The US Trade Representative may escalate trade tensions with France, potentially raising tariffs on European wine up to 100 percent. Our continuing coverage of the story highlights the impact of such steep tariffs on importers. Tyler Colman caught up by phone with Wilson Daniels president Rocco Lombardo at his Napa office. For more coverage, see this story, or explore the "Related Content" below.
Wilson Daniels is a leading importer of fine wines from Europe, including Domaine de la Romanée-Conti and Domaine Leflaive from Burgundy, and Biondi-Santi and Dal Forno from Italy; domestic wines comprise about 40 percent of its portfolio. The company also runs a wholesale business in New York and New Jersey.
In order to get the wine into the US and cleared through Customs before new tariffs potentially go into effect, Wilson Daniels is trying to get wines here quickly. Lombardo said they have made “substantial” purchase commitments and are “getting as much product on the water as we can.”
“Clearly we’re going to make some very large purchases to weather the storm but we’re in a very fortunate position. The company is financially strong and has strong ownership. We can purchase one year’s worth of stock. We have overseas warehouses where we can store product and be patient while we wait for smoother waters and trade tensions easing.”
But there’s only so much they can do since many wineries won’t release their next vintages until the spring. In that situation, Lombardo said, “Maybe we will defer until later in the year? Or use the consolidation warehouses until these tensions pass and the ridiculous tariffs being levied on our industry are rolled back.”
The strong dollar helped offset the 25 percent tariff that went into effect on October 18, and Lombardo said Wilson Daniels worked with its winery partners to absorb the increase. The next set, with a 100 percent levy looming, will be more challenging.
“This second round will be impossible to mitigate,” he says.
The domestic wines in their portfolio stand to benefit if the tariffs do bite. He cited Schramsberg, a Napa-based producer whose sparkling wines retail for $35 to $40 a bottle. Lombardo says they “can compete with grower Champagnes” on quality but could soon see a significant price advantage that will make the relative value “much more appealing if the tariffs go into effect.”
But, he added, he’s not entirely reveling at this prospect: “Clearly, our goal and wish is for the trade war to be resolved and these wines to compete in an open market.”
How long are they planning for the tariffs to endure? “It would be very challenging for us if they extend beyond the end of the calendar year 2020.”
They might even tap the strategic DRC reserve, already in the US: “Fortunately for Wilson Daniels, we maintain a large library of wines in the West Coast. Typically, we release ten percent every fall, so an option for us could be to release a greater percentage of library wines.”
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