In conclusion
Stakeholders in the American wine sector have differing views on the possible consequences of European wine tariffs, with California probably suffering the most.
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Depending on who you ask, California wine producers may benefit or suffer from European wine tariffs.
President Donald Trump is being urged by certain American winemakers, restaurateurs, and others to exempt wine from European goods tariffs, citing the importance of European wines to the health of local wineries.
However, not all wineries in California are on board. They contend that since European winemakers already receive subsidies, wine producers in expensive California are further disadvantaged by American businesses having to pay tariffs on virtually everything else, such as imported barrels, corks, and other supplies.
According to Natalie Collins, president of the California Association of Winegrape Growers, which has 650 members, some wine growers find it difficult to hear about other U.S. wine and hotel sector leaders advocating for zero-for-zero tariffs on European wines. According to her, Californian winemakers find it difficult to set their prices competitively with European wines.
Trump recently claimed to have secured a tariff agreement with the European Union, but specifics, such as potential exclusions, have not yet been made public. Although talks are allegedly ongoing, the EU maintains that wine is subject to the 15% tariffs that went into effect at the beginning of August. The American wine industry, which has been dealing with a number of issues, such as new research indicating that alcohol is unhealthy, declining demand, and rising expenses, is using this chance to request assistance.
According to Jason Haas, co-owner of Tablas Creek Vineyard in Paso Robles, we’ve witnessed a two-year trend of diminishing wine consumption in the United States for the first time in two generations. Less tourism, fewer winery visits, less online orders, and fewer restaurant and retail wholesaler sales are all signs of it, Haas continued.
According to the U.S. Wine Trade Alliance and other industry associations, the hundreds of thousands of restaurants, tens of thousands of wine stores, and thousands of wine importers and distributors will all suffer if wine prices in Europe increase due to tariffs. The state that could be most impacted is California, which leads the country in wine-related exports and tourism. According to industry association WineAmerica, California’s wine sector contributed over $88 billion to the state’s economy in 2022. The California Department of Food and Agriculture estimates that the state’s wine exports in 2022 came to $1.3 billion.
The 45-year-old Cain Vineyard & Winery in St. Helena, Napa Valley, is co-managed by Katie Lazar.
During a recent media briefing, Lazar echoed other winemakers who noted that growing grapes and producing wine takes years, saying, “We’re a long-term business.” The current state of turmoil poses an existential threat to our world since it takes the wine industry so long to respond and make changes.
According to winemakers such as Lazar, the distributors they depend on to market their wines require income from the sale of European wines as well. In an interview with CalMatters, she stated that the quantity of other wine they receive determines their capacity to distribute domestic wine.
The three-tiered structure of the majority of the U.S. alcohol industry was established after Prohibition was repealed. Distributors and retailers are the next layer after winemakers and producers. The uncertainty created by tariffs affects all three: Because some wine imports are on hold, distributors and retailers will make less money.
According to Matt Licklider, owner of LIOCO in Healdsburg, a winemaker that receives its grapes from numerous small vineyards in California, “I’ve never felt so interconnected as I feel now, even with competitors.” According to him, his winery sells to 40 wholesalers, some of which were unsure if they would receive income from imports due to tariff uncertainty. As a result, some of those distributors are placing less orders with him. According to Licklider, it has made distributors more cautious, which is detrimental to everyone involved.
Certain commodities, like wine, might be marked up to assist restaurants with extremely low margins stay in business. Restaurant markups have increased from two to three times to as much as five times the price of a bottle of wine, according to Licklider.
According to Paul Einbund, who owns two restaurants in the Bay Area, many of his patrons just refuse to consume domestic wine. At Sirene, his new restaurant in Oakland, and The Morris, his San Francisco restaurant, he does, however, serve some American wines alongside European wines.
The worst thing, according to Einblund, is not knowing what will happen next, particularly for small businesses who rely on attempting to purchase their goods at the lowest possible cost.
According to him, there are problems for people at every stage of the supply chain. The pre-tariff pricing communications that we were receiving have stopped. Currently, European producers do not sell to Americans. American wines are now not being purchased by European consumers.
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However, after 40 years of cultivating grapes in the Sacramento Delta and Lodi, Richard Samra stated that his primary concern is selling his crop to domestic wineries. He said it’s incredible that certain people in the wine business are requesting that competitors not be subject to tariffs.
Competition receives a lot of support, he noted. Recently, the European Commission authorized $5.6 billion to promote French wine and spirit exports to the United States. The European Union spends more than 1 billion euros a year to help boost European wine, and some countries have their own subsidy programs.
U.S. wine grape growers don t have that, Samra said.
We want to level the playing field. We have plenty of grapes and wine available for sale, Samra added. He said tens of thousands of acres of vines have beenpulled out in California as supply outstrips demand, and he expects that to keep growing. He said imports are a major factor: Profit margins for people are greater when they purchase a product from outside the U.S. and sell it here.
Yet, vintners like Haas, in Paso Robles, said he also worries about the relationships that he has cultivated for years and how they re being affected by the tariffs. Tablas, his winery, has lost all business in Canada this year.
There s certainly spillover effects in terms of other countries just being less wanting to support American products, because they feel like they re being bullied, Haas said.
Tablas only exports about 5% of what it produces, but Haas wanted to grow that this year. We did a lot of investment last year, and building up export markets, he said. And so to have it be down this year instead of up has certainly been a hit to us.
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