French brandy is at the heart of a commercial dispute between Beijing and Brussels over Chinese electric vehicles (EVs).
The wine-growing town of Cognac, in southwestern France, is at the epicentre of a trade war between China and the EU.
Since mid-October, Beijing has imposed temporary anti-dumping measures for imports of European brandy.
This comes after the EU Commission said it wants to impose heavy tariffs on electric vehicles coming from China.
Anxiety and frustration against the French government are brewing among the makers of the eponymous cognac.
‘We’re being completely sacrificed’
“We’re being held hostage in a dispute between the EU and China over electric vehicles, and cognac has nothing to do with it,” said Florent Morillon, head of the National Interprofessional Cognac Association (BNIC).
“We’re being completely sacrificed. But we can still salvage the situation. We’re calling on our government to find solutions and get closer to China to see what discussions can be held,” he told Euronews.
“China is our biggest market in terms of value and our second biggest in terms of volume.”
Although some countries from the EU bloc voted against slapping taxes on Chinese EVs such as Germany, France voted for the measure, angering the cognac industry.
Customs duties to China are set to rise by 35% as a deposit for the time being.
France is expected to be the country most affected by this decision, with China importing as much as 99% of the spirit last year – about €1 billion in revenue.
A sector that represents 70,000 jobs
In addition to bad weather and harvest this year, the economic downturn after the COVID-19 pandemic and Russia’s war in Ukraine, cognac makers fear this decision could threaten the future of their profession, which represents 70,000 jobs.
“Adding the subject of Chinese taxes, which would cause us to lose our second-largest market, would have catastrophic consequences for all operators, winegrowers, merchants and the entire industry around us,” said Anthony Brun, chairman of the General Union of Cognac Winegrowers, UGVC.
“Our consumers are cost-conscious. This tax leads to a price increase of almost 50% in our second-largest market. We know that we’re going to disappear from China and thus bury the cognac industry for good,” he said in an interview with Euronews.
European brandies such as armagnac, Italian grappa and all other grape-based spirits will also be taxed by China.
