French Cognac Workers Plan Strike Over Fears Bottling Business Could Move to China

By Pierre Bertrand

Workers at France's cognac distilleries plan to go on strike next week over fears that the industry could relocate its bottling business to China in a bid to circumvent import tariffs.

The strike, called for Nov. 28 at distilleries Maisons Hennessey, Remy Martin, Courvoisier and Martell, follows a walkout this week at LVMH's Hennessey after the business disclosed that it intends to test the viability of sending bulk quantities of cognac to China.

Hennessy's move prompted fears that the entire cognac industry could relocate its bottling business to China and potentially to the U.S. in the future, CGT trade union's Michael Lablanche said Thursday, referring to possible tariffs President-elect Donald Trump could introduce once in office.

In response to duties on European cognac shipments that China put in place last month, Hennessy is considering temporarily entrusting its bottling service to a China-based provider, it said.

Hennessy said it is evaluating all possible solutions and that nothing has been decided, and said it has no plans to relocate production of the alcohol. Harvesting, distillation and maturation would always be carried out in Cognac, France, the company said.

Remy Martin owner Remy Cointreau said it has no plans to relocate its bottling line. Martell owner Pernod Ricard declined to comment and Courvoisier owner Campari didn't respond to a request for comment.

Next week's strike plan comes as the European Union and China face off on trade tariffs.

Last month China imposed provisional tariffs on brandy imports from the European bloc, a decision that followed the EU's move to impose duties on Chinese-made electric vehicles.

The tit-for-tat measures spurred France's cognac decision-making body, the Bureau National Interprofessionnel du Cognac, to call on public authorities to urgently find a solution to what it called a political issue causing painful consequences.

The cognac industry employs 70,000 people in France and the surrounding regions, the BNIC said. The trade dispute risks eroding cognac's hold on the Chinese market, it added.

The U.S. and China are major destinations for European Union-made spirits and the countries are the bloc's first and second-largest export destinations respectively, according to industry association spiritsEurope.

In 2023, EU spirits exports to China totaled 889 million euros ($937.5 million), 90% of which were made up by grape and marc-based spirits, spiritsEurope Director General Ulrich Adam said. Adam called on both sides to lift tariffs.

Write to Pierre Bertrand at pierre.bertrand@wsj.com

(END) Dow Jones Newswires

November 21, 2024 10:25 ET (15:25 GMT)

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