Hennessy plan to trial bottling cognac in China to avoid tariffs prompts strike
Strike involves 500 workers at plant in southwest France
Hennessy says studying temporary bottling of cognac in China
China is second-largest export market for cognac
Recasts lead, adds Hennessy comment in paragraph 2
By Alban Kacher
Nov 19 (Reuters) -Hennessy is studying a plan to bottle cognac in China, the company owned by French luxury giant LVMH LVMH.PA said on Tuesday, prompting hundreds of workers at its plant in southwestern France to go on strike.
Hennessy said it is looking at all options to cope with antidumping measures imposed by Beijing last month, including shipping cognac to China where it could be bottled locally. A decision would only be taken based on the results of a trial.
China is the second-largest export market for cognac after the United States and the industry's most profitable territory, accounting for $1.7 billion in exports last year.
Difficult economic conditions in China and the U.S., however, have prompted a sharp decline in cognac sales and the industry is also suffering from a bad 2024 harvest.
News of Hennessy's plan prompted about 500 workers, or half the workforce, at its bottling plant in Cognac, to stop work on Tuesday, said Michael Lablanche, a regional representative for the CGT labour union.
Workers are due to continue their strike on Wednesday, Lablanche added.
Beijing imposed duties of more than 30% on imports of bottled brandy from the European Union in October, hitting Hennessy as well as other French companies Remy Cointreau RCOP.PA and Pernod Ricard PERP.PA.
Shipping cognac in containers and bottling it in China would allow companies to circumvent the tariffs but would be a "disaster" for workers, said Lablanche.
Video and photos posted on social media showed large groups of people gathering outside Hennessy's headquarters in Cognac, some wearing jackets showing the logos of CGT and Force Ouvriere, another union.
Hennessy management told employee representatives on Tuesday that it planned to first send a sample shipment of 1,000 litres of its very special old pale (VSOP) cognac to China to test the product's stability, added Lablanche, who said he was briefed by employees after the meeting.
The test shipment is due to take place on Dec. 15, local newspaper Charente Libre reported.
If the test is successful, the group will relocate the whole VSOP bottling line to China, added Lablanche, to handle 600,000 cases of the brandy, or all of its 2025 China sales.
Remy Cointreau, a smaller cognac maker, has said it will raise cognac prices in China to help mitigate the impact of tariffs imposed by Beijing, and could also cut costs in areas such as manufacturing and advertising spending.
It has no plans to relocate its bottling line, a company spokesperson said.
The Bureau National Interprofessionnel du Cognac, an industry lobby group, has repeatedly urged the French government to negotiate a solution to protect the cognac industry.
"Some houses may be forced to explore all options that would enable them to maintain the presence of the appellation on the Chinese market," it said in a statement on Monday.
Reporting by Alban Kacher; Additional reporting by Dominique Patton and Emma Rumney; Editing by David Evans, Paul Simao and Alexander Smith
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