US tariff tussles stuff of nightmares for Bordeaux winemakers
BORDEAUX : French wine producers, already reeling from a downturn in their market, still do not know how bitter a taste the US tariffs on wine will leave on their palates.
In southwestern France, around the Bordeaux region's famed vineyards, months of talk on what US President Donald Trump will decide on tariffs have been the stuff of nightmares for producers as they look on helplessly.
The US is by far the top export market for Bordeaux's wine, accounting for €400 million (US$470 million) worth of annual sales – or about 20% of the total.
China lags behind with €300 million ahead of the UK with €200 million.
Yesterday's announcement of a trade deal between the US and the EU did not clear up what tariffs European wine and spirits producers will face in the US.
While Trump said European exports face 15% tariffs across the board, both sides said there would be carve-outs for certain sectors.
EU head Ursula Von der Leyen said the bloc still hoped to secure further so-called 'zero-for-zero' agreements, notably for alcohol, which she hoped to be 'sorted out' in the coming days.
Philippe Tapie, chairman of regional traders' union Bordeaux Negoce, which represents more than 90% of the wine trade in the Bordeaux area, is worried by the uncertainty.
'One day, it is white, the next it is black — the US administration can change its mind from one day to the next and we have no visibility,' he told AFP.
In mid-March, Trump had threatened Brussels with 200% tariffs on alcohol in response to a proposed EU tax on US bourbon.
Then in April he brandished a new threat of 20% across the board on EU products, a threat ultimately suspended.
Since then, the level first held at 10% but, in late May, the US leader threatened to revert to 50% before pivoting to 30% starting Aug 1st, the deadline for the negotiations with the EU that led to a preliminary accord after Trump and Von der Leyen met in Scotland yesterday.
In vino, veritas is unpredictability
'At 10% or 15%, we'll find solutions. At 30%, no. End of story,' Tapie warned just ahead of the announcement as he criticised a 'totally unpredictable American administration'.
'To export wine, there's a minimum of 30 days by boat.
'If you go to California, it's 60 days. We can't think in terms of weeks,' says Tapie, who says he has 'never been confronted with such a situation' in 30 years of business.
Twins Bordeaux, one of Bordeaux's leading wine merchants, also laments the tariffs' impact.
'The American market represents about a third of our turnover, or around €30 million,' explains Sebastien Moses, co-director and co-owner of Twins, which usually ships upwards of a million bottles a year to the US.
Since January, 'our turnover must have fallen by 50% compared to last year,' he says.
'So far, we've managed to save the situation, because as soon as Donald Trump was elected we anticipated this and sent as much stock as possible to the US,' explains Moses, though longer term he says this is not a 'stable' strategy.
Fly it out?
As an attempted work around Twins Bordeaux even shipped cases of around 10,000 bottles by air in March.
'But only very expensive wines, at no less than €150-€200 per bottle, because by air it's at least two and a half times the price of shipping by sea,' he said.
For Bordeaux wine merchant Bouey, the US market represents less than 10% of its exports.
'We have long since undertaken a geographical expansion. Faced with the global chaos, commercial strategies can no longer be based on a single- or dual-country strategy,' Jacques Bouey, its CEO, told AFP in April.
The tariffs come with the industry already struggling with declining consumption that has led to overproduction and a collapse in bulk prices.
By early 2023, one-third of Bordeaux's approximately 5,000 wine growers admitted to being in difficulty.
'We're starting to become world champions in terms of accumulating problems,' complained Tapie.
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