Wine sellers struggling to survive the coronavirus pandemic are also being hit by the U.S. struggle with the European Union for subsidies on aircraft.
“This is going to get some people out of the market for sure,” said David Bowler, owner of Bowler Wine of Manhattan, an importer and distributor. “It’s like being kicked when you’re already down.”
The family-owned company was forced to pay $ 28,000 in fees earlier this month – $ 16,000 more than it would have paid if two shipments from Europe had arrived when they were due on 11 January.
The slight delay of the 1,987 cases containing 23,844 bottles, mainly from France to New York City, were immediately subject to tariffs that took effect on January 12 – despite the fact that the wines were ordered and shipped before the tariffs were established . “Overnight, a $ 12,000 bill turned to $ 28,000,” lamented Bowler.
The money capture began in October 2019, when the U.S. Trade Representative’s Office imposed a 25% tax on certain wines imported from France, Germany, Spain and the UK. The tariffs covered wines with less than 14% alcohol, including many rosés, Sancerres and Rieslings.
Things got worse on December 30, when the USTR extended tariffs for wines containing more than 14% alcohol – a terrible blow to the industry.
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US importers, who never paid anything more than cents a bottle in import duties, are now paying 25% tax on some of the wines they import from the UK and Spain – and on all wines they import from Germany and France, which is arguably the most important wine exporter in the world.
Premium cognacs that cost $ 38 or more per liter were also added to the latest round of expensive import taxes.
Bowler’s company, which employs 37 people, including his wife and two children, saw a 10% drop in revenue in 2020 – just the second drop in his 17 years in business, he said.
Bowler has already cut his and his wife’s wages by 20% and the salaries of senior executives by 10%. Sales reps, whose commissions plummeted last year due to restaurant closings, received 90% of their 2019 revenue with the help of a payroll protection program loan, Bowler said.
“We expected a 5% increase last year before tariffs,” he said.
Manhattan-based Vintus Wines, a family-owned importer and distributor of restaurants and wine stores, faces a tax bill of $ 540,000 for orders scheduled to arrive in the first two months of 2021 only.
And that in addition to the extra $ 1.8 million in fees that Vintus paid in the past 14 months during the first round of taxes, President Alexander Michas told the New York Post.
“It’s so frustrating,” said Michas. “We feel that we have no control over our business.”
The tariffs aim to pressure the EU on its subsidies to Airbus AIR,
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which competes with Boeing BA in the United States,
and is politically supported by France, Germany, Spain and the United Kingdom
But American wine importers say they are being punished.
“We were not the subject of the discussion,” said Michas. “We have just been dragged and everyone feels sorry for us.”
To pay for the extra cash expenses, Vintus eliminated its marketing expenses and will not fill three new positions that it hoped to add to the family business earlier this year.
“They are kicking American companies in the stomach in the midst of a pandemic,” added Ben Aneff, president of the US Wine Trade Alliance.
Aneff, who is calling on the Biden government to cut tariffs, said Bordeaux labels with higher alcohol content will be hit particularly hard.
“The Bordeaux honeymoon is over,” lamented Aneff, adding that Bordeaux from the right bank region of France and wines from the Rhône Valley will now see a price increase.
It is not just Bordeaux. A Karine Lauverjat Sancerre that sells for about $ 22 in retail will soon rise to around $ 28, according to Bowler, which may dissuade some consumers from buying it. Even so, demand for cheaper wines from other parts of the world or even American wines has not increased, importers say.
“If anyone wants a Sancerre, this is what he wants,” said Bowler. “Wine is not one of those things that people are willing to compromise on.” This is especially true for restaurants, which like to offer a robust selection of French wines, said Michas. “They need to have products that consumers know and trust,” he added.
“Consumers who pay an average of $ 15 for a bottle are paying close to $ 20 now, or a $ 15 glass of Sancerre in a restaurant probably costs $ 17 now,” said Michas.
Among the wines that Vintas is receiving this month and next are those from E. Guigal, from the Rhone Valley, which range from less than $ 20 a bottle to hundreds of dollars.
A 2018 vintage from Château Troplong Mondot on the right bank, which sells for about $ 110 a bottle, will soon cost about $ 140 when it reaches retailers, said Daniel Posner, owner of Grapes: the Wine Co. in White Plains, NY, to the New York Post.
Although 50% of its sales are French wines, Posner is holding some of these highly priced wines.
Posner has reduced the number of Sancerre labels he carries from 10 to four and the day-to-day wines from the Côtes du Rhône region that could have cost $ 12, but now cost $ 15 due to the tariff.
One of his wealthy customers recently ordered a box of Château Lafite Rothschild 2018, which normally costs about $ 1,000 a bottle, but will now cost $ 1,250 a bottle, said Posner.
“I don’t want my customers to pay $ 3,000 in fees, so I asked him to wait until at least the drop, when the fee will be reevaluated,” said Posner, referring to the cost of fees in a case of 12 bottles.
A version of this report appeared on NYPost.com.