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Demystifying the Tariffs on French, Spanish and German Wine...

Dear Friends of Amanti Vino,


I have enjoyed talking to so many of you about the recent imposition of tariffs on a variety of wines from some of our favorite wine producing countries and was encouraged to share my insights on what wines are likely to be affected and how this will affect wine consumers.  Feel free to contact us with any feedback, comments or questions!




25% Tariff on French, Spanish and German Wine: What does this mean for you?


About the Tariff:
As of October 18, 2019, the current Administration has imposed a 25% tariff on all wine imported from France, Germany and Spain other than Sparkling wine and wine with alcohol of 14.1% or higher.  The tariff also applies to Scotch Whisky and Italian cheese.  Note that this fee is charged to Distributors on shipments arriving after 10/18/19 so wine already in this country prior to that date is NOT subject to the tariff.  No one knows how long the tariff will be in effect but it could last anywhere from months to years.  The tariff was implemented as a result of an arbitration settlement with the World Trade Organization in its dispute with the EU regarding illegal Airbus subsidies totaling $7.5 billion.


Which regions will be most affected:
Most table wine has historically been in the range of 11-14% Alcohol By Volume (ABV).  That said, some regions tend to have alcohol that is a bit higher than that level.  For example, most of the Rhone and Bordeaux see alcohol levels of 14.1% or more so most of those wines should be unaffected.  Wines from Burgundy, the Loire, Alsace and the Jura, on the other hand, almost never see alcohol levels anywhere close to 14%.  The same can be said for all German wines.  In Spain, regions such as Rioja, Rueda and Rias Baixas also tend to be below 14.1% ABV so will be subject to the 25% tariff.


Who pays the tariff and when:
The tariff gets paid by the importers or distributors who bring wine into the United States after October 18, 2019 but only when they subsequently remove it from a bonded storage area within a warehouse (to sell to a restaurant or retailer).  So, if a Distributor chooses to bring wine into the USA but hold it until the tariff has been eliminated in bonded storage, no tariff would need to be paid.  This is important because if a Distributor has sufficient stock of a wine but doesn’t want to “miss out” on the new vintage, he or she could decide to bring the wine into the US but not list it for sale.


The Distributor/Importer response:
This has been fascinating.  I have heard every response across the board including:


1) We will not raise prices until January, 2020 at the earliest.

2) We are splitting the tariff with producers so there will be no increase in prices

3) We are increasing prices on all wines in our book by a few percentage points to protect the tariff-affected wines from getting hit by the entire 25%

4) We are asking our producers to add 0.5% ABV to their labels such that they can label at 14.1% or higher and be exempt from the tariff.  Note that EU producers are permitted to report alcohol within 0.5% of actual which historically was helpful for tax purposes.  Wines under 14% alcohol are subject to a lower tax rate than wines over 14% ABV.

4) If I have to pay a tariff, I will pay it and add my margin to it.  This would mean prices would increase 50% or more.  (Fortunately, not many Distributors have taken this stance.)


What does this mean for Amanti Vino?
To be honest, the verdict is still out.  I do fear that prices for some of our favorite wines, from Beaujolais and Chinon to Burgundy and Alsace, will increase.  My hope is that all or part of the tariff will be covered by producers and Importers/Distributors.  But I do expect to see prices going up at least nominally.  For example, if the average price of a bottle of Sancerre today is $24.99, the most you would expect to see the price increase to is $31/bottle.  But I think $2-3 increases are more likely.


What is Amanti Vino doing about this?
My first action as soon as I read about the tariff was to start a dialogue with literally every one of my importers.  The ones who are helping to mitigate the cost of the tariff will get much more of my business than those who simply plan on passing the full tariff on to us.  I have also increased my inventory substantially and will hold prices for as long as I possibly can.  As I see increases coming, I will do my best to let customers know when to stock up.  I have reached out to lobbyists but so far have not found any interested in fighting this battle.  If all else fails, and you are on a budget, I will work with you to find suitable alternatives for the lower alcohol wines we love from tariff-affected regions.  We will endeavor to offer the same level of service as we always have. 


So what does the tariff mean to you?  You may see a slight increase in prices on a few wines but trust that we will do everything within our power to keep prices constant and to find alternatives to match your budget.


Thanks for reading,

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