Tariffs: Far-Reaching Ripples

Summarized from The Drinks Business - Bordeaux Wine Trade Demands Compensation for U.S. Tariffs, by Phoebe French

Bordeaux producers are traditionally among the wine world’s wealthiest estates, offering some of the most reliably high-priced wines to wine lovers as well as investors. Their “en primeur” idea (buying cases in advance of the wine’s release for a lower price) helped investors taking fine wine seriously.

But today their story is very different. For the first time in this old dog’s memory, a confluence of factors have conspired against the Bordelaise – disruption in their key markets (Hong Kong unrest, China’s higher tariffs, Brexit uncertainty) all of which set them up for the crowning blow – US tariffs of 25%, with threats of far greater tariffs (up to 100%) yet to be settled. For perspective, the U.S. only puts a 10% tariff on aircraft purchased from Europe, the industry that launched this tariff war in the first place.

As a result, Bordeaux wines are plummeting in price (well, their price before tariffs, anyway) and the wines are reportedly selling for less than the cost of production. As a result, Bordeaux estates are fighting bankruptcy at an increasing rate, and are petitioning their government for three hundred million Euros as compensation for their hardship, just as the U.S. has given to its farmers.

I wish them luck. Our globe would be far less interesting to live on without the wines of Bordeaux.

Source:  Summarized from The Drinks Business, “Bordeaux Wine Trade Demands €300M Compensation for U.S. Tariffs” by Phoebe French.  Read the full article here.