Published by Global Banking and Finance Review
Posted on January 17, 2025
By Tassilo Hummel
PARIS (Reuters) - French cognac makers increased shipments to the United States in December, trade data showed, as distributors fill up their stocks to prepare for possible new tariffs while demand in the country shows signs of improvement.
France's cognac industry is particularly exposed to the U.S. market, its biggest by volume, and memories of a trade dispute in President-elect Donald Trump's first term sparked fears it could return.
LVMH's Hennessy, the largest producer, increased the amount of cognac it delivered by 17% compared with last month and by more than a third when compared to the same month the year before, U.S. import records from ImportYeti showed.
Campari-owned Courvoisier more than doubled its exports to the country in December from both the previous month and the same month last year.
Hennessy declined to comment while Campari did not immediately reply to a Reuters request for comment.
The data was part of a wider pattern of increased U.S. cognac exports at the end of 2024, an industry source said on Friday, driven by the prospect of additional tariffs under incoming President Donald Trump and a general market improvement.
Trump has threatened to impose across-the-board tariffs of 10% on foreign-made goods in a bid to eliminate the country's trade deficit. Europe's spirits industry could be hit even harder by possible additional retaliatory measures should an old trade dispute between the U.S. and the European Union from Trump's first presidential term flare up.
Meanwhile, demand for luxury goods in the U.S. showed signs of improvement.
U.S. credit card spending on luxury brands in December turned positive for the first time in more than two years, while Swiss jewellery and watchmaker Richemont reported strong U.S. sales in the last quarter of 2024.
Barclays analysts also flagged a positive trend, saying in a recent note that LVMH's wines and spirits division has "started to see some improvement for Hennessy in the US."
France's cognac industry was hit in 2024 by weak global demand and trade tensions with China, another major market.
Cognac exports to China dropped by 75% in December compared with last year, the industry source said, adding that a recent ban of cognac products from all duty-free sales points also weighed.
(Reporting by Tassilo Hummel, additional reporting by Emma Rumney,; Editing by Louise Heavens)
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