China has launched an anti-dumping investigation on brandy imported from the European Union, a step that appears to be mainly targeted at France.
Below are some facts about China's brandy imports and European companies exposed to the market.
CHINA'S TASTE FOR BRANDY
China imported $1.57 billion worth of spirits from distilled grape wine in 2023 through November. France accounts for 99.8% of all EU brandy exports, according to Chinese customs data.
In 2022, brandy made up the largest portion of imported spirits in China at 37.5 million litres, according to a Daxue Consulting report.
China counts a dozen local producers of brandy, most of them small-scale. The biggest domestic producer is Yantai Changyu Pioneer Wine Co Ltd (000869.SZ) that makes Koya brandy.
EXPOSED COMPANIES
Remy Cointreau (RCOP.PA)
The French spirits maker, which produces Remy Martin cognac, derived 30% of its group sales, or 464.6 million euros ($507.1 million), from China in fiscal year 2022/2023.
Pernod Ricard (PERP.PA)
China accounted for about 10%, or 1.21 billion euros, of Pernod Ricard's group sales in 2022/2023. Cognac brands like Martell make the bulk of Pernod's sales in the country, and it also sells whisky.
Diageo (DGE.L)
China accounted for 3%, or 513.4 million pounds ($650.8 million), of Diageo's sales in 2023. Jefferies analysts said the maker of Johnnie Walker whisky has no direct exposure to China cognac, but they estimated an indirect exposure at 2-3% of net income through its stake in a joint venture with luxury giant LVMH (LVMH.PA).
Campari (CPRI.MI)
Last month, the Italian spirits group agreed to buy French cognac brand Courvoisier, aimed at expanding its footprint in China, which represents about 9% of Courvoisier's revenues. The deal is expected to close this year.
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