LVMH’s Hennessy plan to trial bottling in China and bypass tariffs sparks hundreds protesting on home turf

French unions CGT and FO said that between 500 and 600 employees in the Charente region, home to Cognac in southwest France, were protesting against a pilot plan to export the drink in containers, rather than bottles, which would be subject to an additional 35 percent tax.

Frederic Merceron, a representative of the Ministry of Commerce at Hennessy, told AFP: “The administration told us that it wants to conduct tests on export products in tubs with a view to future packaging in China by the service provider” and no longer in France.

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

“This is the first of its kind for a major house. It is a real spanner in the works,” said Mathieu Devers of the CGT union, expecting other Cognac producers to follow suit.

The strike at the Hennessy factory in the town of Cognac, which employs 1,100 people, is open, although a source close to Hennessy, who requested anonymity, said that “dialogue is possible.”

Since October 11, China has required importers of European brandy – of which Cognac accounts for 95% of the total – to submit a deposit or bank letter of guarantee to Chinese customs authorities.

The action is part of what Beijing describes as an anti-dumping investigation. But the move is widely seen as retaliation for the EU imposing tariffs on electric cars imported from China, Cognac’s second-largest export market.

The first delivery test to be conducted by the end of 2024 will ensure that the quality of the drink is maintained after transportation, Devers said.

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

The association of French cognac producers, BNIC, said it did not want to comment on individual companies’ strategies.

But she added: “It is worth noting that while waiting for a negotiated solution, and in light of the deterioration we have observed, some houses may have to explore all avenues that would allow them to maintain their presence in the Chinese market.” “

The cognac industry, which relies heavily on exports, now fears being targeted in the United States, its largest market, after the election of Donald Trump, who plans to increase tariffs across the board.