armagnac us tariffs

Armagnac: How US tariff relief poses long-term questions

04 May, 2021

“When I heard the news on December 30, I was very anxious because it was not good news at all, and it was a shame because our sales were going very well despite the pandemic,” says Lesgourgues.

“We’re now praying that it won’t just be for four or six months, but forever. When I heard the news about the deal between the UK and US I was hopeful that the EU would go in the same direction.”

In 2000 Lesgourgues’ father bought out their distributor in New York, which has provided the company with a much more flexible and adaptable approach in the US. Lesgourgues adds: “We are very fortunate to have our own subsidiary in New York and so we were at a huge advantage to other brands because we held immediate talks and didn’t have any orders cancelled. In the long run it would have been a real problem for us having the added 25%, but we were able to limit the impact.

“In the US we’ve actually seen a 43% increase in total sales in 2020 on the previous year, boosted by off-trade of course, which we’ve never seen before – the brandy category in the US is doing well right now.”

At the other side of the EU’s tug-of-war trade rope is Asia, with China remaining armagnac’s largest export market by volume, ahead of the US. However, China has also endured a similarly strained relationship with Europe over the past few months due to discrepancies over China’s human rights standards getting in the way of positive trade negotiations. President Xi Jinping is now pushing the EU hard to cooperate with China and show it more respect on the global trade map, but many armagnac producers have no time to waste and are looking to strike their own deals in the east as the US tariff spat continues across the Atlantic.

Tobiassen adds: “It is clear that the Biden administration wants to rebuild trade relationships with traditional allies. We [the US] have trust issues with Europe and right now there’s a bidding war between China and the US for rebuilding relationships with Europe and they have to decide what is the safest course.”

Jérôme Castledine, commercial director at Bordeneuve Châteaux & Collections, says: “The past 18 months we’ve had a real focus on Asia and it’s proven really successful. We’ve had the best start to the year we’ve had in a long, long time and it’s certainly not through the domestic market because that’s virtually dead – it’s the exports which are performing well. Volumes are up but also what they’re ordering is changing. “I find that the Asian market is a lot more open to armagnac. They love French products and the more craft they are the better and it’s much easier to work with them than it is with some of the more developed markets, which can feel like a constant battle at times.”

FOCUSED STRATEGY

One producer which sees China as a long-term target is Arton in the Haut region. The brand has been under new management since January with second-generation husband and wife team Jean and Lili de Montal taking over the reins from Jean’s father, Patrick.





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