China's New Brandy Tariff Stirs EU Tensions

China has imposed temporary anti-dumping measures on European Union brandy imports, requiring security deposits from importers. This move targets French brandy makers, with companies like Remy Cointreau and Pernod Ricard facing significant impacts on sales. China's brandy market is predominantly French, with several local producers holding smaller shares.

China has introduced interim anti-dumping duties on brandy imports from the European Union starting Tuesday, according to the commerce ministry. Importers are now required to place security deposits ranging from 34.8% to 39.0% of the import value, a decision largely affecting French producers.

The announcement follows China's January anti-dumping investigation, aimed chiefly at France, which supplies 99% of China's €1.7 billion brandy market. In 2022, brandy represented the largest category of imported spirits in China, amounting to 37.5 million litres, reports Daxue Consulting.

Key players feeling the strain include Remy Cointreau and Pernod Ricard. Remy Cointreau's sales in China accounted for 30% of its total revenue last fiscal year, necessitating a 38.1% security deposit. Pernod Ricard faces a 30.6% levy on its Martell sales, while Diageo has indirect exposure through a joint venture with LVMH. The Italian Campari has recently acquired Courvoisier to expand in the Chinese market.

(With inputs from agencies.)