The world’s largest Cognac maker is stepping up its investments in China as it remains upbeat on the company’s long-term growth prospects in the country, a top executive said. Frederic Noyere, managing director of LVMH-Moet Hennessy Diageo China, said he believes that in the future, the wine market in China will center on consumption by the emerging middle class. Already the company’s second-largest market after the United States, China will play a major role in the French firm’s business, Noyere said…Full Article: ECNS.cn Feb 2016

Key Point

  • In January 2016, Hennessy began selling its liquors on JD.com as part of its e-commerce/online growth strategy.

ChinaAg Comments

  • In October 2015, LVMH’s Moet Hennessy spirits division stated that Chinese demand for their cognac had improved slightly.
  • In 2014, Hong Kong imported 4.8 million liters of brandy/cognac and exported 1.9 million liters to mainland China, equating to a 40% re-export rate. From 2010 to 2014, total re-export volumes averaged 43% of all imports. The top supplier was France, while Singapore was a strong secondary supplier. However, nearly all of Singapore’s brandy/cognac supply originated from France, meaning that a fair amount of French cognac was re-exported twice (by Singapore and Hong Kong) before reaching the mainland. In 2014, Hong Kong brandy/cognac imports were valued at US$215 million. Impressive as this figure is, Hong Kong’s brandy/cognac re-export market has been stagnant due in part to Xi Jinping’s anti-corruption and anti-extravagance campaign. Launched in November 2012, the austerity campaign has had a dampening effect on the consumption of high-end liquors within China.

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