Pernod Ricard Takes a Hit in China, But Will It Be Enough to Save the Day?

Pernod Ricard SA, the French spirits giant, has just been dealt a blow in the ongoing trade war with China. The company has agreed to a minimum price undertaking as part of China’s MOFCOM Cognac Anti-Dumping investigation, a move that will undoubtedly increase the cost of operating in the Chinese market.

But here’s the thing: this is not the worst-case scenario. The provisional Anti-Dumping tariffs were significantly higher, and Pernod Ricard’s agreement to a minimum price undertaking is a clear victory for the company. However, the fact remains that China has imposed anti-dumping duties on European brandy, including Pernod Ricard’s products.

The exemptions for major cognac makers that meet a price commitment are a welcome relief, but they come with strings attached. Pernod Ricard will have to commit to a minimum price, which will undoubtedly eat into its profit margins. The question is, will this be enough to save the day?

The company’s stock price has remained relatively stable, with a slight decline of 0.11% compared to the previous day’s close. But this is not a cause for celebration. The fact that Pernod Ricard’s stock price has not taken a bigger hit is a testament to the company’s strong brand and loyal customer base.

However, the bigger picture is one of concern. French Minister Marc Ferracci has expressed his worries about the trade war, stating that “trade wars only make losers.” And he’s right. The ongoing trade tensions between the US, China, and Europe are a recipe for disaster, and Pernod Ricard is just one of many companies that will suffer as a result.

The Bottom Line

Pernod Ricard’s agreement to a minimum price undertaking is a temporary reprieve, but it’s not a solution to the underlying problem. The company will continue to face challenges in the Chinese market, and the ongoing trade war will only make things worse. The question is, what’s next for Pernod Ricard? Will the company be able to navigate these treacherous waters and come out on top, or will it become another casualty of the trade war?

Key Takeaways

• Pernod Ricard has agreed to a minimum price undertaking as part of China’s MOFCOM Cognac Anti-Dumping investigation
• The company’s stock price has remained relatively stable, with a slight decline of 0.11% compared to the previous day’s close
• French Minister Marc Ferracci has expressed concerns about the trade war, stating that “trade wars only make losers”
• The ongoing trade tensions between the US, China, and Europe are a recipe for disaster, and Pernod Ricard is just one of many companies that will suffer as a result