(Boursier.com) — Remy Cointreau And Pernod Ricard return timidly after their dark session on Friday. The two spirits groups respectively lost 12% and 3.6% during the last session after the announcement by the Chinese Ministry of Commerce of the launch of an anti-competitive investigation into wine spirits, as cognac, imported from the European Union. The investigation by Chinese authorities followed a complaint from the China Alcoholic Beverage Association on behalf of the local wine spirits industry, the ministry said. Oddo BHF considers that the market reaction was excessive given the persistent uncertainties surrounding the nature of these restrictions which, at this stage, remains unknown.
If these restrictions take the form of tariff barriers, this could affect the growth potential of the Chinese cognac market via two main channels: a negative volume effect due to an increase in the price of cognac within market pockets already conquered by the spirit French (ie the so-called “tier 1” cities of Hong Kong, Shanghai and Beijing); and an erosion of the penetration potential of so-called “tier 2” cities which are at the heart of the development strategy of the cognac sector on the Chinese market. As it stands, given the lack of indication on the nature and therefore the real scope of said restrictive measures, the analyst remains to ‘outperform’ on the two French groups.
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