French wine exports soared in 2019, but it wasn't good news

A combination of Brexit and US tariffs saw stockpiling of French wines and spirits in 2019 - but the outlook for 2020 isn't so rosy.

Photo by Robson Hatsukami Morgan on Unsplash
Photo by Robson Hatsukami Morgan on Unsplash

Exports of French wine and spirits soared by 5.9% in 2019 – but not because of positive trends. Doom, gloom and uncertainty led to US importers panic buying French wine in 2019, resulting in a record year for French wine exports. 

“The 2019 positive result must not be misinterpreted,” said Antoine Leccia, president of the Fédération des Exportateurs de Vins & Spiriteux de France (FEVS), in a statement that accompanied FEVS’ overview of 2019, adding that “2020 will be a challenging year.”

By the end of 2019, France had exported €14bn ($15.1bn) worth of wine and spirits. The gains were a result of the 25% US tariffs imposed in October, along with the uncertainty surrounding Brexit, which prompted wine and spirits companies to make large shipments, in order to get wines through customs before tariffs took effect or border enforcement changed. 

The first half of 2019, the FEVS report states, saw French wine and spirit exports to the US rise by 16% in value, and 5.5% in volume. The final quarter, after the tariffs were in place, saw those same exports drop by 17.5%.

Similarly, Brexit uncertainties caused French exports to the UK to rise by 4.4%, or €1.4bn.

The triple uncertainty of Brexit, the 25% tariff, and the COVID-19 outbreak in China has cast a gloomy outlook over 2020, not least because these three markets are the top export destinations for French wine and spirits. “The international environment creates a high-risk situation for our exports on our top three markets, these countries accounting alone for 50% of our overall sales,” said Leccia. 

The economic slowdown in China and political tension in Hong Kong caused French wine and spirits exports to Asia to drop by 3.1%. With the added impact of the coronavirus, exports are expected to continue to slide.

Not everything was gloomy. Exports to Japan increased by 10% after the EU-Japan Free Trade Agreement came into force in February 2019.  “Certainly, there are some reasons for satisfaction,” said Leccia.

However, Leccia called on the French government for help. “Without a prompt and significant action from public authorities, the sanctions will have even more impact in 2020,” he said, saying the government needed to create a €300m compensation fund.

Via press release

 

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