The French cognac industry, heavily reliant on the US market, saw a significant surge in shipments in December 2024. This increase comes as distributors stockpile inventory in anticipation of potential new tariffs under the incoming Trump administration, coupled with signs of recovering US market demand.
Import data from ImportYeti reveals that leading cognac producer Hennessy, owned by LVMH, boosted its US shipments by 17% compared to November and over 33% year-over-year. Similarly, Campari’s Courvoisier more than doubled its exports to the US in December, both month-over-month and year-over-year. This reflects a broader trend of increased US cognac exports in late 2024.
Two key factors are driving this surge: the threat of new tariffs and improved market conditions. President-elect Trump’s proposed 10% tariff on imported goods aims to reduce the US trade deficit. The European spirits industry faces potential further impact from retaliatory measures should a previous trade dispute with the EU resurface under Trump’s second term.
Simultaneously, the US luxury market shows signs of recovery. December marked the first positive growth in luxury brand spending via credit cards in over two years. Richemont, a Swiss luxury goods company, reported robust US sales in the final quarter of 2024. Barclays analysts also noted improvement for Hennessy in the US market, further supporting the positive trend.
In contrast to the US market, cognac exports to China, another significant market, plummeted by 75% in December 2024 compared to the previous year. This decline is attributed to weakened global demand, trade tensions, and a recent ban on cognac sales in Chinese duty-free shops.
This contrasting performance underscores the importance of the US market for French cognac producers. The industry is closely monitoring the evolving trade landscape under the new administration, as potential tariffs could significantly impact future growth. While the US market shows promise, challenges remain in navigating trade uncertainties and revitalizing demand in other key regions.
