China puts tariffs on EU brandy, top cognac makers drop

By Louis Goss

China has imposed fresh tariffs on imported brandy from the European Union just days after the bloc voted to place its own tariffs on Chinese electric vehicles.

In a statement on Tuesday, China's Ministry of Commerce said it had decided to impose temporary tariffs on brandy from the EU of 30.6% to 39%, which will come into effect on Oct. 11.

China's new tariffs will primarily hit French brandy producers including the world's top four cognac producers Hennessy, Martell, Courvoisier, and Remy Martin, which all saw their share prices drop.

The Ministry of Commerce said it planned to impose 39% tariffs on Hennessy, 38.1% tariffs on Remy Martin, 30.6% tariffs on Martell and 34.8% tariffs on Courvosier. All other brandy producers are set to be hit with tariffs of 34.8%.

China's new brandy tariffs come just four days after EU member states voted in favor of the European Commission's plans to impose tariffs of up to 37.6% on EVs made in China, in response to concerns about China's state subsidies .

The EU's tariffs will come into effect on Oct. 31, unless China is able to reach an agreement with the bloc on its subsidies for EVs before the end-of-October deadline.

Like China's new tariffs on brandy, the EU's tariffs also provide varying rates depending on the companies involved, with tariffs of 17% on BYD (CN:002594), rates of 18.8% on Geely (HK:175) and tariffs of 35.3% on cars made by state-owned SAIC (CN:600104).

China is currently the largest brandy market in the world, where the drink is seen as a status symbol, according to a report from 6W Research.

French brandy accounts for 99.8% of all brandy imported into China, where brandy remains the most popular spirit, a report from Daxue Consulting says.

Cognac producers last month held protest in France in opposition to EU tariffs on Chinese EVs, in response to mounting concerns about the threat of retaliatory tariffs on the European brandy industry.

France voted in favor of the EU tariffs on Chinese EVs along with the majority of EU member states, though car making powerhouse Germany voted against the European Commission's plans.

China itself is a major producer of brandy, where companies including Chnagyu have a strong foothold in the market via brands including Koya.

Shares in LVMH Moët Hennessy Louis Vuitton (FR:MC), which owns Hennessy, fell 5% on Tuesday having lost 11% of their value in the year-to-date.

Remy Cointreau (FR:RCO), which makes Remy Martin brandy, saw its stock price drop 8% with its shares down 46% in 2024.

David Campari Milano (IT:CPR), which makes French cognac brand Courvoisier, saw its share price fall 2% Tuesday and it is downd 28% this year.

Shares in Pernod Ricard (FR:RI), which makes Martell, fell 4% on Tuesday having lost 19% in the year-to-date.

-Louis Goss

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10-08-24 0518ET

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