China is launching an anti-dumping investigation into liquor products like brandy from the European Union as trade tensions between Beijing and Brussels intensified. European liquor stocks declined, according to Bloomberg.
The investigation will focus on brandy products that come in smaller than 200 liter containers from the EU, China’s Ministry of Commerce said Friday, without specifying any companies. It’s being launched because of an application from a domestic liquor association, according to the statement.
The move comes months after the EU started an investigation into Chinese subsidies for electric vehicles in a bid to wave off a flood of cheap imports. The bloc also opened an anti-dumping probe into biodiesel from China in December.
“China is showing Europe what retaliation could look like if it slaps duties on Chinese EVs,” said Noah Barkin, senior advisor at Rhodium Group. “This move would hit wine-producing countries like France the hardest — and that is probably no coincidence. Macron’s government was the strongest supporter of the EU’s anti-subsidy probe into EV imports from China.”
French distillers Remy Cointreau, Pernod Ricard and luxury conglomerate LVMH sell French brandy called cognac in China under brands including Remy Martin, Martell and Hennessy. China represents a major market for all the brands which have been struggling with a sharp drop in US demand following a surge during the pandemic.
Shares of Remy Cointreau tumbled as much as 9.2% in Paris while Pernod Ricard fell 5.8%.
Beijing has a history of using trade to help it achieve its policy goals. It previously looked into foreign liquor imports when geopolitical tensions flared with Australia, resulting in the imposition of anti-dumping tariffs on Australian wines, decimating what had been one of Australia’s major overseas markets. As ties improved, China started to review the curbs.
China imported $1.57 billion worth of spirits from distilled grape wine in 2023 through November, among which 99% of the products are from France, according to China customs data compiled by Bloomberg.