Last week, China announced a probe into brandy imported from the European Union (EU) after noting price reductions of 15.88%.
However, producers in France have now questioned the ‘real purpose’ of the investigation, noting that the alleged discounts are unusually small for a formal government probe.
In reality, they have been caught in the crossfire of a tit-for-tat trade dispute between Brussels and Beijing.
It all kicked off when the EU announced a probe into China’s subsidies for electric vehicle makers in September last year.
European Commission President Ursula von der Leyen said the bloc has become flooded ‘with cheaper electric vehicles’ that benefit from ‘huge state subsidies’.
It raised the prospect of the commission levying countervailing tariffs on EU imports of Chinese electric vehicles to offset state subsidies and level the playing field.
The dispute heated up last month, when the EU launched another anti-dumping investigation into biodiesel imports from China.
Beijing responded by launching its own investigation into brandy imports from the EU. It imported £1.24bn worth of brandy from the bloc last year, with France accounting for 99.8% of it, according to customs data.
News of the investigation dented the share prices of the leading Cognac producers. Remy Cointreau’s shares are down by more than 16.5% since the start of 2024, while Pernod Ricard’s share price has dipped by around 7.6%.
The Bureau National Interprofessionnel du Cognac, which represents Cognac producers, said the discounts appear ‘singularly low compared to what is generally accepted as justification for an anti-dumping investigation’.
It added that the news ‘reinforces our conviction that our future exchanges with the Chinese authorities will demonstrate that our commercial practices are fully compliant with Chinese and international regulations’.
