Questions on French wine tariffs!

wine tariff
Our post about the 25% tariff that will be imposed on the $.2.5 billion of wines imported from France, Spain and Germany as of October 18 raised some questions. We respond:

Rick: How do you suppose this will affect futures orders that are in place?

Dr. Vino: They will be hit by the 25% levy if they arrive in the US after October 18. This could lead to the smart collector’s money either (A) diverting toward wines already in the US that are available at auction (they have the added bonus of being perhaps more ready to drink) or (B) perhaps the merchant that sold you the future is prepared to hold off on taking delivery until the tariffs are called off. This trade dispute can’t go on forever, right?!

Carol: Since Italian wines are not hit by tariffs, will this be a Prosecco New Year’s Eve?
Dr. Vino: Maybe! Some champagne importers may have enough stock already landed to avoid having to raise prices by year end. Others may work with suppliers to mitigate price increases in the short term, again, hoping that the tariffs are eliminated relatively soon.

Carol, with a follow-up: So will wine prices be rising this holiday season? Can we say Trump raised the price of Champagne?
Dr. Vino: Well, if you are looking for a Grinch who stole your Christmas champers, then, yes! It is unclear if there will be price hikes on store shelves (and restaurant wine lists as soon as December). Many shops or restaurants could conceivably buy now to insulate themselves and distributor warehouses are probably pretty full in anticipation of both year-end madness and perhaps this tariff move. One rep I spoke with said their distributor is not expecting price hikes for six months. But who knows–others may not be as well positioned and have to pass these tariffs on to consumers sooner.

Juliette: so will French rosé next year be 25% more expensive?
Dr. Vino: If the issue remains unresolved and the tariffs are still in place, then yes. Any 2019 wine from these three countries would be impacted–even Beaujolais Nouveau!

Leslie: How exactly do the tariffs affect the auction market? If a past vintage passes from an affected EU country will that be subject to tariff? Do auction wines now become more valuable if they are unaffected by the tariffs?
Dr. Vino: Wines in the US before Oct 18 are not hit by tariffs. So, yes, there’s a chance that if futures buyers like Rick divert their funds to collectible wines that are slumbering in cellars across America now, then, yes, there could be a bump in the auction market for French (and German and Spanish) wines.

Okay, that’s all the questions for now. But I did want to reproduce the text of the directive on French wine tariffs (and Spanish and German and UK wine): “Wine other than Tokay (not carbonated), not over 14% alcohol, in containers not over two liters.”

So weird that wine over 14% alc gets a pass! I guess all that Chateauneuf du Pape gets a pass? To Juliette’s point above, maybe we will see some 14% alc roses? ? Also, game on for double mags of French wine!

Also, final fun fact: $16 million of wine was imported from the UK last year! I knew it was, uh, small beer, but that is actually more than I thought!

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