Hennessy, a subsidiary of the LVMH group, is putting on hold its controversial project to relocate cognac bottling to China. A decision which comes after a massive mobilization of its employees in Cognac.
Hennessy's reaction to Chinese surcharges
Since October 11, China has imposed strict measures on European importers of brandies, including cognac, which represents 95% of exports concerned. Beijing requires a deposit or bank guarantee equivalent to 34% to 39% of the value of the goods for any shipment in bottles of less than 200 liters. This measure, justified by an anti-dumping investigation, is seen as a direct response to the 35% surcharges introduced by the European Union on Chinese electric vehicles.
To get around these restrictions, Hennessy proposed a pilot project: exporting its cognac in bulk and bottling it in China via a local subcontractor. According to management, this initiative would have made it possible to maintain the company's competitiveness on the Chinese market, which represents 25% of its exports. But this idea immediately aroused the anger of employees, worried about the future of their jobs and local production.
On November 19 and 20, nearly 600 Hennessy employees participated in a historic strike. Supported by unions and joined by workers from Verallia, the main supplier of glass bottles, they demonstrated in front of the company's headquarters in Cognac. Yvan Biais, CGT delegate, denounced a “sword of Damocles” hanging over employees and possible long-term relocation.
Social mobilization and suspension of the project
Faced with this pressure, Hennessy management announced, on November 25, the temporary suspension of its project. « The house closely follows developments in the political and diplomatic situation », indicated the company, while specifying that the production of cognac, from harvest to assembly, would remain anchored in Cognac. The press release also denies any intention to relocate activities to France.
However, for the unions, this suspension does not mean definitive abandonment. “ The project remains on hold. We remain mobilized », declared Matthieu Devers, CGT representative, confirming a day of action planned in Cognac.
The cognac industry, which employs 72,500 people in France, depends almost exclusively on exports, representing 98% of sales. If the United States remains the leading market (38%), China occupies a strategic place with 25% of shipments.
This commercial standoff between the European Union and Beijing highlights the fragility of this industry in the face of international tensions. While the EU has contacted the World Trade Organization to challenge Chinese practices, the suspension of the Hennessy project offers respite to its employees, but leaves uncertainty over the future of the sector.
