CHINA. Cognac houses and Chinese travel retailers are today breathing a huge collective sigh of relief after China’s Ministry of Commerce (MOFCOM) issued its much-anticipated final ruling on an anti-dumping investigation into brandy imports from the EU.
MOFCOM concluded there is clear evidence of dumping which has undermined China’s domestic brandy industry.
Critically, however, MOFCOM said it has accepted price undertakings submitted by relevant EU industry associations and companies. Imports that meet the terms of these undertakings will be exempt from anti-dumping duties.
French trade association Le Bureau National Interprofessionnel du Cognac noted today there has been no information on the reopening of China’s all-important duty-free channel for Cognac sales. However, the ruling is likely to pave the way for a normalisation of trading in the sector for companies signing the required undertakings.
As reported, the Ministry slapped heavy ‘temporary anti-dumping’ measures on imported European brandies from 11 October 2024 in what was widely seen as a tit-for-tat response to the EU’s anti-subsidy probe into Chinese electric vehicles.
This had a disastrous impact on Cognac (in particular) sales in Chinese duty free as retailers were unable to procure new supplies.
Cognac accounts for an estimated 90% of sector giant China Duty Free Group’s liquor sales.
“MOFCOM’s announcement also confirms the return of guarantees and the release of deposits paid since October 2024. However, no information has been given on the reopening of the duty-free market , from which Cognac has been excluded since December 2024 and which traditionally represents nearly 20% of its sales in China.” – Le Bureau National Interprofessionnel du Cognac
French trade association Le Bureau National Interprofessionnel du Cognac said, “We note today the decision of the Chinese Ministry of Commerce (MOFCOM) to conclude its investigation by imposing an average duty of 32.2% on EU wine spirits, marc spirits and brandies, even though our sectors have demonstrated for 18 months the total absence of dumping on the Chinese market.
“This average duty is slightly lower than the provisional average duty imposed since October 2024. This taxation will apply from 5 July, 2025.
“To avoid seeing their presence in China completely jeopardised and to envisage their activity in China with greater stability, some of our companies have signed ‘minimum price commitments’ with MOFCOM. These commitments, made possible thanks to the diplomatic efforts of France and companies in the sector, will replace anti-dumping duties.
“They will also apply, from 5 July, 2025, to the three sampled companies as well as to the other signatory companies that MOFCOM has selected.
“It is therefore imperative that the list of cooperating companies be extended to all those that responded to the survey and that all companies that signed the minimum price agreement can benefit from it.
“This minimum price commitment regime, which in no way constitutes recognition of dumping, will be less unfavourable than the anti-dumping tax regime. However, the companies benefitting from it will remain in a worse situation than the conditions they experienced in the Chinese market before the procedure launched in January 2024.
“This is why we renew our call to the French government and the European Commission to reach a political agreement as soon as possible with the Chinese authorities to return to a situation without anti-dumping duties.”
“MOFCOM’s announcement also confirms the return of guarantees and the release of deposits paid since October 2024. However, no information has been given on the reopening of the duty-free market , from which Cognac has been excluded since December 2024 and which traditionally represents nearly 20% of its sales in China.”
As reported, major houses such as Pernod Ricard, Hennessy and Rémy Cointreau have been severely affected by the crisis.
MOFCOM set the ‘dumping margin’ at 27.7% to 34.9% and said the consequent anti-dumping duties and implementation of accepted price undertakings will be effective for five years starting from 5 July. ✈
