Cognac stock rallied on Tuesday, 7 May 2024, after French President Emmanuel Macron hinted that the trade tensions between China and the EU might subside.
Cognac Shares Rally After Talks to Ease Chinese Trade Strains
Based on CNBC data, the share prices of Pernod Ricard (RI.PA) and Remy Cointreau (RCO.PA) jumped by 2.7% and 7.6% respectively at the midday mark in London. Chinese President Xi Jinping is currently in talks with European leaders to discuss the continued trade conflict. He met with Macron on Monday, 6 May 2024, and received a bottle of top-shelf cognac, which, according to CNBC, sells for more than $3,200. Macron said:
I thank the president for his open attitude regarding provisional measures on cognac and for his wish not to implement them.
China had initiated an anti-dumping probe into European cognac and brandy producers earlier this year. Dumping is a commercial practice where foreign markets sell products at lower prices, thereby straining domestic production and retail. According to CNBC, China’s Ministry of Commerce indicated that the China Liquor Industry Association requested the investigation.
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This inquiry followed hot on the heels of a similar EU probe regarding Chinese electric vehicle (EV) manufacturers and was widely regarded as retaliation. Although China denied that its investigation was retaliatory, the announcement negatively affected cognac makers.
The Bureau National Interprofessionel du Cognac (BNIC) implored the Chinese and French leaders to find a solution to the situation. The organisation described added tariffs as “extremely damaging for an entire region” that depends on cognac production and retail.
