Hennessy workers strike as France's Macron urges Xi to remove tariffs on China's cognac

Hennessy staff extended a strike on Wednesday over its plans to bottle cognac in China to avoid import tariffs, after French President Emmanuel Macron urged his Chinese counterpart Xi Jinping to lift tariffs.

Hennessy, owned by luxury group LVMH, is exploring options to deal with Chinese anti-dumping measures imposed last month, including shipping cognac in bulk for bottling in China.

Beijing imposed deposits of between 30% and 40% on brandy imports from the EU, hitting French companies such as Hennessy, Pernod Ricard and Remy Cointreau, days after the 27-state bloc voted in favor of tariffs. to electric vehicles made in China.

Macron urged Xi to remove tariffs at the G20 meeting in Brazil and told reporters on Tuesday that China's attack on cognac came as a surprise.

France is refusing to lift its support for electric vehicle tariffs to reduce pressure on its cognac sector, Elysée officials and industry insiders say. Paris says the two issues are unrelated and that Beijing's actions on cognac were political and retaliatory.

China is the second-largest cognac export market after the United States and the most profitable in the industry, with exports of $1.7 billion last year.

On a visit to Shanghai earlier this month, Trade Minister Sophie Primas reminded her Chinese counterpart that Xi Jinping himself had promised Macron during a state visit earlier this year that there would be no tariffs on French brandy, said a government source briefed on the meeting. .

Speaking to reporters after meeting Xi, Macron said the Chinese president had agreed to work transparently on the issue and that his prime minister, Michel Barnier, would travel to China early next year.

“We have started a process and I am hopeful that we can emerge victorious, that is, returning to normality,” Macron said.

The Chinese measures have already led to cancellations and postponements of orders, said Florent Morillon, president of the Bureau National Interprofessionnel du Cognac (BNIC), who welcomed the intensification of the diplomatic effort.

China's measures do not apply to bulk shipments, which currently account for only 2 to 3% of volume, Morillon said, as cognac is traditionally produced and bottled entirely in its region of origin.

Unions representing the sector fear that other producers could also move their bottling operations to China.
Remy has said it has no such plans, while Pernod Ricard declined to comment.

The unions plan to pressure the BNIC to include bottling activity within the scope of an 'appellation of controlled origin' (AOC) label to protect the local workforce, said Mathieu Devers, a Hennessy technician and secretary of the unions' representative committee. company employees.

Blocking bulk cognac shipments is also being considered, Devers said.

Unions were also discussing expanding the strike throughout the Cognac region, which could affect other producers, said Frederic Merceron of the Force Ouvrière union.