Big Cognac Houses Struggle in China

Phthalate ruling may change

All of the big cognac houses have seen their profits in China fall lately.  This is thanks not only to the Chinese government’s restrictions on luxury gifts but also to its refusal to accept cognac containing even minimal levels of phthalates.  The latter has become a real problem for the industry as most aged cognacs have passed through phthalate-laden plastic pipes at some point in their lives.  The levels allowed in China are currently far more stringent than the rest of the world but according to a member of the BNIC Board, this is set to change.  There is real optimism that by the end of this year the Chinese phthalate regulations will reflect the European ones.  Undoubtedly this will boost the waning Chinese market, which the ‘Big Four’ in particular continue to pursue, as the supply chain will become more accessible.