Oct 8 (Reuters) - Shares of French spirits makers fell early on Tuesday after China announced provisional anti-dumping measures on brandy imports from the European Union.
From Friday, importers will be required to provide a security deposit to Chinese customs when importing relevant brandies originating in the EU, an about-turn after Beijing recently said it would not impose provisional tariffs.
The announcement comes after the EU pressed ahead with tariffs on Chinese-made EV following a split vote.
Pernod Ricard shares fell 4%, while those of Remy Cointreau had lost 8.3% by 0750 GMT, on track for their worst single-day drops in 11 and 10 months respectively. The losses have so far wiped roughly a combined 1.7 billion euros ($1.9 billion) off their market values.
Neither company was immediately available to comment.
Jefferies analysts estimated in a note to clients that the tariffs could translate into a 20% consumer price increase, which in turn would probably turn into a 20% decline in volume and supplier sales.
"Pernod Ricard is the only player in China with access to a full spirits portfolio with integrated distribution, which should allow it to better navigate this uncertain environment," the analysts added.
Hennessy cognac maker LVMH dropped 4.3% amid a wider sell-off in luxury stocks, as Hermes, Kering, Ferragamo and Burberry lost 2.4%-6.8% on concerns the tariffs might spill over to luxury items and cars.
"There is a fear that, after brandy, it will be the turn of the luxury sector and cars. Every time there is a change in China's customs regulations there is a negative response in the most export-exposed sectors", a Milan-based trader said.
Separately on Tuesday, China's markets lost steam after opening on a high following a week-long break, as officials refrained from introducing stronger fiscal steps, disappointing investors who had banked on more support for the economy.
($1 = 0.9102 euros)
Reporting by Leo Marchandon; Additional reporting by Giancarlo Navach; Editing by Mark Potter
Source: Reuters