French Winemakers Set To Cut Prices On U.s. Imports

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After President Trump increased tariffs on French wine, some bottles have become too expensive for U.S. sellers to import. There are now stockpiles in French cellars and it seems likely that French producers will have to cut prices in order to sell.

The annual agriculture show, currently taking place in France, is a big deal; the French pride themselves on being a largely rural nation (each region has strong ties to local foods and dishes) and France is one of the world's largest agricultural exporters. As President Macron arrived in the wine tasting tent this week, he was assailed by some very worried wine exporters. Since President Trump introduced new tariffs on many luxury French goods, the cost of importing food and drink has increased by up to 25%.

In an already gloomy context, the American wine tax is the last straw. Some people might think that 25% is peanuts, but in reality it is huge!

Quoted in The Times, Olivier Fleury, owner of 18th-century Château du Pavillon in Bordeaux, has 70,000 bottles of wine in his cellar that he usually exports to U.S. customers. Each bottle sells for between $25 and $60. These bottles account for 20% of his market, but his importers have asked him to stop shipping them as they are now too expensive. Mr Fleury is not alone; Bordeaux’s wine-making bodies have reported a 46% fall in exports to the U.S. since the tariffs began.

U.S. tariffs on French goods is just one of the issues facing a troubled French wine market. The export of premium wine has been compounded by Brexit and the political tensions in Hong Kong, which makes U.K and Asian wine sales uncertain. The potential negative impact of Coronavirus adds to the nerves, particularly with the news that French tourism will fall by 30-40% this year. Importers have turned to South American and Italian wine instead, all of which are unaffected by the tariffs. For many Bordeaux growers, it seems likely that they will have to reduce prices, mostly on the more expensive bottles.

By Alex Ledsom Senior
Contributor March 3, 2020
Source and complete article: Forbes.com