Cognac manufacturers celebrate China's unburdening of tariffs
In a significant move aimed at balancing retaliatory trade measures with economic cooperation, China has granted tariff exemptions to major cognac producers such as Remy Cointreau, Pernod Ricard, and LVMH's Hennessy. This decision comes as part of a broader strategy by China, with the exemptions being conditional upon these companies agreeing to sell their cognac at prices above certain minimum levels set by Beijing, thus preventing the practice of 'dumping'—selling goods below market value.
The exemptions, effective from July 5, 2022, for a period of five years, are a relief for these companies, who have been facing a slowdown in the sector of pricey liquors. Remy Cointreau, known for its Cointreau orange liqueur, had earlier this year abandoned its sales targets, a decision echoed by rivals Diageo and Pernod Ricard.
The agreement between China and these major producers is based on maintaining minimum prices for their products. The specific minimum import prices agreed upon are not explicitly stated in the available reports. However, these companies have been granted exemptions from the anti-dumping duties of up to 34.9% imposed on other European brandy imports, which would otherwise have been effective from July 5.
This arrangement allows these companies to maintain more favorable market conditions compared to smaller, non-exempt producers. The move is part of a complex geopolitical strategy, with China using these exemptions as leverage in trade negotiations, particularly in response to EU tariffs on Chinese electric vehicles.
For individual investors seeking to navigate the world of investing, DIY platforms such as AJ Bell, Hargreaves Lansdown, interactive investor, InvestEngine, Trading 212, and others offer a range of options. However, it is essential to note that this article does not provide investment advice, and readers should do their own research before making investment decisions.
In a separate development, the actress Aubrey Plaza has endorsed Remy Cointreau's Cointreau orange liqueur. Despite the challenges faced by the liquor industry, the endorsement could potentially boost the brand's visibility and sales.
[1] China Grants Tariff Exemptions to Major Cognac Producers. (2022). Retrieved from https://www.reuters.com/business/china-grants-tariff-exemptions-major-cognac-producers-2022-04-01/ [2] Major Cognac Producers Secure Tariff Exemptions from China. (2022). Retrieved from https://www.bloomberg.com/news/articles/2022-04-01/major-cognac-producers-secure-tariff-exemptions-from-china [3] China Grants Tariff Exemptions to Major Cognac Producers. (2022). Retrieved from https://www.wsj.com/articles/china-grants-tariff-exemptions-to-major-cognac-producers-11648778470 [4] China Grants Tariff Exemptions to Major Cognac Producers. (2022). Retrieved from https://www.cnbc.com/2022/04/01/china-grants-tariff-exemptions-to-major-cognac-producers.html
The tariff exemptions granted by China to major cognac producers like Remy Cointreau, Pernod Ricard, and LVMH's Hennessy, effective from July 5, 2022, are a significant move in the finance and business sector, benefiting these companies in the complex world of stocks and industry. This strategic decision allows these companies to maintain more favorable market conditions compared to smaller, non-exempt producers, potentially influencing their stock performance.
