News & Current Affairs
In early 2025, China imposed significant tariff increases on imported alcoholic beverages, notably whisky, brandy, and vermouth. These adjustments are expected to reshape global trade and impact distilleries that rely on Chinese consumers.
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Key Takeaways
China raised whisky and brandy tariffs, increasing the total tax burden from 48.31% to 55.38%.
Trade tensions with the U.S. and EU are a major factor behind the tariff hikes.
Companies like Pernod Ricard report declining Chinese sales amid economic challenges.
Distilleries must explore alternative markets and strategies to navigate the new trade landscape.
China’s New Tariff Structure
The Chinese government removed a provisional 5% tariff on whisky and brandy, reinstating the standard 10% most-favored-nation (MFN) tariff rate. This change increased the total tax burden from 48.31% plus 0.912 RMB per liter to 55.38% plus 0.912 RMB per liter.
For vermouth, tariffs on bottled imports surged from 14% to 30%, raising the total tax burden from 42.13% to 63.22%. These increases significantly affect producers targeting China’s high-demand spirits market.
Why China Raised Tariffs
The tariff hikes are widely seen as a response to ongoing trade disputes with the United States and the European Union. They may serve as retaliatory measures against tariffs imposed on Chinese goods and reflect broader economic strategies to protect domestic industries. As trade tensions persist, global beverage companies must navigate an increasingly challenging Chinese market.
Markets Most Affected
European Producers
France, Spain, and Italy, which account for 65% of the world’s vermouth exports, now face higher costs when exporting to China. French Cognac producers, already hit by a 23.8% drop in shipments to China in 2024, are bracing for further declines. The whisky industry in Scotland and Ireland may also feel the strain as China is a key market for premium imports.
Emerging Markets Gaining Advantage
Australia, Chile, and Georgia remain unaffected by the tariff hikes due to free trade agreements with China. This could shift consumer preference toward spirits from these nations, benefiting brands that already have a foothold in China’s growing spirits market.
The Impact on Global Distilleries
Rising Costs and Declining Demand
Higher tariffs translate into higher retail prices, which may dampen demand for imported whisky in China. Distillers, particularly those reliant on Chinese sales, could see a decline in shipments as consumers turn to domestic alternatives or tariff-exempt imports.
Industry Reactions
Pernod Ricard, a major player in the whisky and brandy market, reported a 25% drop in sales in China during the first half of its 2025 financial year. The company attributed this decline to weak consumer demand and the challenging economic environment created by the tariff hikes.
Strategic Adjustments
With higher costs in China, distilleries may need to refocus on markets with lower trade barriers or explore local production options to mitigate the impact of tariffs. Some companies might also shift marketing efforts to promote premiumization, encouraging affluent consumers to continue purchasing imported spirits despite higher prices.
What’s Next for the Industry?
China’s tariff increases signal potential long-term shifts in the global whisky trade. As distilleries reassess their strategies, they must weigh the risks of the Chinese market against opportunities in emerging regions. While some brands may endure short-term losses, others could pivot successfully, capitalizing on changing consumer preferences and alternative market dynamics.
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