Trump tariffs on cognac are a French success story

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Paris (AFP)

Over the past decade, owners of cognac distilleries have seen their sales more than double in the United States, making their spirits one of the fastest growing major French exports. Then Donald Trump arrived.

While the French are light drinkers of cognac, Americans consume nearly one in two bottles produced in the vineyards north of Bordeaux, in part thanks to the alcohol promoted by American rappers as a symbol of wealth and luxury. .

And while millionaires like Snoop Dogg and Jay-Z will still be able to afford their beloved “yak,” many other Americans may find it out of reach after the 25% US import duty goes into effect Tuesday. .

The United States “is a rapidly developing and priority market for our industry, which is even showing growth this year despite the impact of Covid-19”, told AFP the director general of the institution of the BNIC cognac industry, Raphael Delpech.

The tariffs were confirmed by the Trump administration on New Year’s Eve, marking the latest trade salvo from the outgoing US president and further escalation of a long-standing transatlantic feud.

Cognac, which is to be taxed along with other grape-based spirits from France and Germany, is a collateral victim of a dispute between Washington and Europe over subsidies granted to their commercial aircraft manufacturers, Boeing and Airbus.

European wines, cheeses and olive oils have been subject to 25% import duties in the United States since October 2019, while Europe has hit products from American orange juice to ketchup with its own measures .

“All French wines and spirits, and not just cognac, are now affected by diplomatic tensions that have nothing to do with us,” said Delpech.

FEVS, an association of French exporters, estimated that the wine and spirits sector could lose more than one billion euros ($ 1.2 billion) per year in sales in the United States due to tariffs at less that the new president Joe Biden does not cancel them.

– “Sip Remy” –

The trade dispute has shown how reliant century-old cognac houses in Charente have become on America’s thirst for their products, some of which sell for hundreds of dollars.

The prospect of long-term tariffs brought back memories of the only major downturn the industry experienced in the past 20 years during the 2008-2009 global financial crisis.

The explosive growth since then – exports to the United States have doubled to over 100 million bottles a year – has been fueled by the unlikely marriage of conservative cognac dynasties in their turreted castles with the flashy world of hip hop. American.

Jay Z rapped about “sipping Remy on the rocks with my team” in his 1996 hit “Can’t Knock The Hustle”, while Busta Rhymes released “Pass The Courvoisier II” in 2001, a defining moment for industry.

Since then, big brands like Remy Martin, Hennessy, Courvoisier, Martell or Louis XIII have piled on business opportunities, forging partnerships with artists from Pharrell Williams, Nas, A $ AP Ferg, to Quavo.

Although popular with rappers, cognac is also popular and widely drunk in cocktails by Americans.

Delpech says the industry has built “a very strong bond with American consumers step by step over decades, investing heavily”.

– Short term pain? –

Jean-Pierre Cointreau, director of premium cognac house Maison Frapin, believes stocks in the United States are high enough that consumers do not see an immediate impact on prices.

And he hopes the new Biden administration, which includes many Francophile figures including next Secretary of State Antony Blinken, will work to reverse the tariffs.

“I tend to think that the French and American governments are determined to solve this problem,” he told AFP.

His company also has close ties to Asia, notably China, where cognac also benefits from its association with France’s luxury reputation.

“It makes this period very complicated,” Cointreau said of US tariffs, adding that bar and restaurant closures due to Covid-19 closures, as well as a reduction in duty-free and airline sales, were hitting the entire sector.

“There is an accumulation of problems which are very regrettable. ”

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