Wine sellers struggling to survive the coronavirus pandemic are now also being criticized by the U.S.’s battle with the European Union over aircraft subsidies.
“This is sure to put some people out of business,” said David Bowler, owner of Bowler Wine of Manhattan, an importer and distributor. “It’s like being kicked when you’re down.”
The family business was forced to pay $ 28,000 in tariffs earlier this month – $ 16,000 more than it would have paid if two shipments had arrived from Europe on Jan. 11.
The slight delay in the 1,987 cases of 23,844 bottles from mainly France to New York City was immediately subject to the duties that came into effect on Jan. 12 – despite the fact that the wines were ordered and shipped before the duties were imposed. “Overnight, a $ 12,000 bill turned into $ 28,000,” complained Bowler.
The robbery started in October 2019, when the U.S. sales agent’s office proposed a 25% tax on certain wines imported from France, Germany, Spain and the United Kingdom. The tariffs included wines with less than 14% alcohol, including many rosés, sancerres and Rieslings.
Things got even worse on December 30th when the USTR extended tariffs on wines with more than 14% alcohol – a blow to the industry.
Market Extra (October 2020): California’s fabled wine region has “the most terrible, devastating and disastrous year”
US importers who never paid more than pennies on the bottle as import duties are now levying 25% taxes on some of the wines they import from the UK and Spain – and on all wines they import from Germany and France , arguably the most important wine exporter in the world.
Premium cognacs, which cost $ 38 or more per liter, have also been added to the final round of costly import taxes.
Bowler’s company, which employs 37 people including his wife and two sons, posted a 10% drop in sales in 2020 – only the second drop in its 17 years of existence, he said.
Bowler has already cut his and his wife’s salaries by 20% and executive salaries by 10%. The sales reps, whose commissions fell last year due to restaurant closings, received 90% of their 2019 earnings with the help of a Payroll Protection Program loan, Bowler said.
“We expected that we would gain 5% last year before tariffs,” he said.
Manhattan-based Vintus Wines, a family-owned restaurant and wine store importer and distributor, faces a tax charge of $ 540,000 for orders placed in the first two months of 2021.
And that’s on top of the $ 1.8 million additional tariffs Vintus paid over the past 14 months during the first round of taxation, President Alexander Michas reportedly told the New York Post.
“It’s so frustrating,” said Michas. “We feel like we have no control over our business.”
The tariffs are supposed to put pressure on the EU through its subsidies for Airbus
AIR, + 1.58%
AIR, + 1.77%,
that competes with Boeing in the US
BA, + 0.15%
and is politically supported by France, Germany, Spain and Great Britain
But American wine importers say they will be punished instead.
“We weren’t the point of the argument,” said Michas. “We have just been dragged along and everyone feels sorry for us.”
In order to afford the extra cash outlay, Vintus has eliminated its marketing expenses and will not fill three new positions that it had hoped would expand the family business earlier this year.
“You are kicking US companies in the stomach in the middle of a pandemic,” added Ben Aneff, president of the US Wine Trade Alliance.
Aneff, who is calling on the Biden government to cut tariffs, said Bordeaux labels with higher alcohol levels would be particularly hard hit.
“The honeymoon for Bordeaux is over,” said Aneff sadly, adding that Bordeaux from the French region on the right bank and wines from the Rhône Valley will now see price increases.
It’s not just Bordeaux. A Karine Lauverjat Sancerre that retails for about $ 22 will soon climb to around $ 28, according to Bowler, which could discourage some consumers from buying it. Still, the demand for cheaper wines from other parts of the world, or even American wines, hasn’t increased, importers say.
“If someone wants a Sancerre, that’s what they want,” Bowler said. “Wine is not one of those things that people want to compromise on.” This is especially true of restaurants that offer a robust selection of French wines, Michas said. “You need products that consumers know and trust,” he added.
“Consumers paying an average of $ 15 for a bottle are now paying closer to $ 20, or a glass of Sancerre for $ 15 in a restaurant is now probably $ 17,” Michas said.
Some of the wines Vintas is receiving this month and next are E. Guigal’s wines from the Rhône Valley, priced from less than $ 20 a bottle to hundreds of dollars.
A 2018 vintage of Château Troplong Mondot from the Right Bank, which sells for about $ 110 a bottle, will soon cost about $ 140 when they hit retailers, said Daniel Posner, owner of Grapes: the Wine Co. in White Plains, NY, the New York Post.
Although 50% of its sales are French wines, Posner is reluctant to introduce some of these highly rated wines.
Posner reduced the number of Sancerre labels he runs from 10 to four and to everyday wines from the Côtes du Rhône region, which may have cost $ 12 but are now $ 15 because of the tariff.
One of his wealthy clients recently asked about a 2018 case of Château Lafite Rothschild, which normally costs around $ 1,000 a bottle but is now $ 1,250 a bottle, Posner said.
“I don’t want my customers to pay $ 3,000 in tariffs, so I asked him to wait at least until the fall for the tariff to be re-evaluated,” Posner said, citing the cost of the tariffs for a case of 12 bottles.
