-May 15,2019-
What’s the trade war doing to California wine sales? It’s not good.
The Wine Institute reported this week that the Chinese government announced that it would be increasing the tariff on U.S. wines in response to the ongoing trade dispute between the U.S. and China. The increase is good news for our competitors.
Effective June 1, China will add another 15% tariff on U.S. wine imports to their country. That takes the total tax and tariff on US wines shipped to China to 91% since they ratcheted up several times starting April 2018.
“This is the third Chinese tariff increase on U.S. wine in the past 14 months, and with each additional round, it becomes more and more difficult to compete in the fastest-growing wine market in the world,” said Robert P. “Bobby” Koch, President and CEO of California-based Wine Institute.
Sales of US wine to China were already off 25% in 2018.Most of that was from California.
“It is imperative to resolve this dispute as soon as possible, so that our wineries do not suffer long-term market loss. Despite these challenges, the California wine brand remains strong with Chinese consumers and we are committed to doing everything we can to ensure this does not change ” added Koch.
China is one of the fastest growing wine markets in the world and will soon be second only to the U.S. in the total value of wine sales. U.S. wine exports to China and Hong Kong have grown 450% in the past decade. U.S. wine exports to all markets abroad, more than 90% from California, reached $1.47 billion in winery revenues and 375 million liters (41.7 million cases) in 2018.
US competitors in the world market include number one producer France, then Italy and Spain followed by the US in fourth place. Smaller upstarts like Argentina, Australia, South Africa and Chile are growing faster than the US.
When the Chinese consumer shops for wine in 2019 US made wine will cost them more than wine from Chile or France.