High Chinese tariffs on EU brandy would leave French companies with vast amounts of cognac that could be hard to sell elsewhere, according to Reuters' calculations, analysts, and investors who fear firms could be forced to discount.
Item 1 of 6 A technical expert works during a double distillation process in the distillery of Courvoisier cognac house in Cognac, southwestern France, February 11, 2015. REUTERS/Regis Duvignau/File PhotoA technical expert works during a double distillation process in the distillery of Courvoisier cognac house in Cognac, southwestern France, February 11, 2015.
The cognac industry's "future depends" in part on tariffs being avoided through such talks, industry association the Bureau National Interprofessionnel du Cognac said in a statement on Thursday. Remy and Pernod declined to comment. Their shares are down more than 16% and 5.7%, respectively, compared with before the probe was announced.
France shipped just over 35 million bottles worth of cognac to China last year, the BNIC says. If shipments continued at that rate, more than 175 million bottles would go to China over the next five years. A key risk is that companies are forced to cut prices, damaging margins and brand value, Whyatt and two investors agreed.
BEV BEVS CMPNY CYCP CYCP08 CYCS CYCS08 EU FOBE GEN INTAG LIQS LIQS1 LUX NCYC NEWS1 POL PUBL TEX TRD TRF WEAR WEAR1 WEU EASIA EUROP EZC EMEA ASXPAC EMRG CN ASIA FR FIN
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