While the U.S. and European Union struck a trade deal over the weekend that will include 15 percent tariffs on most E.U. products exported to the U.S., the rate on alcoholic beverages remains to be determined. Industry players on both sides of the Atlantic are holding out hope that wine and spirits could be exempted from levies altogether as part of a “zero-for-zero” list of products.
“For now, we can say with confidence that the most extreme outcome—a 30 percent to 50 percent tariff on E.U. wine as early as next week—appears to have been avoided,” said Ben Aneff, president of the U.S. Wine Trade Alliance, which represents wine importers, distributors, retailers and restaurants in trade issues.
“[European Commission President Ursula] von der Leyen noted that negotiations are ongoing and that the product list for zero tariffs is still being finalized. She specifically stated that discussions on alcoholic beverages have yet to be resolved,” Aneff continued. “Other key questions remain unanswered, including whether there will be exemptions for wine already in transit and how enforcement will work if negotiations on alcohol extend past August 1.”
“We are optimistic that, in the days ahead, this positive meeting and agreement will lead to a return to zero-for-zero tariffs for U.S. and E.U. spirits products, which will benefit not only our nation’s distillers, but also the American workers and farmers who support them from grain to glass,” added Chris Swonger, president of the Distilled Spirits Council of the U.S. (DISCUS), a trade group for spirits producers and marketers.
On the other hand, if wine and spirits aren’t ultimately exempted, the new 15 percent charge will hit businesses on both sides of the Atlantic—including importers and distributors in the U.S.—and result in higher prices for consumers.
“With a 15 percent tariff in place, the glass will be half-empty for at least 80 percent of Italian wines,” said Lamberto Frescobaldi, head of Marchesi Frescobaldi and president of Italy’s Unione Italiana Vini (UIV) trade group. “The projected impact on our industry is a 317 million euro loss over the next 12 months. For our U.S. partners, the estimated missed earnings could reach nearly $1.7 billion.
“According to our analysis, earlier this year, a 5 euro bottle of Italian wine would reach U.S. shelves at $11.50,” Frescobaldi continued. “With the new tariff and the weaker dollar, that same bottle could now retail for around $15. This means the markup from winery to shelf jumps from 123 percent to 186 percent.”
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