China launches anti-dumping investigation into brandy imported from the EU
China has launched an anti-dumping investigation into brandy imported from the European Union, at a time of commercial tension between the two commercial superpowers. The Ministry of Commerce said the investigation followed a complaint filed in November by the China Liquor Association on behalf of the domestic brandy industry.
According to the Beijing ministry, the complaint included “the relevant evidence necessary to proceed with an anti-dumping investigation, as established by (national) regulations”. The investigation will examine suspected dumping between October 2022 and September 2023, as well as industrial damage suffered between 2019 and 2023. And will likely conclude by January 5, 2025, although it may be extended by six months in “special circumstances.” , he added.
According to a report by research group Daxue Consulting, China imported more brandy than any other spirit in 2022, most of which came from France. The repercussions on the stock market were immediate, with Rémy Cointreau shares falling by 10.93% to 97 euros on the Paris stock exchange, after having reached the lowest level since April 2020. Cognac represents two thirds of the group's sales and, according to Oddo Bhf analysts, China represents almost 30% of sales. Beyond turnover, “it is Rémy Cointreau's growth potential that really lies in China,” underlines Lionel Melka, partner at Swann Capital.
Pernod Ricard loses 4.76% to 145.20 euros. Over the course of the week, Rémy Cointreau fell by 15% and Pernord Ricard by almost 10%. In Milan Campari lost 1.99% and in London Diageo lost 1.87%. Global luxury giant LVMH, whose Hennessy cognac brand represents a marginal part of its turnover, also lost 1.96%.
For Lionel Melka the announcement must be included “in the great story of the worsening of trade tensions between China and the West”. Tensions between China and the EU have worsened since Brussels declared it wanted to reduce its trade dependence on China, particularly with regards to the tech sector. The Netherlands recently joined the United States and Japan in imposing export curbs on advanced chip-making equipment, aimed at preventing Beijing from acquiring the most advanced chips that could be used in weapons and high technology . In September the European Commission also opened an investigation into Chinese public subsidies for electric cars. “When we are attacked, it is often because of cheese, wine or champagne, they hit where it hurts the most”, underlines the expert. Finally, according to a note released by Stifel analysts, the growth prospects for the alcohol sector are reduced, due to a “general context” that “remains gloomy”.
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