French cognac sales down as China exports fall

 

Worldwide sales of cognac fell in 2013-14 largely due to a drop in exports to China, France's main trade body for the brandy said.

Sales for the year to August were down 6.7 percent by volume and 10.2 percent by value, the National Interprofessional Bureau of Cognac (BNIC) said Tuesday.

While exports to Asia generally remained strong, with 49.2 million bottles shipped and a turnover of nearly one billion euros ($1.3 billion), exports to the Far East (Kuala Lumpur: 5029.KL - news) were depressed, dropping by about one-fifth, BNIC said in a statement.

In the Chinese market, orders have fallen back for "all high value-added products", it said.

An anti-corruption drive launched by China in late 2012 cracked down on ostentatious consumption, putting a damper on sales of high-end wines and liquors.

But the industry blames the slowdown in China on a large build-up of stocks by retailers there, rather than a sign of well-heeled consumers turning away from cognac, which is considered a prestigious libation and is frequently used to toast business deals in the People's Republic.

Hermes is another French luxury products group that has suffered from China's clampdown on showy business entertainment and extravagant gift-giving.

Known particularly for silk scarves and handbags, Hermes reported that sales slowed in the second quarter of the year.

"Shipments for this new campaign totalled 155.5 million bottles... with a turnover that is still high at 2.2 billion euros," BNIC said in a statement.

Despite the downturn, cognac has enjoyed a third record year, with a "good dynamic" in North America, where volume rose 6.0 percent, mainly with strong sales to the United States, the top customer with orders of 54.1 million bottles.

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