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Drinks

French Wine And Spirits Exports Shrug Off Weak China To Hit Record In 2018

French wine and spirits exports topped €13 billion ($14.7 billion) for the first time in 2018 even though shipments to China fell sharply as its economy slowed and trade tensions rose, exporters group FEVS said.

Sales abroad of wines and spirits - France's second-biggest export after aerospace - rose 2.4% in value to a new record of €13.2 billion, the Federation of French Wines and Spirit Exporters said.

A premium branding strategy in the Cognac, Champagne and Bordeaux sector compensated for a historically poor harvest in 2017, which lead to a 2.7% fall in exported volumes.

Growth Driver

The main driver of the rise was the United States, where sales reached €3.2 billion, up 4.6% on 2017.

The US market is by far the largest overseas for French wines and spirits, representing nearly a quarter of all such exports.

In contrast, exports to China tumbled 14.4% in 2018 to €1 billion after growing 24.5% a year earlier.

That fall was largely offset by an 8.3% rise in exports to Singapore, at €901 million, and to Hong Kong, up 12.3% at €556 million.

Both cities are used as logistics hubs to supply the Chinese market, FEVS Chairman Antoine Leccia told Reuters.

"Taking into account these hubs that are Hong Kong and Singapore, exports are almost stable," he said.

Strong Sales

Large French cognac groups like Pernod Ricard (Martell), LVMH (Hennessy) and Remy Cointreau (Remy Martin) have reported strong sales to China last year.

Wine exports dropped 4.6% in volume after repeated bad weather including frosts and storms cut output to a record low in 2017 but lower availability pushed up prices, so that exports gained 2.6% in value to €8.9 billion.

Spirits exports continued to grow, with sales up 1.8% to €4.3 billion, still driven by cognac, exports of which rose 1.7% in value last year to €3.1 billion.

That was nevertheless much slower than the 10.8% growth posted a year earlier.

Outlook

Looking ahead, wine and spirits exporters remain confident despite international trade turmoil and uncertainty about Britain's impending exit from the European Union.

"Exports are expected to rise again in China and the United States have remarkable fundamentals," Leccia said.

Like many others French wine and spirits exporters have been preparing for an abrupt no-deal Brexit by building up stockpiles in Britain. Some have reserves to last until September, six month after the country is due to leave the EU.

Every day, about 200 wine and spirits trucks are crossing the border between France and the UK, Leccia said.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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