French wineries hit hard by US wine tariffs

French wineries are considering their options as their trade with the US collapses, while other Europeans watch the situation anxiously. Sophie Kevany reports.

Photo by Erwan Hesry on Unsplash
Photo by Erwan Hesry on Unsplash

The 25% tariff imposed by America on various European products, including still wines from France, Germany, Spain and the UK, has collapsed orders for many producers. 

The tariffs were imposed by the US after the World Trade Organisation ruled that those countries had failed to eradicate illegal state support for certain aeroplanes built by Airbus. 

At the family run vineyard, Domaine La Colombette in southern France, Sophie Pugibet said the effect was instant. “Basically we have had no orders since the tariffs were imposed on October 18th. From one day to the next they stopped. American retailers are just emptying their stocks.” 

Luckily Pugibet, who sells about one third of the family’s wines to the US, has committed importers. “We had our American buyers here this week and with them we agreed to split the tariff, we will lower our price and they will lower their cut to preserve the market.”

Looking ahead, Pugibet was downbeat. “Our buyers said they would not be shocked if it [the tariff] continued, nor if it went to 100%.” 

With that in mind, Pugibet is exploring other routes to market. “We are considering shipping our wine to the US in bulk and bottling it there. It’s not an easy option, but we at least need to explore it.”

Meanwhile, in Bordeaux, a region synonymous with wine for many Americans, a spokesperson for the area’s producers said the latest sales figures for November 2019 show US exports down 24% in volume and 46% in value. 

Asked about the outlook, the spokesperson said the focus is on the French state taking responsibility for the situation. “For the whole of France that loss currently stands at €300 million,” she said, citing a joint statement from two national federations that represent French winegrowers and exporters. The two entities are currently asking for that sum to be released to growers as an emergency compensation measure. 

At Bordeaux chateaux level, director of second growth vineyard, Dauzac, Laurent Fortin said their sales are down 30% by value since the tariffs were imposed. 

In Spain, concerns are just as high, although one of the country’s best-known wines has been lucky to date. 

“We sell about 16% to 18% of our production to the US,” said Dominio de Pingus spokesperson, Paula de Santiago. “We are not affected by the tariffs for the moment because our wines are over 14 degrees of alcohol. The tariff applies to still wines under 14 degrees.” 

Precautionary measures were still taken, however, with their importer, The Rare Wine Company, collecting the latest 2017 release early. Now the focus is on Pingus 2018, due for release June or July.

“We are concerned the tariff will be expanded. The worst-case scenario is that it goes to 100% and that it applies to wines up to 16 degrees of alcohol,” Santiago said. 

There are fears too of a geographical expansion. In Portugal, general manager for port maker Niepoort, José Teles, is watching the situation closely. 

“For now the tariff does not apply to us since Portugal was not involved in the Airbus project,” he said. But, he understand there is a chance tariffs could be applied to all European wines. 

“The US is a small export market for us, about 7% of our sales, but it is growing. And we have been investing in it,” Teles said. “So yes, we are concerned.”

Sophie Kevany

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