Berliner Boersenzeitung - US tariff tussles stuff of nightmares for Bordeaux winemakers

In southwestern France, around the Bordeaux region's famed vineyards, months of talk on what US President Donald Trump will decide on tariffs have been the stuff of nightmares for producers as they look on helplessly.

The United States is by far the top export market for Bordeaux's wine, accounting for 400 million euros ($470 million) worth of annual sales -- or about 20 percent of the total.

China lags behind with 300 million euros ahead of the United Kingdom with 200 million.

Sunday's announcement of a trade deal between the United States and the European Union did not clear up what tariffs European wine and spirits producers will face in the United States.

While Trump said European exports face 15 percent tariffs across the board, both sides said there would be carve-outs for certain sectors.

EU head Ursula Von der Leyen said the bloc still hoped to secure further so-called "zero-for-zero" agreements, notably for alcohol, which she hoped to be "sorted out" in the coming days.

Philippe Tapie, chairman of regional traders' union Bordeaux Negoce, which represents more than 90 percent of the wine trade in the Bordeaux area, is worried by the uncertainty.

"One day, it is white, the next it is black -- the US administration can change its mind from one day to the next and we have no visibility," he told AFP.

In mid-March, Trump had threatened Brussels with 200 percent tariffs on alcohol in response to a proposed EU tax on US bourbon.

Then in April he brandished a new threat of 20 percent across the board on EU products, a threat ultimately suspended.

Since then, the level first held at ten percent but, in late May, the US leader threatened to revert to 50 percent before pivoting to 30 percent starting August 1st, the deadline for the negotiations with the EU that led to a preliminary accord after Trump and Von der Leyen met in Scotland on Sunday.

- In vino, veritas is unpredictability -

"At 10 percent or 15 percent, we'll find solutions. At 30 percent, no. End of story," Tapie warned just ahead of the announcement as he criticised a "totally unpredictable American administration".

To export wine, "there's a minimum of 30 days by boat. If you go to California, it's 60 days. We can't think in terms of weeks," says Tapie, who says he has "never been confronted with such a situation" in 30 years of business.

Twins Bordeaux, one of Bordeaux's leading wine merchants, also laments the tariffs' impact.

"The American market represents about a third of our turnover, or around 30 million euros," explains Sebastien Moses, co-director and co-owner of Twins, which usually ships upwards of a million bottles a year to the United States.

Since January, "our turnover must have fallen by 50 percent compared to last year," he says.

"So far, we've managed to save the situation, because as soon as Donald Trump was elected we anticipated this and sent as much stock as possible to the US," explains Moses, though longer term he says this is not a "stable" strategy.

- Fly it out? -

As an attempted work around Twins Bordeaux even shipped cases of around 10,000 bottles by air in March.

"But only very expensive wines, at no less than 150-200 euros per bottle, because by air it's at least two and a half times the price of shipping by sea," he said.

For Bordeaux wine merchant Bouey, the US market represents less than 10 percent of its exports.

"We have long since undertaken a geographical expansion. Faced with the global chaos, commercial strategies can no longer be based on a single- or dual-country strategy," Jacques Bouey, its CEO, told AFP in April.

The tariffs come with the industry already struggling with declining consumption that has led to overproduction and a collapse in bulk prices.

By early 2023, a third of Bordeaux's approximately 5,000 wine growers admitted to being in difficulty.

"We're starting to become world champions in terms of accumulating problems," complained Tapie.

(T.Burkhard--BBZ)