Hennessy is considering injecting undiluted solution from China to avoid high tariffs. As soon as they heard the news, workers at its headquarters went on strike. Hennessy is a French miscellaneous goods group LVMH that produces high-end brandy cognac made by distilling wine.
According to Reuters on the 19th (local time), Hennessy is reviewing all options on the table to cope with anti-dumping tariffs imposed by the Chinese government last month. It is also considering shipping the undiluted solution to China and then shipping the final product in China, including bottling. It is expected that companies will be able to avoid tariffs if cognac is bottled in a container in China.
The Chinese government has imposed high tariffs of 30 percent on European brandies since last month in retaliation for the European Union’s dumping tariffs on Chinese products. Liquor companies including Hennessy, Remy Cointreau, and Pernorica are on alert. To Hennessy, China is the world’s second largest export market after the U.S. Hennessy recorded sales of 1.7 billion dollars in China last year.
Hennessy’s management informed employees that it planned to first send 1,000 liters of VSOP cognac samples to China to test the product’s stability. Then hundreds of workers at the southwest French plant immediately went on strike. “About 500 people, half of the current workers, have gone on strike, and the strike will continue for a while,” said Michael La Blanche, head of the labor union.
According to local media, Hennessy is scheduled to carry out a test shipment on the 15th. According to the union, Hennessy planned to transfer the entire VSOP bottling line to China to produce 600,000 boxes of brandy. This is equivalent to the total amount of sales expected in China in 2025. French liquor companies are expected to be forced to raise sales prices in China because of tariffs right now. “We may be able to cut costs in areas such as manufacturing and advertising spending,” a Hennessy official told Reuters.
JULIE KIM
US ASIA JOURNAL
