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May 30, 2022 View:

After the epidemic, the global wine industry is affected by tariffs again

With the impact of the 2020 epidemic, the global wine industry has entered a period of rapid transition, while the issue of tariffs between countries has added an element of unpredictable change.

Image courtesy of: WineHub

China"s Ministry of Commerce launched an anti-dumping and subsidies investigation into imports of wine originating from Australia in containers of 2 liters or less in August, and announced the preliminary rulings of the double anti-investigation into Australian wine on November 27 and December 10, deciding to impose tariffs on Australian wine.

The Office of the United States Trade Representative (USTR) imposed a 25% tariff on wines of 14% abv and below from several wine producing countries in Europe, including France, Spain, and Germany, in October 2019 due to Airbus subsidies.In late 2020, the Trump administration announced the launch of a second round of duties on French and German wines, imposing a 25% tariff on wines of 14% abv and above, to be officially implemented on January 12, 2021.

Under the bombardment of tariffs, different governments, wine merchants and consumers have risen up and changed to cope with the price and market changes of products brought about by tariffs.

China

Wine Australia has recently cancelled its 2021 China roadshow and the Chengdu Spring Sugar Show; however, some of the top Australian wine brands, such as Swansea, which are committed to the Chinese market, will continue to promote and invest in their brands in China.

With high tariffs, some Australian wine importers are waiting for the opportunity to move, while others have already started to expand their products in other markets, such as red-dyed sauces, red-dyed spirits or adding competitive products from other wine-producing countries to diversify their product portfolio in order to seize market opportunities.

France

In response to the new round of U.S. tariffs, French Finance Minister Bruno Le Maire announced at a Jan. 14 press conference that he will subsidize national wine producers up to 200,000 euros per month for producers earning only 50 percent of their revenue or less.

Germany

In a Jan. 17 CCTV report, German wine producers said the round of U.S. tariffs was an unexpected move and that the tax increase would further depress the German winemaking industry, which has been affected by the outbreak.

German wineries have made major adjustments to the U.S. market after the implementation of U.S. tariffs, with some brands withdrawing directly from the U.S. market and others changing the way they work with U.S. distributors, while they will make up for lost market share in the U.S. by seeking or expanding other market shares, especially deepening cooperation with the Asian region, especially China.

United States

For the U.S., the tariffs are making the wine importers and distributors miserable and adding to the epidemic-hit wine market, and they are looking to the incoming Biden administration to turn the situation around. We hope the Biden administration will recognize that such a trade war is unhelpful and will only deepen the burden on American family-owned small businesses, said Ben Aneff, chairman of the Alliance Group. The Distilled Spirits Council is also calling for the European Union and the United States to negotiate an end to taxes on spirits.

However, in the view of many economists, although the Biden administration mentioned in his campaign speech to ease relations with the EU, but the new administration faces many challenges, especially the epidemic crisis, in the short term, I am afraid there is no time to take care of.

The volatility of wine market prices has also significantly influenced the trend of wine selection by American consumers. Data from Liv-ex, the London Wine Exchange index, shows that in the face of dramatically higher prices for Bordeaux, Burgundy and Côtes du Rhône wines, U.S. wine collectors are turning to top Italian wines such as Super Tuscans, Barolo, Barbaresco and Brunello, as well as French Champagne.