My Timing is Impeccable. Really.

100 tariif just fck -1

In April of 2018, on a trip to Italy, I fell in love with an Italian winery. They didn’t import to my state and I ended up ordering wine a few times from this winery. This began a dialogue that would result in me obtaining a license to import wine.

Smooth Sailing

In February of 2019, I sat down with a local distributor who was a friendly acquaintance of mine through Atlanta area wine events, and tossed out this crazy idea of importing wine. I was half thinking (perhaps hoping) he would talk me out of it with horror stories of financial ruin, but that didn’t happen. With his encouragement, and a winery agreeing to let me import for them, I decided to begin the licensing process.

The Federal Basic Permit for importing alcohol is not only free, it is fairly straight forward and easy to obtain. I did not find State licensing to be as straightforward. In June, I secured a spot for my pallet of wine from Italy on a container that was scheduled to set sail in August. The State licensing had me befuddled and now I was worried about deadlines. Proving to be the best decision I’ve made so far, I enlisted professional help and hired a law firm that specializes in alcohol licensing.

Snag #1

To make a very long story, short, in submitting the wine labels for COLA approval, I discovered that my beloved winery had imported into Georgia as recently as 2017. In my state, that means that the Georgia distributor for this winery still had the exclusive right of distribution. It is hard to believe that a winery has no control over changing distributors, but it’s true, once a distributor is the chosen distributor is hard to change that without mutual consent or a pause in distribution. Anyhoo. That was only one problem. This discovery begged the question – who was your previous importer and what is the current status? I would chalk this all up to rookie mistake (and some of it for sure was), but my distributor had just met with this winery in person at VinItaly, and had extensive conversations about distribution in Georgia. In a follow up  phone conversation this winery we discussed how much they loved meeting this distributor and that they were thrilled to embark on this new relationship. Full steam ahead with our intentions to import.

If you like happy endings, you’ll be happy to know that this ended very well for the original importer and distributor of record. Que sera sera.

Snag # 2 – No Harm, No Foul

Onward. By this time there was chatter about tariff increases on wines from the EU, but this strange tariff excluded many wines, and did not impact Italy at all. I reached out to another Italian winery that I had met at a trade show here in the states. We developed a relationship. They sent samples. I want to point out here that this is no small thing. To be able to find a wine that is not already imported and that is actually good and that you think will sell is no small feat.

My distributor and I held a tasting at my local wine market and the wines were well received.  By this time a 25% increase in tariff on most wines from the EU had been levied – but, as stated above, not Italy. A plan was hatched to bring a pallet of this wine over in February/March. Fantastico!

I really had to pinch myself. After nearly a year of licensing effort, and a few sputtered starts – this was actually happening. I really couldn’t believe it!

Not a Snag, More Like a FUBAR

You know where I’m going with this right? The 25% was in response to disputes over tax subsidy disputes with Airbus that President Trump felt put Boeing at a disadvantage. Somewhere in the middle of all of this a threat was made to increase the tariff on French sparkling wines to 100%. This would include Champagne which was specifically excluded from the 25% increase already in place. This second threat on sparkling wine was in response to France’s intention to tax all mega tech company doing business in France, and completely unrelated to the Airbus/Boeing issue. If all of this was not confusing enough, the U.S. Office of Trade Representation announced a January 13th deadline for the public to voice their opinion, prior to their reviewing the option of increasing the 25% tariff to 100% and including all of the wine.  A 100% tariff on ALL wines from the EU. Now I’m in trouble. And so is everyone else. Including consumers.

The Bigger Picture

The consequences of the 25% tariff had not yet been felt by most consumers, however, it has had an impact on the industry with a myriad of responses. Some shipments of wine were just cancelled. Some established industry professionals and foreign producers agreed to decrease profit margins to minimize the impact to consumers. Some importers, distributors and retailers in the U.S. agreed on pass through pricing, meaning that only the increase in tariff is passed on to consumers.

All of these lines of thought have merit for a 25% increase, however, if the tariff goes to 100%, none of them result in a feasible situation. Every bottle of wine we currently buy from Spain, France, Italy, Portugal, Germany and every single other EU country will literally cost double. Double.

What’s Next?

I know there are thousands of other industry professionals who will be impacted worse than my little business that almost was, but in fact wasn’t. But still. Just fuck.

For me, this is like running into a brick wall. My wines were coming from Calabria. Trying to introduce a fairly unheard of region, with an almost unheard of grape to consumers at $40+ a bottle just isn’t going to happen. But, I don’t have a brick and  mortar lease to worry about. I don’t have employees I might need to lay off. I can keep things in perspective but it still feels like shit.

Most of the people I’ve discussed this with believe that the proposed tariff – which is retaliatory and meant to be punitive – will be a short term thing. I am banking on this. Wines imported from the EU represent billions of dollars to both economies.

Honestly, can the U.S. even produce enough wine to make up for the loss of all wines imported from the EU? I don’t have data to back me up here, but I seriously doubt it.

The deadline for voicing your opinion to the USTR was yesterday. I cannot find a deadline for the decision to be made. So. We wait.