Wine is more than just about what is in the bottle. For someone in the business, it’s also the bottle, the cork, the label, the distributor, and dozens of other moving parts. While, in theory, tariffs could help the U.S. wine industry (i.e. more locally sourced vino), many say that the business is more complicated than that. It’s all interconnected.
“We get our bottles from China, and they’re gonna be increased in terms of tariffs,” said Ken Freeman of Freeman Vineyard and Winery in Sonoma County told NPR. “Our costs are gonna go up.”
Others get their glass bottles from Mexico. Like other goods from Mexico, these could be subject to a 25% tariff. Depending on how that tariff plays out, “that is going to have a huge impact on us,” said Scott Donnini, owner of Auburn Road Vineyards in New Jersey and vice chair of the Garden State Wine Growers Association.
For others, the Trump administration’s on-again, off-again tariff announcements bring just as much economic pain as the actual tariffs.
“Every business owner I speak with compares the situation today to feeling the same as in the early days of the pandemic. There are a lot of unknowns, and the administration communicates new changes daily. The uncertainty makes it difficult to do business and communicate pricing to customers,” says Sarah Mack, who owns wine startup Vinat.
Vinat sources wine from Europe so it is particularly vulnerable to a tariff regimen targeting the EU.
“Transporting wine on a boat from Europe takes about a month, so you can imagine how much uncertainty there is around tariffs,” Mack says, adding that since tariffs are charged when the products land on U.S. soil, the pricing strategy is tough to plan.
“If you don’t know your costs in one month, it’s hard to communicate pricing,” Mack says.
She says tariff surcharges will be very popular because of the uncertainty and time in transit for wine.
“As a consumer, it isn’t very clear to understand if companies are just choosing to raise prices or if a price raise is outside of their control. Communicating surcharges is a great way to be transparent with your customers,” Mack says.
Louis Amoroso, co-founder and CEO of Full Glass Wine Co. says the outlook for wines in the U.S. is more nuanced than gets reported.
He predicts that, if the full suite of tariffs goes into effect, prices will go up. By the time it goes through the distribution process and everyone puts on their mark-up, a $10 bottle of wine may well become a $20 bottle of wine. And if the flow of wine from overseas slows to a trickle, that will cause U.S. prices to rise.
“If there are significant tariffs, it will boost demand for US products and that will lead to price increases in the USA. There is no way around that,” Amoroso says.
Right now, U.S. winemakers are dealing with the uncertainty the best they can.
“We are just preparing and getting ready for what may come down the road,” Amoroso says, and Full Glass Wine Co. is trying to source more wine from the U.S.; Amoroso added that the company has the flexibility to source high-quality wine from countries where the tariff regimen may not be as harsh.
Amoroso says his direct-to-consumer wine companies are also trying to offset the pain of price by focusing on making the whole experience enjoyable, from ease of ordering to unboxing and uncorking. He says the majority of wines consumed in the U.S. are from bottles costing under $20. He thinks the price pain from tariffs won’t push people away from wine. Amoroso says that price increases for wine should be viewed in the context of prices going up for almost every grocery item and that wine will win in the battle for the consumer’s wallet.
“We are focusing on making the experience enjoyable. Wine has been around for 1,000 years; it is an affordable luxury product that is not going anywhere,” Amoroso says.
The post The wine industry is getting crushed like grapes, thanks to tariff uncertainty appeared first on Quartz.
