Spirits makers exposed to China's EU brandy probe

Reuters

Spirits makers exposed to China's EU brandy probe

Oct 8, 2024 at 9:01 am GMT

<html xmlns="http://www.w3.org/1999/xhtml"><head><title>FACTBOX-Spirits makers exposed to China's EU brandy probe</title></head><body>

Updates throughout after China announced anti-dumping measures

Oct 8 (Reuters) -China on Tuesday imposed temporary anti-dumping measures on brandy imports from the European Union.

As of Oct. 11, importers of brandy originating in the EU will have to put down security deposits mostly ranging from 34.8% to 39.0% of the import value, the Chinese commerce ministry said.

China had launched an anti-dumping investigation in January, a step that appeared to be mainly targeted at France. It had said in late August it would not impose provisional tariffs, but left open the possibility to do so.

Below are some facts about China's brandy imports and European companies exposed to the market.

CHINA'S TASTE FOR BRANDY

France accounted for 99% of China's brandy imports last year, with French brandy shipments reaching $1.7 billion.

In 2022, brandy made up the largest portion of imported spirits in China at 37.5 million litres, according to a Daxue Consulting report.

China counts a dozen local producers of brandy, most of them small-scale. The biggest domestic producer is Yantai Changyu Pioneer Wine Co Ltd 000869.SZ that makes Koya brandy.

EXPOSED COMPANIES

* Remy Cointreau RCOP.PA

The French spirits maker, which produces Remy Martin cognac, derived 30% of its group sales, or 464.6 million euros ($507.1 million), from China in fiscal year 2022/2023.

Remy Martin's importers would have to pay security deposits of 38.1%.

* Pernod Ricard PERP.PA

China accounted for about 10%, or 1.21 billion euros, of Pernod Ricard's group sales in 2022/2023. Cognac brands like Martell make the bulk of Pernod's sales in the country, and it also sells whisky.

Security deposit rate on Martell was set at 30.6%.

* Diageo DGE.L

China accounted for 3%, or 513.4 million pounds ($650.8 million), of Diageo's sales in 2023. Jefferies analysts said the maker of Johnnie Walker whisky has no direct exposure to China cognac, but they estimated an indirect exposure at 2-3% of net income through its stake in a joint venture with luxury giant LVMH LVMH.PA.

Importers of Hennessy, owned by LVMH, would have to pay security deposits of 39.0%.

* Campari CPRI.MI

The Italian spirits group earlier this year completed the buyout of French cognac brand Courvoisier, aimed at expanding its footprint in China which represents about 9% of Courvoisier's revenues.

($1 = 0.9162 euros)

($1 = 0.7889 pounds)

Compiled by Michal Aleksandrowicz, Dagmarah Mackos and Anna Pruchnicka in Gdansk
Editing by Milla Nissi and Andrea Ricci

</body></html>