Talking Trade – Effects of US tariffs already felt in the New Year

Happy New Year to all of those in the wine trade and beyond.

December was an extraordinary end to an unprecedented year. A Brexit trade deal was struck at the midnight hour. VI-1 requirements were dramatically watered down and crucially there are no longer any requirements for lab analysis.  All things considered it seemed we were in for a positive start to the new year. But then the US placed additional tariffs on EU produced wines.

The present 25% tariffs were enacted in October 2019 and were put on all French, German, and Spanish non-sparkling wines at 14% or below ABV. The new tariffs, which come into effect on January 12th, are on all German and French wines, no matter the ABV. Spain was spared the increase. And Italy and Champagne are still omitted.

Coming as quite a surprise, the effects of these tariffs are already being seen in the secondary market. Italy (15.7%), Champagne (10.2%), and the USA (10.0%) all started the year briskly as their omission from the US tariffs made trading decisions easy. Bordeaux has not been so lucky. It is expected that the shipping of Bordeaux (amongst others) will be delayed while importers wait to see what the new US administration does. Few are expecting an overnight U-turn.

Domaine de la Romanee Conti, Romanee Conti Grand Cru 2003 was the most traded wine by value this week. Screaming Eagle Oakville Cabernet Sauvignon 2016 was the second most traded – it has received unanimous praise from trade critics. James Suckling, Lisa Perrotti-Brown, and Antonio Galloni all scored the wine at 100 points. Their drinking windows range from next year out to 2065.

Toro Albala Montilla Don PX Convento Seleccion 1946, a fortified wine from Spain, joined the top traded list this week. The wine was one of the first three sherries to be awarded 100 points in the Robert Parker Wine Advocate. Luis Gutierrez, who covered the wine, called it “an extreme wine” and “ultra-mega-super concentrated”. He further explained “it is unbelievably powerful both in the nose and the palate, full of unami, with sweet cinnamon, Christmas cake, camphor, petrol, lemongrass belgian chocolate and butter.”

Liv-ex Indices

Both the Liv-ex Fine Wine 100 and Liv-ex Fine Wine 1000 posted gains in December, up 0.75% and 0.71% respectively. Both indices closed the year in positive territory. All the Liv-ex 1000 sub-indices bar the Burgundy 150 and Rest of the World 60 closed the year in positive territory.