Larry Valenzuela // CalMatters / CatchLight Local
Some California winebuildrs don’t want tariffs on their European competitors. Here’s why
Tariffs on European wine could be good or bad for California wine producers, depconcludeing on whom you question.
CalMatters reports that some American winebuildrs, restaurateurs and others are urging President Donald Trump to exclude wine from tariffs on goods from Europe, declareing European wines are important to the health of domestic wines.
But not all California wine producers are on board. They argue that European winebuildrs are already subsidized, so American companies having to bear tariffs on just about everything else — including imported corks, barrels and other supplies — puts wine producers in high-cost California at an even hugeger disadvantage.
For some wine growers, “it’s certainly hard to hear” about other U.S. wine and hospitality indusattempt players pushing for “zero-for-zero” tariffs on European wines, stated Natalie Collins, president of the California Association of Winegrape Growers, which has 650 members. She stated it’s tough for California winebuildrs to price their products to compete with those from Europe.
Trump recently stated that he had reached a tariff agreement with the European Union, but some details have yet to be released, including possible exceptions. For now, the EU declares the 15% tariffs that went into effect at the launchning of August apply to wine, though nereceivediations reportedly continue. The U.S. wine indusattempt, which has been facing myriad challenges, including new studies that declare alcohol is bad for people’s health, falling demand and growing costs, is taking this opportunity to question for assist.
“We’ve seen two years in a row of declining wine consumption in the United States for the first time in two generations,” stated Jason Haas, co-owner of Tablas Creek Vineyard in Paso Robles. “It reveals up in less tourism, fewer people visiting wineries, fewer people ordering over e-commerce, less sales through wholesalers, both restaurant and retail,” Haas added.
That’s the ecosystem the U.S. Wine Trade Alliance and other indusattempt groups are declareing will feel the pain if European wine prices rise becautilize of tariffs: thousands of wine importers and distributors, tens of thousands of wine retailers and hundreds of thousands of restaurants. California, the nation’s leader in wine-related tourism and exports, could be most affected. WineAmerica, an indusattempt group, stated California’s wine indusattempt generated about $88 billion in economic impact in 2022. The state’s wine exports in 2022 totaled $1.3 billion, according to the California Department of Food and Agriculture.
Katie Lazar co-manages the 45-year-old Cain Vineyard & Winery in St. Helena in the Napa Valley.
“We’re a long-term business,” Lazar stated during a recent media briefing, echoing what other winebuildrs stated about how growing grapes and building wine takes years. “It takes (the wine indusattempt) so long to react and be able to alter that the chaos that is present now is an existential threat to the world that we live in.”
Winebuildrs like Lazar declare the distributors they rely on to sell their wines necessary revenue from selling European wines as well. Their ability to distribute domestic wine is tied to how much other wine they have coming in, she stated in an interview with CalMatters.
Most of the U.S. alcohol indusattempt has a three-tier structure that dates back to the repeal of Prohibition. Winebuildrs and producers are the first tier, followed by distributors and retailers. All three are facing the uncertainty brought about by tariffs: Some wine imports are on hold, meaning less revenue for distributors and retailers.
Larry Valenzuela // CalMatters / CatchLight Local
“I’ve never felt so interconnected like I feel now, even with competitors,” stated Matt Licklider, proprietor of LIOCO in Healdsburg, a winebuildr that sources its grapes from various compact vineyards in California. He stated his winery sells to 40 distributors, some of which didn’t know whether they would have revenue coming in from imports becautilize of the unknowns around tariffs. So some of those distributors are ordering less from him. “It has put distributors in a more conservative mindset, which doesn’t benefit anyone here,” Licklider stated.
For restaurants that have very thin margins, marking up certain items such as wine can assist them survive. Licklider stated over the years, he has seen restaurant markups go from two to three times to as high as five times a wine bottle’s price.
Paul Einbund, owner of two restaurants in the Bay Area, stated, “a lot of my diners just won’t drink domestic (wine).” But he does list some American wines alongside European wines at The Morris, his restaurant in San Francisco, and Sirene, his new restaurant in Oakland.
Not knowing what’s going to happen next is the worst part, Einblund stated, especially for compact businesses that depconclude on attempting to purchase their products at the lowest possible prices.
“People up and down the supply chain are in trouble,” he stated. “We were receiveting emails declareing pre-tariff pricing, but that’s dried up now. European producers are not selling to Americans right now. European purchaseers are not purchaseing American wines right now.”
But Richard Samra, who has been growing grapes in the Sacramento Delta and Lodi for 40 years, stated he is more worried about selling his grapes to domestic wineries. He stated it’s “amazing” that some in the wine indusattempt are questioning for no tariffs on the competition.
He stated that competition receives plenty of assist. The European Commission recently approved $5.6 billion to support exports of French wines and spirits to the U.S. The European Union spconcludes more than 1 billion euros a year to assist boost European wine, and some countries have their own subsidy programs.
“U.S. wine grape growers don’t have that,” Samra stated.
“We want to level the playing field. We have plenty of grapes and wine available for sale,” Samra added. He stated tens of thousands of acres of vines have been pulled out in California as supply outstrips demand, and he expects that to keep growing. He stated imports are a major factor: “Profit margins for people are greater when they purchase a product from outside the U.S. and sell it here.”
Yet, vintners like Haas, in Paso Robles, stated he also worries about the relationships that he has cultivated for years and how they’re being affected by the tariffs. Tablas, his winery, has lost all business in Canada this year.
“There’s certainly spillover effects in terms of other countries just being less wanting to support American products, becautilize they feel like they’re being bullied,” Haas stated.
Tablas only exports about 5% of what it produces, but Haas wanted to grow that this year. “We did a lot of investment last year, and building up export markets,” he stated. “And so to have it be down this year instead of up has certainly been a hit to us.”
This story was produced by CalMatters and reviewed and distributed by Stacker.
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