Tag Archives: wine tariff

Wine prices 2021

wine prices 2021Wine prices 2021 will defy the law of supply and demand, and we’ll suffer with more overpriced, mass-market wines

This is the first of two parts looking at wine prices and wine trends in 2021. Today, Part I: Wine prices 2021. Monday, Part II: Wine trends 2021.

Anyone who says they know what wine prices 2021 will do is guessing, at best – the Wine Curmudgeon included. How else to explain a wine world which continues to deny the existence of the law of supply and demand?

That’s because we saw demand continue to decline in 2020, supply continue to increase, and prices refuse to follow along. In fact, some prices increased, and that had nothing to do with the tariff, but producers and importers trying to take advantage of the last gasps of premiumization.

Or is this premiumization’s last gasp? I’ve been writing about the end of premiumization for a couple of years (and I’m not the only one), but it’s still with us in all its irritation and aggravation. I’m beginning to think that the oligopoly structure of the post-modern wine business, with a handful of companies controlling production, wholesaling, and retailing means that prices will do what the oligopoly wants, and not what they should do. If the oligopoly wants premiumization, then we’re going to have premiumization, and that means more overpriced, mass-produced, flabby, and boring supermarket-style wines.

And it looks like the oligopoly does. How else do you explain paying $15 for Italian wine, which isn’t included in the tariff, that costs one-third that much in Italy? Or $15 and $20 California labels, where the bulk grapes used to make the wine may have cost as little as $1 per bottle? Or $20 Washington wines when the state is awash in bulk grapes? Or all those French roses that cost two and three times as much as something like this – even though the former have much the same grape cost?

So if I had to make one prediction for wine prices 2021, it’s not to expect any price relief. For one thing, the tariff isn’t going away any time soon. That not only raises the price of most French, Spanish, and German wines, but gives producers elsewhere an excuse to raise their prices. Ironically, I asked several experts about this possibility when the tariff took effect in 2019, and was told no producer would be stupid enough to raise prices to take advantage of the tariff. Once more, the experts were wrong, and the wine business demonstrated yet again why I worry about its future.

So not much good news here – save for the caveat that if I have been as wrong this time as I have been before, then we will have some good news. Just don’t count on it.

More about wine prices:
Wine prices 2020
Wine prices 2019
Wine prices 2018

Winebits 676: Prosecco, tariff, e-commerce

proseccoThis week’s wine news: Top Italian producer says cheap Prosecco is undermining the market, plus chefs oppose wine tariff and Kroger becomes top e-commerce company

Cheap Prosecco: A leading Italian producer says too many wineries are selling Prosecco at slashed prices, which is hurting the bubbly. “Prosecco is being sold at below the production cost at some retailers, which is such a big mistake,” Sandro Bottega told a virtual tasting in early December. “I don’t know how or why they do it, but it’s conveying a bad message for consumers about the product.” This is not the first time we’ve seen this complaint; it seems to happen every couple of years. In this, Bottega says producers need to produce less wine, but of higher quality at higher prices.

Chefs vs. tariff: A new chefs group has called for the Biden Administration to end all tariffs on European food, wine, and spirits via executive action on its first day in office. The group, Coalition to Stop Restaurant Tariffs, says tariffs make the pandemic that much worse for restaurants, increasing costs that they can’t already afford. The group is a who’s who of the restaurant business, including Alice Waters of Chez Panisse and New York City’s Daniel Bouloud. This is a big deal, not just because of the names, but also because chefs usually don’t get involved in politics like this.

Kroger e-commerce: Kroger has become the country’s ninth biggest e-tailer, the only grocer to make the list, reports Supermarket News. Why does this matter to wine drinkers? Because more than half of the wine sold in the U.S. is sold in supermarkets, and Kroger is one of the biggest. As such, it has a stake in continuing the growth of on-line wine sales that has taken place during the pandemic – and it will likely want to. I saw Kroger’s political muscle when it bankrolled a wet-dry election in Dallas after the recession; anyone who thinks it will go meekly back to the old days when the pandemic ends is mistaken.

Photo: “Birthday Prosecco” by Mel Sharlene is licensed under CC BY-SA 2.0

Wine tariff update: It looks like things are going to get worse before they get better

tariff warNew 25 percent EU spirits tariff threatens to ratchet trade war up another notch

The good news about repealing the 25 percent Trump European wine tariff? The administration that levied it will be gone in a couple of months. The bad news? A couple of commentators don’t see the Biden Administration as being necessarily more friendly toward trade and the European Union.

Alan Beattie, writing in The Financial Times, says the new administration won’t be as loopy on trade as Trump’s was, but that the days of free-traders Bill Clinton and Barack Obama won’t soon return. A Biden Administration won’t rush into anything, and while saying it believes in free trade, may not do what we want or hope it will do.

The other bad news? This week’s 25 percent European Union duty on U.S. rum, brandy, vodka and vermouth – one more tax as part of the Airbus-Boeing aircraft parts dispute, whose sad, pathetic history has turned into something only Dickens would recognize. This is in addition to a 25 percent tariff on U.S. bourbon and other whiskeys that took effect in June 2018, while Trump retaliated with the wine and Scotch tariff last fall.

In other words, all of us who were cautiously optimistic about being cautiously optimistic were probably too optimistic. Whatever signs there were that the EU was willing to compromise with the Biden Administration disappeared with the most recent tariff. Spirits producers on both sides of the Atlantic were already reeling – one trade group puts the sales losses at more than 30 percent for Scotch labels in the EU and more than 40 percent for U.S. brown goods companies. Hence, it’s difficult to see one more tariff as a sign of good faith.

Having said that, the Financial Times’ coverage of the U.S.-EU tariff war has been universally gloomy, so that’s one thing. More importantly, we’re all adults here, and rational people on both sides must realize that throwing tariffs at each other to settle a dispute that has already been mostly settled (both aircraft companies have renounced the illegal subsidies) seems pointless – as well as economically dangerous. And isn’t the economy in enough trouble as it is?

Winebits 670: It’s all about prices

pricesThis week’s wine news: It’s all about prices — supermarket shoppers cast a wary eye, Illinois weed prices stay high, and European Union sets tariff hikes

Not in my supermarket: Shoppers, who’ve seen shortages and price hikes during the pandemic, are focusing on value at the supermarket, says a new study. The dunnhumby Consumer Pulse Survey, reports Supermarket News, found a significant lack of consumer confidence that stores are doing a good job dealing the with COVID-19 crisis, and “remain concerned about rising food prices and are adhering to a value-focused shopping strategy.” The study doesn’t specifically mention wine, but since a majority of U.S. wine purchases are made in supermarkets, it stands we’re also watching those prices. In September, only half of U.S. survey respondents thought stores were doing a good job, down from 52 percent in July and 60 percent in May.

Pricey legal weed: Illinois’ legal weed shortage appears to be over, says the Chicago Sun-Times, but prices have not come down. “According to industry analysts, Illinois has the most expensive weed in the country. Budzu, a crowdsourcing site that tracks the price of cannabis, says the average cost for an eighth of an ounce is roughly $62. In Colorado, the same amount costs around $33.” Reasons for the high prices vary, says the story, but one analyst blamed them on weed growers and a lack of competition. The illegal price, according to one website, is about half the legal price.

Tariff hikes coming? Bloomberg reports that the European Union has set a Nov. 10 target date for triggering tariffs on as much as $4 billion of U.S. goods in retaliation over illegal aid to Boeing Co. This would come in retaliation for the Trump Administration’s tariffs last year, including the 25 percent wine levy. Goods targeted for a tariff include aircraft-related products, spirits and nuts, and  handbags and chemicals. U.S. wine is not apparently on the list, but the U.S. exports relatively little wine to the EU, and especially compared to bourbon and similar whiskeys.

Is a wine tariff solution on the horizon?

wine tariffReuters reports possible path to compromise in wine tariff trade war

Oct. 14 update: Reuters is reporting that the European Union has been given permission to impose $4 billion worth of tariffs on U.S. goods as part of the aircraft parts subsidy trade dispute.

Says the news service: “However, negotiators on both sides say it could also lead at last to discussions to resolve a 16-year legal battle over subsidies to aircraft manufacturers Boeing and Airbus. … Both the United States and the EU have signaled interest in settling the dispute over plane maker subsidies, while accusing the other of refusing to talk seriously.”

So, perhaps, we do have reason to be cautiously optimistic.

Oct 5: Could bourbon be the key to upending the Trump Administration’s 25 percent wine tariff?

That’s a distinct possibility after a Reuters report last week that said the European Union is considering retaliatory tariffs on U.S. wine and whiskey. The U.S. sends very little wine to Europe; in fact, U.S. wine exports overall are trivial, only about 10 percent of what we produce each year. But we sell a lot of bourbon and Tennessee whiskey to the EU, which accounted for more than half of all American whiskey exports in 2019. In this, it’s U.S. whiskey’s biggest overseas market.

There is already a 25 percent tariff on U.S. whiskey in the EU, dating to a 2018 Trump Administration tariff on European steel and aluminum. Reuters reported that the World Trade Organization will announce this month that the EU can levy another tariff on whiskey and a new tariff on wine as part of the on-going aircraft parts trade dispute that gave us the original 25 percent wine tariff.

(And if you’re confused reading this, given that wine and whiskey are being taxed in disputes about airplanes, steel, and aluminum, think how irritating this is for me. I have to write the same stupid sentences over and over to explain this foolishness.)

In other words, a compromise is more possible than ever. That’s because a hike in the whiskey tariff would devastate the business, already reeling from the first tariff and the pandemic. By one account, U.S. whiskey sales to the EU have fallen by one-third in the past 18 months. Faced with that possibility, says the Reuters story, the EU and the U.S. have more reason than ever to end the trade war. This ties into developments a couple of weeks ago, when Airbus — which got the illegal subsidies that started this mess — apologized and offered to pay the money back.

Plus, given Reuters’ track record record in covering the wine tariff, when it writes that the EU may be more concerned with ending the trade war than with upping the ante, there’s reason to be cautiously optimistic.

Reports the news service: “ ‘Everybody’s been waiting for this. It sets the stage for a negotiation,’ said William Reinsch, a former senior U.S. Commerce Department official and trade expert at the Council on Strategic and International Studies.”

Having said that, there have been stories in the European and U.S. financial media over the past couple of weeks implying just the opposite. There was one especially depressing story in Britain’s Financial Times saying there was almost no hope, and that the trade disagreements were too deeply rooted in mutual animosity for compromise.

Which is too bleak a prospect even for someone as cranky as I am.

Ask the WC 24: Wine tariff, grape harvest, wine blogging

wine tariffThis edition of Ask the WC: Could the wine tariff go away? Plus, how is California handling its harvest in the middle of the pandemic, and what’s going on with wine blogs these days?

Because the customers always have questions, and the Wine Curmudgeon has answers in this irregular feature. You can Ask the Wine Curmudgeon a wine-related question by clicking here.

Hello, most cranky one:
Your post about the wine tariff not going up implied we could have some good news, like it might end soon. Or am I being too optimistic?.
Hoping for the best

Dear Hoping:
I’m cautiously optimistic about being cautiously optimistic about the tariff going away, but probably later rather than sooner. One top U.S. importer told me this week that it was incredibly significant that the Trump Administration didn’t extend the tariff to other alcohol and food products or increase it on existing items. That’s because it had been threatening to do just that, and just days before last week’s announcement. So maybe someone in Washington finally understands how much the tariff is hurting the alcohol business and the economy at a time when we need all the help we can get. Having said that, the importer and I agreed that trying to make sense of Washington these days is almost impossible. Hence, two cautiously optimistics.

Hi, Wine Curmudgeon:
Will the California grape harvest be normal this year? I mean normal in that the Covid thing won’t make it more difficult.
Wondering

Dear Wondering:
Everyone I’ve talked to says the harvest should proceed as planned, despite the pandemic. There might be some regional shortages of labor, but most California grapes are harvested with machines so labor isn’t as important as it used to be. But, given the way this thing strikes suddenly, all could change overnight if one of the wine regions sees a surge in infections. And none of this takes into account possible wildfire complications.

Hello, WC:
What’s the state of your wine blogging these days? Didn’t you say you were hurting at the start of Covid 19?
Inquiring mind

Dear Inquiring:
My traffic has slumped this summer, but who knows why? It usually decreases this time of year, and I have had some technical problems on the blog’s back end that probably didn’t help, either. And we all know how fickle our overlords at Google can be in driving traffic to the blog. My best guess is that the pandemic, the election, and all the rest over the past six months have given people other things to do than to check out wine blogs, sports blogs, and all the rest. But not to worry: I renewed the blog’s hosting for another year, so I’m not going anywhere for a least another year.

Photo: Ryan McGuire, via Librestock, using a Creative Commons license

Wine tariff update: Has Europe made the U.S. an offer to end the tariff that it can’t refuse?

wine tariffEuropean officials say illegal aircraft subsidies will be re-paid, so there’s no need for the U.S. wine tariff

The European airplane manufacturer at the center of the U.S. wine tariff controversy says it will increase loan repayments to France and Spain to convince the United States to settle a 16-year-old dispute over billions of dollars of aircraft subsidies.

The news couldn’t get much better than that, could it?

No word from U.S. trade officials on the European offer, which was made on Friday afternoon. But several European government representatives said over the weekend that with the repayments, there’s no reason for the U.S. to continue the 25 percent tariff on French, Spanish, German, and British wines, as well as the levy on airplane parts and a host of other food and alcohol products, including whiskey and some Italian cheeses. The French finance minister was adamant: The U.S. must remove tariffs imposed on European products such as French wine, he told Reuters.

Reuters also reported that an industry source said the manufacturer, Airbus, made the concession because Europe and the U.S. are at “an impasse and need to get out of it. It is a way to show good faith and open the door to find a solution.”

In fact, the tariff has wreaked havoc on U.S. wine imports, the whiskey business on both sides of the Atlantic, and even airplane manufacturing. French wine exports to the U.S. have declined by as much as one-half since October 2019, when the tariffs were imposed. The U.S. Distilled Spirits Council, a trade group for whiskey producers, said U.S. and European companies “have suffered enough.”

And, because the Wine Curmudgeon appreciates irony, it’s worth noting that Airbus has stopped production of the plane that caused the tariff row, citing slow sales. In other words, we’re having a trade dispute about a product that no longer exists.

More about the European wine tariff:
The Trump zombie wine tariff
Robin Hood takes on the wine tariff
Panic wine buying