French cognac makers rallied on Tuesday (7 May) after President Emmanuel Macron flagged his Chinese counterpart's "open attitude" amid a trade dispute that could see possible tariffs imposed by China on EU brandy imports.
Shares in Pernod Ricard and Rémy Cointreau surged 3% and 6% respectively by 08:00 GMT, and stayed among top performers on France's two main stock indices, CAC 40 .FCHI and SBF 120 .SBF120, respectively.
The two companies' earnings are vulnerable to losses if China opts to impose tariffs as part of an anti-dumping probe on brandy imported from the EU, a move that appeared to target France in a tit-for-tat trade dispute.
The probe has weighed heavily on their shares since it was announced in January, with both earning significant revenue from Chinese cognac sales. High tariffs could leave them with large amounts of brandy they could struggle to sell elsewhere.
"I thank the president for his open attitude regarding provisional measures on cognac and for his wish not to implement them," Macron said during a state visit from China's Xi Jinping on Monday.
Brandy Imports
While the French president gave few details and Xi did not mention the matter, a French diplomatic source said this meant no taxes or custom duties until the probe was over, but did not preclude measures once it is wrapped up.
Rémy and Pernod declined to comment.
Shortly after the anti-dumping investigation was announced, France's cognac industry association said it would fully cooperate with Chinese authorities but believed the move was linked to a broader trade row rather than the liquor market.
China imported $1.57 billion worth of spirits from distilled grape wine in 2023 through November, and France accounted for 99.8% of all EU brandy exports, according to Chinese customs data.
Macron presented Xi with a bottle of Remy Cointreau's exclusive Louis XIII cognac, which retails for €3,000 - €4,000 ($3,230-4,306) apiece, among other gifts on Monday.
