Strike at French cognac maker Hennessy over measures in China spat

Hundreds of employees of French cognac maker Hennessy, part of the LVMH group luxury empire, went on strike on Tuesday to protest measures the brand plans to employ to circumvent Chinese tariffs imposed in a spat with the EU.

Some 500-600 staff in cognac’s home Charente region in southwestern France were protesting at an experimental plan to export the drink in vats, rather than bottles, which will be subject to additional taxes estimated at 35 percent, France’s CGT and FO unions said.

“Management told us they wanted to do tests on exporting the products in vats with a view to future bottling in China by a service provider” and no longer in France, Frederic Merceron, FO representative at Hennessy, told AFP.

We can well imagine the impact on employment,” he added, describing the news as a “cold shower.

“This is a first for a major house. It’s a real spanner in the works,” said Matthieu Devers of the CGT union, predicting that other cognac producers would follow suit.

The strike at the Hennessy plant in the town of Cognac, which employs 1,100 people, is open-ended, though a source close to Hennessy, asking not to be named, said that “dialogue is possible.”

Since October 11, China has required importers of European brandies — of which cognac represents 95 percent of the total — to submit a deposit or a bank guarantee letter with Chinese customs authorities.

The measure is part of what Beijing describes as an anti-dumping investigation. But the move is widely seen as retaliation for the EU slapping tariffs on electric cars imported from China, which is the second biggest export market for cognac.

Devers said a first test delivery to be carried out by the end of 2024 would ascertain if the quality of the drink is maintained after transport.

He described as “bizarre” a suggestion that materials including glassware, labels, corks and boxes be shipped to China with the drink then bottled there.

France’s umbrella cognac producers association BNIC said it did not want to comment on the individual strategies of companies.

But it added: “It should be noted that while waiting for a negotiated solution, and in view of the deterioration that we have noted, certain houses could be forced to explore all avenues that would allow them to maintain the presence on the Chinese market.”

The cognac industry, which is heavily dependent on exports, now fears it will be targeted in the United States, its biggest market, following the election of Donald Trump, who plans to step up customs duties across the board.

Source