Hennessy prepares to bottle in China to avoid Beijing's tariff sanctions, triggering French worker strikes

The leading LVMH group's Hennessy, a luxury brand from France, is currently studying how to transport brandy to China for bottling in response to the high tariffs imposed by Beijing. China is the second largest export country of cognac outside the United States, and also the largest market for cognac brandy, with exports reaching $1.7 billion last year. However, China's economic situation in recent years has been severe, and the previous prosperity has faded. Hennessy's cognac sales have plummeted significantly. In addition, Beijing implemented anti-dumping measures last month, imposing over 30% tariffs on bottled brandy imported from the EU, undoubtedly adding insult to injury for Hennessy's already declining performance.

In October, Beijing imposed tariffs of over 30% on bottled brandy imported from the European Union, causing significant impact on French brands like Remy Cointreau and Pernod Ricard, in addition to Hennessy.

CGT union regional representative Michael Lablanche said that when the news of Hennessy's preparation to move bottling to China came out, it triggered about 500 workers in the Cognac bottling plant to stop work on Tuesday in protest and prepare for ongoing strike action. Shipping Cognac brandy in containers and bottling in China can allow the company to avoid tariffs, but it will pose a livelihood challenge for the workers.

Hennessy plans to send 1000 liters of VSOP Cognac samples to China on December 15 to test the stability of the product. If the test is successful, Hennessy will move the entire VSOP bottling line to China to handle the estimated 600,000 cases of Cognac, which is the projected sales volume for China in 2025.

For Rémy Martin, another cognac brand, it will raise the price of Chinese cognac to help mitigate the impact of Beijing's tariff imposition and will reduce manufacturing and advertising costs. The company spokesperson stated that Rémy Martin has no plans to relocate bottling lines to other countries.

In the past, besides enjoying the wine tasting experience, the exquisite external bottle and paper box packaging of brandy are the perfect presentation of French art design. Although the raw materials still come from the place of origin, the thought of even the proud French wine can be transported to China for packaging for the sake of profit, it suddenly feels that emphasizing authentic local production is no longer a 'craftsmanship spirit', but an outdated 'business strategy'.

The aging time of VSOP is four years, which is a middle-grade cognac. The price is about $60, which is an affordable "little happiness" for the general middle class. Next year, this affordable entertainment expenditure may also increase in price due to tariff increases. Liquor lovers can stock up before the end of the year.

This year, LVMH's stock price fell by 24.61%, even the most luxurious brands have to implement austerity measures, which will have an even greater impact on consumer goods. Next year, as a result of the high tariff sanctions imposed by Beijing after Trump took office, it will also trigger China's anti-dumping policy against the United States.

The chain reaction caused by anti-dumping policies will bring a butterfly effect to the global economy next year. The luxury goods industry in France is already on high alert, and the United States will also impose high tariffs on the European Union after Trump officially takes office. The prices of consumer goods will definitely continue to rise globally, which will not only affect the lowest-level workers but also affect advertising and other merchandisers. The long-term impact of anti-dumping policies may lead to global price inflation and economic instability.

This article, Hennessy's preparations for bottling in China to avoid Beijing's tariff sanctions, has led to strikes by French workers, first appeared in Chain News ABMedia.