(Yicai) Jan. 8 -- China's Ministry of Commerce has started an anti-dumping investigation into brandy imported from the European Union.

The investigation follows a Nov. 30 application from the China Alcoholic Drinks Association on behalf of the domestic brandy industry for a probe of brandy in containers of less than 200 litres from the EU, the ministry said on Jan. 5. Preliminary evidence shows that the dumping margin on EU brandy exports to China is about 15.9 percent, it added.

In response, France’s cognac industry association, the Bureau National Interprofessionnel du Cognac, said: “We are confident that our products and commercial practices fully comply with Chinese and international regulations and that EU and China will find a constructive way to resolve any bilateral disputes.”

The producers under investigation include France's Rémy Cointreau, Pernod Ricard, and luxury brand Louis Vuitton Moet Hennessy, owner of Hennessy cognac, Yicai learned.

Shares of Rémy Cointreau [NASDAQ: REMYY] plunged 12 percent to close at USD10.50 apiece on Jan. 5, while LVMH [ENX: LVMHF] ended 1.3 percent lower at USD753 per share.

Any tariffs imposed on Chinese exports will negatively impact cognac producers, and the investigation will hang over the industry for at least six months, noted Trevor Stirling, managing director of European beverages at Bernstein.

The dumping investigatory period covers Oct. 1, 2022 to Sept. 30 of last year, and the industry injury investigation period covers Jan. 1, 2019 to the same date. The probes should be concluded by Jan. 5, 2025 and may be extended for six months under special circumstances.

“The European Commission was assessing documentation received from Chinese authorities and will intervene as appropriate, in close cooperation with EU liquor companies," according to Olof Gill, spokesman for the European Commission trade and agriculture.

“We are now assessing the documentation we have received, and will intervene in the framework of the investigation, as appropriate, in close cooperation with the EU industry concerned,” said Olof Gill, the European Commission’s spokesperson for trade and agriculture.

The CADA’s application shows that from 2019 to 2022, the demand for brandy in China remained robust at 72,048 tons, 56,829 tons, 69,004 tons, and 57,166 tons each year, respectively. The share of EU brandy in the Chinese market also jumped to 49 percent from 43 percent in 2022.

EU brandy imports rose 23 percent to 22,768 tons in the nine months ended Sept. 30 from a year earlier, according to Chinese customs data. The figure jumped 30 percent in the third quarter of last year from the second quarter and 70 percent in the second quarter from the first.

Editors: Shi Yi, Martin Kadiev