February 12, 2020 / 10:36 AM / 5 days ago

French wine and spirits exports hit record in 2019, tougher year looms

PARIS (Reuters) - French wine and spirits exports hit a record in 2019 as exporters booked sales ahead of U.S. tariffs and Brexit but the business faces a tougher year in 2020, industry group FEVS said.

FILE PHOTO: Bottles of French red wine are displayed at the Chateau du Pavillon in Sainte-Croix-Du-Mont, France, July 29, 2019. REUTERS/Regis Duvignau

Sales abroad of wines and spirits — France’s second-biggest export after the aerospace industry — rose 5.9% in value to a record 14 billion euros (£11.8 billion), the Federation of French Wines and Spirit Exporters (FEVS) said on Wednesday.

Shipments to the United States, by far the largest overseas market for French wines and spirits and one which represents nearly a quarter of all such exports, rose 16% to 3.7 billion euros in 2019, with volumes rising 5.5%.

The United States imposed 25% duties last year on an array of European goods including French wine and European cheeses, as part of Washington’s response to illegal EU aircraft subsidies.

Uncertainty about the date and conditions of Britain’s exit from the European Union also prompted people to buy stocks ahead of time. This led to a 4.4% rise in sales in 2019 to 1.4 billion euros, FEVS said. Britain is the second biggest export market for French wines and spirits.

“This positive result in 2019 should not mislead us: trade and international political tensions have weighed heavily on exports of French wines and spirits companies and herald a difficult 2020 year,” FEVS President Antoine Leccia said in a statement, saying the U.S. market was the most worrying.

U.S. tariffs, which came into effect on Oct. 18, led to a 17.5% drop in French still wine exports in bottle in the last quarter of 2019, amounting 40 million euros in lost sales, FEVS said.

“The arbitrary sanctions that have affected our sector since Oct. 18 threatens our development on the world’s leading market, which will have a heavy impact on exporting companies and, more broadly, on the 500,000 players in the wine sector,” FEVS said.

In contrast, sales to China fell 4.7% last year to 953,000 euros, FEVS said, adding that sales to Hong Kong dropped 9.4%. The trade body cited a slowdown in the economy and political tensions in last year.

Champagne sales, which had been threatened by U.S. tariffs last year in retaliation for France’s digital tax, were nearly stable in volume but rose 7.5% in value to 3.1 billion euros.

Cognac sales, by far the largest spirits exports, jumped 11.4% to 3.5 billion euros.

Reporting by Sybille de La Hamaide; Editing by Sudip Kar-Gupta and Edmund Blair

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