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January 15, 2020

How The 100 Percent Wine Tariff Threat Affects You

Post by South Lyndale Liqours

The Wine Tariff

Something pretty important is taking place in the wine industry right now. It has to do with tariffs. During a back and forth that started with a levied tax in response to EU subsidies granted to Airbus, the EU hit back with a French digital services tax aimed at Google, Facebook, Amazon and Apple.

What started out as a 25% tariff on select EU wines has escalated to a possible 100% tariff on wines (and other items-cheese, oils and the like) from Italy, France, Spain, Germany and any other EU members producing wine. That means more than just our favorite $10 Cava becoming a $20 Cava, it means the end of so much with very little gained.

Prices would go up, but vintners and industry analysts say the bigger threat is that many European wines would simply disappear from American store shelves. ~ Wine Spectator

Very few importers will have an interest bringing wines into the US if they are double the price. Especially wines that have proven successful. Do we love any wine so much we are willing to pay twice as much for it? And what distributor wants to make the argument that the wine is still worth the money? Americans consume roughly 30 million hectoliters of wine annually. California, which produces about 90% of all US wine, only produces 17 million gallons. GALLONS! A gallon is equal to .03 hectoliter. Where will we get the other 820 million gallons we consume?

On the upside new world countries like Chile, Australia, South Africa, New Zealand and Argentina are making some of the best wine they ever have! Oh! and Mexico and Canada.

How The 100 Percent Wine Tariff Threat Affects You

How it affects us

The immediate effect will be a narrower spectrum from which to buy. This is a sad thing as the last five years have shown that wine drinkers are the most experimental they’ve ever been. This is one of the most exciting and important statistics the wine industry can claim.  People are excited to try new things or just try their favorite varietal but from 7 different winegrowing regions.

Even more interesting, consumers are understanding why they like what they like. Is it carbonic maceration? Stem inclusion? French oak influences vs American? No oak? Neutral? Concrete?

Broader consenquences

The broader consequence will be that importers and distributors will go out of business. The wineries they represent will likely find new markets to sell their wines and once they are established in those markets would there be reason to return to the US? It could be catastrophic. Will the US collect any tax if no one is importing the items that are being taxed?

Certain wines have gone up in price already with importers, distributors and retailers working together to eat as much of the tariff as possible. But if 100% passes that won’t be an option.  Coverage of this issue has been relatively small, but could have an enormous impact. 100% tariffs would be the largest involvement of Washington in alcohol since Prohibition.

Irony is airplane (remember how this started? Airbus) and helicopter parts are exempt.

Learn more about wine tariffs

To learn more on this topic, you can visti these articles for in-depth converstion.

  1. Wine Spectator - What would 100% tariffs mean for you?
  2. Decanter - "Panic" over 100 percent wine tariff threat in U.S.
  3. Oregon Live - Import tariffs could cripple oregon's wine industry.

 

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