Why US wine industry is hoping tariffs on EU wine won’t go ahead

The US wine industry is currently reeling from the President’s decision to potentially  tax wine from Europe by 100%. In fact, some experts in the industry are saying that the threatened rise in import tax will have a similar impact on them as prohibition did more than 100 years ago.

Wine sellers in the US are hoping that the President will change his mind and drop the import tax raise. They say that their businesses will fail should the proposed taxes happen.

How would 100% EU tariffs affect the US wine industry?

Proposals to raise tax on EU imports is in retaliation for subsidies on American company Airbus. But the American wine industry is arguing that it shouldn’t take the hit for this trade battle. Representatives of wine merchants in the US argue that these proposed tariffs would hit the industry very hard.

Every year, the US imports wine worth £3.8 billion (approximately $5 billion) from European countries. In October 2019, the industry had to deal with a 25% tax on wines from Europe. This was imposed by the President after approval was granted from the World Trade Organisation (WTO) for the US to retaliate after subsidies imposed on Airbus.

This first round of tax increases was absorbed by wine sellers in the US. However, the suggestion that there will be another round of tax increases, this time at 100%, has shaken the industry once more.

Possible job losses and huge price rises

It is feared that the tariffs will lead to more retaliation and put potentially thousands of jobs on the brink. But what would the fallout be for the consumer? The National Association of Wine Retailers (NAWR), says that prices per bottle could more than double. Furthermore, some bottles will just be way too expensive to import.

The US Trade Representative has been open to comments, and according to the BBC, thousands of sellers have formally opposed the tariffs. Field Blend Solutions is a wine importer based in New York. A representative told the BBC that while the tariffs are supposed to cause problems for the countries of origin in Europe, “… instead, they are having a calamitous impact on American small businesses, American workers and American consumers.”

The president of the National Association of Beverage Importers (NABI) warns that the “impact on jobs” and “the impact on the US marketplace” are concerning.

Industry braces for impact of wine tariffs

This tariff was announced in December 2019 by the US Government, which says that the 100% increase is necessary. This, they say, is because of a “lack of progress” between the EU and the US in resolving the subsidy battle over Airbus.

President Trump says that Americans should drink home-grown wine instead. However, industry experts say that consumers may well turn to wines from the New World instead of the US.

Whether the 100% tariff on wine imports goes ahead remains to be seen. However, it’s likely that even if it doesn’t, some tariffs will remain for the US wine industry. It’s possible, for example, that Champagne will come under fire in a separate trade dispute over French taxes on tech companies. Whatever happens, collectors of fine wines and everyday consumers will be watching closely on both sides of the Atlantic.

What are the biggest wine trends for 2020?

 

It’s not always possible to accurately predict the future for any business sector, and the wine industry is no exception. However, as we enter 2020, there are a number of likely changes to the industry. These include changing consumer tastes and demands, as well as wider economic and political issues affecting the market.

 

Look out for these nine wine trends for 2020

 

1. Fusing rosé and Prosecco

These two hugely popular trends are looking set to come together in 2020. In Italy, wine producers have been attempting to get official approval for Prosecco rosé for a number of years. And in the Bibendum wine trends 2020 report, the UK supplier predicts that the first shipment could reach the shelves before the end of the year.

Wine producers looking to take advantage of this new trend would have to use up to 15% Pinot Noir with Glera grapes to make official Prosecco DOC rosé.

 

2. Rosé continues its ‘serious wine’ trend

Rosé has been gaining traction as a serious wine for a while, and there will be continued exposure to high end versions. This is borne out by various high-profile acquisitions, including Moet Hennessey buying the maker of Whispering Angel rose (Chateua d’Esclans).

 

3. The rise in appassimento wines will continue

Sales of appassimento wines have doubled in the UK, according to major sellers such as Majestic Wines. These Italian wines are taking market share from previously popular Malbec easy drinkers.

Appassimento is a specific wine making technique used mostly in traditional Italian regions. The grapes are dried before fermentation takes place, leading to wines with concentrated, rich flavours.

 

4. Austrian wines are becoming more popular

Bibendum’s report also highlights indigenous Austrian grapes becoming more popular. These include Saint Laurent, Zweigelt and Blaufrankisch.

 

5. Vegan wines continue to grow as a new sector

Many wine sellers are increasing the number of vegan products, due to growing consumer demand. Expect to see more wines labelled vegan during 2020, following the growth of the market in 2019.

 

6. Natural wines will go mainstream

While it’s not easy to get official figures on natural wines, as there is no one definition, there is a definite shift to sulphite-free wines. This part of the wine industry continues to divide wine lovers and wine makers and remains a small sector. However, it’s likely to continue to gain exposure and consumers can expect to see more ‘natural’ labelling used by wine retailers and in restaurants during 2020.

 

7. Changes in the fine wine market

Fine wine continues to be a fascinating part of the industry, for consumers and collectors alike. During the 2010s there was a distinct shift in the market as wine collectors began reaching out to a wider range of regions. This led to an increase in specialist fine wine retailers, including Ideal Wine. And while some analysts suggest that the fine wine market could slide slightly, collectors should be on the lookout for a resurgence for Bordeaux 2010.

 

8. Economic and political changes

These factors affect the fine wine market as tariffs and trade wars are ongoing. However, it also affects the accessibility of wine to consumers in general terms. For example, following the UK’s exit from the EU on 31 January 2020, trade negotiations will begin. This could lead to changes in the value of the pound versus the Euro, and if the UK and EU cannot agree new trade agreements, then a ‘no deal’ Brexit is back on the table.

Over in the US, the president is entering the election year. Recent US tariffs on wine still stand, and it’s unclear as to whether these will be rescinded or increased. US officials plan to agree on raising tariffs by the end of January across a number of wines from the EU, including Barolo and Champagne.

 

9. The biggest threat of all – climate change

In 2019, Spanish wine producer Miguel Torres urged the world’s wine industry to work faster to combat climate change. Having set up a thinktank in 2011, Torres told Decanter that just 20 wine producers in Spain had joined. There have been a number of reports during 2019 showing the likely effects of the continuing threat of climate change on wine producing regions.

This is, of course, a long-term issue, but we can expect to see more conversation, more research and more changes within the global wine industry to respond to climate change in 2020.

Wine innovators are continuing to change the industry

For many wine collectors and aficionados, the wine industry is steeped in tradition. From traditional wine producing processes to ancient vineyards producing grapes that have been used for centuries, it’s an industry with historical connotations. However, in 2019, the wine industry is also home to innovations and new ways of producing wine.

Innovation tends to occur when there is a new problem to solve. But it also happens when people with a new perspective join an established industry. Innovative solutions often build on top of existing tech and adapt them into a new industry. And however simple the end result appears to be to the outsider, the background levels of vision, determination and innovation are fascinating. Every year, the Wine Industry Network (WIN) awards businesses and entrepreneurs for excellence in the wine industry.

 

Wine innovators recognised in annual awards

Here are three winners from the eighth annual WINnovation Awards. They show the breadth and scope of innovation in this most traditional of industries.

Fighting climate change is ConeTech. There are new challenges facing the wine industry in regions that are suffering from adverse consequences of climate change. For example, in California the now annual wildfires destroy and taint grapes. Smoke exposure from the fires can cost winemakers entire crops, leading to huge financial loss. ConeTech developed a process that removes smoke taint without destroying the wine itself.

The process encompasses two steps. The first is vacuum distillation, which separates the essence and smoke compounds in the wine. The second step is testing the wine for more than 30 markers to work out how much the wine is tainted. This allows for properly targeted removal of the taint, restoring the value to the wine. Since ConeTech launched this proprietary process, they have restored almost one million gallons of wine that was smoke tainted.

 

New product restores nutrients to the soil

Another company working on climate change is Enartis USA, which linked up with BluAgri. The latter company is based in Europe, and developed a product called BluVite, which is a biofertilizer that restores the soil’s microbiological fertility. This was developed in response to extreme heat events caused by climate change. The fertiliser helps soil retain nutrients, which leads to healthier vines and better-quality grapes.

Enartis USA trialled the product in 2018 across a number of California wine growers. This has led to significantly higher levels of resistance of vines when exposed to environmental extremes. BluVite is an example of the kinds of innovative products that will safeguard the industry against the worsening effects of climate change.

 

Automating and improving the fermentation process

Another award winner is GOfermentor, which is a great example of a newcomer to the wine industry bringing a new perspective on how things are done. Biotech engineer Vijay Singh completely changed the way pharmaceutical fermentations are processed. He did this by introducing a sterile bag that is used just once to replace stainless steel.

This concept and process has now been introduced by Singh to the wine industry. Grapes are crushed into a GOfermentor single use bag that holds one tonne. It’s then programmed to automatically process the fermentation. The automated process reduces the need for manual labour and improves the fermentation process. This results in reduced sulphides. In addition, the single use bag protects the wine from being exposed to outside pollutants, such as oxygen, bacteria and smoke.

When the fermentation process is finished, the GOfermentor presses the grapes, which leaves the pomace in the biodegradable single use bag. This means easy, environmentally sound disposal, which reduces water usage by 90% too. This kind of innovation is absolutely the future of the industry, with low cost usage and investment and many advantages.

 

Winemakers are producing delicious red wine from the UK

When it comes to selecting a nice full-bodied red wine, which country of origin do you go for? There are plenty of fine reds available from Italy, France, Germany and New Zealand, for example. But what about red wine from the UK? Not convinced? Read on…

It may not be where you expect to find a delicious red wine. It’s not even where you’d expect to find the location of the future UK wine industry, but a wine maker in Wolverhampton is turning expectations on their head.

 

How red wine from the UK is making a splash

A vineyard around nine miles south-west from the Midlands city of Wolverhampton is growing a grape from Switzerland. And it turns out that this hardy little grape is turning into delicious red wine.

The Halfpenny Green wine estate is technically in Staffordshire. They grow around 3,000 vines, all of which are producing a brand-new variety of grape for Britain. Winemakers are hoping that this grape will completely transform the burgeoning wine industry in the UK.

And the star of the show is the divico grape. Imported all the way from Switzerland, this grape is different from most grown in the UK. It isn’t used to make sparkling wine. More than 70% of the UK’s wine industry is devoted to making sparkling wine. But the divico grape is making full-bodied, rich reds.

 

Achieving the previously impossible

A good red wine from the UK was previously thought pretty much impossible to achieve. And for the estate’s founder, Martin Vickers, it was a calculated gamble based on nearly four decades of vineyard experience. He told the Guardian that they “put in a great deal of thought” before installing the country’s first divico vineyard.

Having first learned about the grape during a wine symposium in 2016, which was dedicated to wines from cool climates, he was impressed enough to bring it to the UK. The vines were planted in 2018 and the first bottles of the brand-new red should go on sale in 2022. A consortium of UK based wine producers is backing trials of the grape, including Nyetimber, Chapel Down, Bolney Wine Estate and Gusbourne.

At the moment, red wine makes up a tiny 5% of the UK’s total wine production. However, the industry is keen to develop the divico grape and believe that there is huge commercial potential in red wine from the UK.

 

Hardy Swiss grape ideal for cooler climate wines

The divico grape is ideal for UK growers as it comes into flower in early June. This is generally late enough in the season to completely avoid any frosts. Temperatures in June in the UK are higher than ever before, and this creates the perfect conditions for pollination. All of this improves both the quality and the yield of the grape. It is also very resistant to the kinds of problems that adversely affect vineyards in the UK, such as powdery mildew.

There have been trials of other grapes in the UK to make red wines. And while some pinot noirs have done fairly well in taste tests, there are rarely dark and rich enough for the consumer. If any producer can produce a consistently good, deep, rich red wine in the UK there will be a market.

It will take about 18 months to see whether the divico gamble has paid off, but early results are positive. Early taste tests from a vineyard in Kent last year have produced a silky red, reminiscent of a decent burgundy. The grape could be used to make a variety of red wines.

 

Red wine contributing to growth of UK wine industry

We are seeing an increasingly buoyant and successful UK wine industry. There are currently more than 500 vineyards and around 160 wineries across Great Britain. England and Wales export their wines to 40 different countries. The area of land under vine has shot up 160% since 2009, and now covers more than 7,000 acres.

This acreage is currently sustaining a record number of vines. This year saw 3 million vines planted, which is almost double 2018’s number. Predictions estimate that the UK could produce more than 40 million bottles of wine by 2040. And grapes like the divico could further open the market in the cooler north of the country.

 

After a bumper 2018, global wine production falls in 2019

For serious fine wine collectors, or those interested in the worldwide industry, the state of the world’s wine production is important information. Early figures from the International Organisation of Vine and Wine (OIV) show that global wine production dropped by 10% this year.

 

In 2018, the world’s production hit a record high of 294 million hectolitres (mhl). For 2019, the production has dipped and is now back at an average of 263 mhl. This is primarily due to three key European wine producers: Spain, Italy and France.

 

Biggest fall in global wine production in the EU

Italy and France are the two biggest wine producers in the European Union (EU). This year sees both countries record a 15% drop in production. Spain, which is the third biggest wine producing country, dropped production by 24%.

 

In 2019, all three of these countries have the lowest output for five years. The OIV says that Spain, Italy and France account for 80% of the entire output for the EU. They attribute this drop to weather conditions, specifically pointing to the “very cold and rainy spring followed by an extremely hot and dry summer.”

 

The EU itself accounts for 60% of the world’s production of wine. And the trading bloc’s collective output for the 2019 season has decreased by 26.7mhl to 156mhl. Portugal is the sole country showing an increase in wine production compared with 2018’s figures. Meanwhile, Austria, Romania, Hungary and Germany all show levels roughly in line with their average over five years.

 

Wine production outside of the EU

Away from the EU, wine production is up in countries like Georgia and Russia, according to the OIV. Figures for the US are not quite as clear. The United States produces about 12% of the entire wine industry in the northern hemisphere. Early estimates show a potential decrease in production of 1% on 2018, but this is likely to change over the next few months.

 

Across the southern hemisphere, the industry has also seen a slight decline in production. However, wine production in this part of the world is roughly “in line with the five-year average”. The two biggest producers of wine in South America are Chile and Argentina and they show declines of 7% and 10% respectively.

 

South Africa has boosted wine production by 3% to 9.7mhl. This increase is despite a long drought that affected wine harvests. However, it should be kept in mind that this figure is compared with an extremely poor output in 2018.

 

Australia registered a slight fall in production, which is estimated so far at a loss of 3% compared with 2018. New Zealand’s production comes in at 3.0mhl for 2019, which is a decrease. This is the fourth year in a row that this country’s production has dropped.

 

These wine production estimates from OIV are updated annually and use data from 28 countries that make up 85% of the global wine production. They are a useful gauge to measure how climate change is affecting traditionally strong wine growing countries. While these figures have been published, OIV says that they are early estimates only and are likely to change as we move towards the end of the year.