Cognac Industry Faces Multi-Front Crisis as China’s Anti-Dumping Measures Take Heavy Toll
Since the imposition of anti-dumping taxes by China, one of its main markets, the cognac industry has suffered significant losses, calling for urgent government intervention. Since October 11, 2019, European brandy exports, of which cognac represents the vast majority, have been subject to bank guarantees from Chinese customs.
The anti-dumping measures, enacted by Beijing in retaliation for the European Union’s similar actions on Chinese electric vehicles, have already resulted in a 50% monthly decline in cognac shipments. The combined impact on the cognac and armagnac industries has been severe.
"There are already consequences for employment and businesses," stated Florent Morillon, president of the Bureau National Interprofessionnel du Cognac (BNIC). "We had an industry that was performing very well, generating over 70,000 jobs. Today, it has been crippled by European political decisions."
With the upcoming Salon de l’Agriculture (Paris Agricultural Show) serving as a platform to highlight the crisis, industry representatives intend to appeal directly to political figures. "It is imperative that the Prime Minister visits China, as the President of the Republic has pledged," urged Morillon. "This is a purely political issue that can only be resolved politically."
Despite ongoing discussions with the Élysée Palace and various ministries, no clear solution has yet emerged. "We are heard, there is a lot of empathy, but nothing concrete has come of it," lamented a spokesperson for one of the leading cognac producers.
The industry feels a sense of neglect, especially considering the absence of alternative markets that could compensate for China’s importance. China remains the primary market for cognac in terms of value and the second largest in volume, after the United States.
Uncertainty further looms over the cognac and armagnac industries with the return of Donald Trump to the White House. His aggressive trade policies, marked by the imposition of tariffs, raise concerns for cognac exports. "We are closely monitoring the situation," said BNIC president Morillon. "We hope to be spared from this."
Impact on Employment and Businesses
The anti-dumping measures have had a significant impact on employment within the cognac industry. Cognac production supports over 70,000 jobs in various sectors, including viticulture, distillation, and distribution. The decline in exports has led to reduced production and a subsequent loss of employment opportunities.
Businesses have also been severely affected. Cognac producers have seen their revenues decline, resulting in financial losses and uncertainty. The threat of further anti-dumping measures from the United States has compounded this uncertainty, creating a challenging operating environment for the industry.
Call for Urgent Government Action
The cognac industry is calling on the French government to take immediate action to resolve this crisis. This includes:
- Engaging in direct diplomatic negotiations with China to seek a removal or reduction of the anti-dumping measures.
- Exploring alternative markets to mitigate the impact of reduced exports to China.
- Providing financial assistance and support to affected businesses and workers.
- Advocating at the European Union level for a coordinated response to the United States’ trade policies.
The industry believes that the government has a responsibility to protect the cognac industry, a vital part of the French economy and a symbol of French excellence worldwide.
