Greenspoon Marder Hospitality, Alcohol & Leisure Blog: More Tariff Gloom For Wine Lovers?…Maybe Not

Oct 17, 2019 Miami, FL

By: Louis J. Terminello, Esq.

Comments on a/b/v and Today’s Tariff Increase

I’m sorry to burden the reader with more talk of tariffs and the doom that is about to fall upon the wine consumer and producer alike, but here goes anyway because the work around is interesting and perhaps plausible.

Tomorrow, the tariff wall is to increase by another twenty-five percent (25%) on a variety of products including Scotch and French wine. The increase will result in higher shelf price of imported French wine from all regions and likely cause pain to producers, US importers, distributors and consumers alike.

This round of tariff increase on French wine is on those with an alcohol content of fourteen percent (14% or less). Much wine imported into the US falls into this category.

The interesting point of discussion is the 14% break-point. Obviously, wines with a higher alcohol by volume content (a/b/a) are excluded from the tariff list. It seems that in days past, the Alcohol and Tobacco Tax and Trade Bureau (TTB) referenced this break-point because wines below 14% were considered table wine, while wines above 14% were considered dessert. Over the years this distinction has become blurred and many a great wine (non-dessert) has an alcohol content above 14%. Consumers have in fact adapted well to increased alcohol contents and their taste profiles and many higher alcohol content wines can be found on the shelf and in the consumers shopping cart.

I suspect that one way of countering increase tariffs is for US consumers to direct their wine purchasing dollars on those French wines above 14%. This will likely benefit the consumer but will still cause dismay to producers, importers and distributors whose portfolios consist of lower alcohol French wine. The potential work-around (in short form) is for French producers to leave the grape on the vine a little longer (and perhaps there are other tactics as well) to increase the alcohol content of previously imported lighter wines taking them out of the tariff category. There is uncertainty surrounding the cost effectiveness and timeliness of the proposed solution but it just may be worth a shot.

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