French wine and spirits exports shrug off weak China to hit record in 2018

[PARIS] French wine and spirits exports topped 13 billion euros (S$19.9 billion) for the first time in 2018 even though shipments to China fell sharply as its economy slowed and trade tensions rose, exporters group FEVS said on Wednesday.

Sales abroad of wines and spirits - France's second-biggest export after aerospace - rose 2.4 per cent in value to a new record of 13.2 billion euros, the Federation of French Wines and Spirit Exporters said.

A premium branding strategy in the Cognac, Champagne and Bordeaux sector compensated for a historically poor harvest in 2017, which lead to a 2.7 per cent fall in exported volumes.

The main driver of the rise was the United States, where sales reached 3.2 billion euros, up 4.6 per cent on 2017. The US market is by far the largest overseas for French wines and spirits, representing nearly a quarter of all such exports.

In contrast, exports to China tumbled 14.4 per cent in 2018 to 1 billion euros after growing 24.5 per cent a year earlier.

That fall was largely offset by an 8.3 per cent rise in exports to Singapore, at 901 million euros, and to Hong Kong, up 12.3 per cent at 556 million euros. Both cities are used as logistics hubs to supply the Chinese market, FEVS Chairman Antoine Leccia told Reuters.

"Taking into account these hubs that are Hong Kong and Singapore, exports are almost stable," he said.

Large French cognac groups like Pernod Ricard (Martell), LVMH (Hennessy) and Remy Cointreau (Remy Martin) have reported strong sales to China last year.

Wine exports dropped 4.6 per cent in volume after repeated bad weather including frosts and storms cut output to a record low in 2017 but lower availability pushed up prices, so that exports gained 2.6 per cent in value to 8.9 billion euros.

Spirits exports continued to grow, with sales up 1.8 per cent to 4.3 billion euros, still driven by cognac, exports of which rose 1.7 per cent in value last year to 3.1 billion euros. That was nevertheless much slower than the 10.8 per cent growth posted a year earlier.

Looking ahead, wine and spirits exporters remain confident despite international trade turmoil and uncertainty about Britain's impending exit from the European Union.

"Exports are expected to rise again in China and the United States have remarkable fundamentals," Mr Leccia said.

Like many others French wine and spirits exporters have been preparing for an abrupt no-deal Brexit by building up stockpiles in Britain. Some have reserves to last until September, six month after the country is due to leave the EU.

Every day, about 200 wine and spirits trucks are crossing the border between France and the UK, Mr Leccia said.

REUTERS

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