For decades, consumer indifference was the greatest threat to the US market for German wines. Now, just as German wines look more likely than ever to gain traction among a new generation of American consumers, a set of powerful forces threatens derailment.
As Karl Storchmann of the American Association of Wine Economists explains, the 25% tariff imposed by the US on still wines under 14% abv affects German wines disproportionately because most fall into this category, with few workaround options. Covid-19 and its devastating effect on US bars and restaurants, coupled with political uncertainty, has made the US a less attractive market, while competition from northern European markets is a further significant challenge.
It’s a best of times, worst of times scenario: The positive effects of climate change on German growing conditions have boosted wine quality. A generational shift among producers is intersecting with a new openness among consumers to the varietal and stylistic diversity of German wines. And an expanded range of importers is dedicated to bringing these into the US and savvy at communicating their virtues.
The US perspective
“It’s the best time to be buying German wine — if you forget that we live on planet Earth,” says Lyle Fass of Fass Selections, an importer and direct-to-consumer retailer.
“Market uncertainty is the biggest issue we face now,” notes Kevin Pike of Schatzi Wines. “The US seems exceptionally fragmented, with each of us dealing with varying threats, from the pandemic and economic downturn to existential questions about what our industry will look like on the other side of all this.” He says his focus has been on “keeping bread and butter wines in stock at prices that will sell”.
Jenna Fields, president of importer The German Wine Collection, says her challenge “is figuring out how to pivot on a daily basis to support bars and restaurants as much as possible while hanging on tight to retail relationships, which are more important than ever.” Her end goal, she says, is to figure out how to ensure German producers still value the US as a top market for their wines.
Gabriel Clary, portfolio director of German, Austrian and Champagne at Skurnik, says despite taking “serious reductions” and a helpful stance from his producers, pricing has crept up. At the lower end of the price spectrum, “a 10% or 15% price increase one vintage to the next turns a lot of people off".
The closure or uncertain future of so many American restaurants has hit German wines particularly hard, as by-the-glass placements and on-premise communication are often essential to getting these niche wines into consumers’ hands.
But Fass sees household restaurant budgets being redirected to at-home wine budgets. Fields agrees, saying, “I think people are depleting their cellars. Those who track the high-end wines are still going to want the current vintage and to replenish their cellars.”
Stephen Bitterolf of Vom Boden says he has “not done that much less volume this year than last. I focus on very small estates and I’m used to allocating them between retail and restaurants. I’ve seen that retail can kind of take everything.” Still, he acknowledges: “The US is no longer the place everyone has to be, wants to be. Part of it is the natural rise and fall of things. Part of it is producers looking for more stability, and the US proving not to be that.”
Interest elsewhere
A steady rise in German wine imports by Scandinavia and the Benelux countries combined put them neck and neck with US imports for the first time in 2018, the latest year for which official figures are available.
Fields has already noticed smaller allocations from producers “who are putting more effort into other markets because of all the uncertainty here. We have even seen a grower let the US market sit empty of their wines until they see what happens with the presidency, tariffs, everything else. To have anyone write off the US so quickly just shows how serious a situation we’re in.”
If one thing is clear, it is that the outcome of the November presidential elections and the pandemic’s trajectory have the potential to leave a lasting imprint on the American market for German wines.
Valerie Kathawala
Valerie Kathawala also writes for the website of Schatzi Wines, featured in this article.
