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The prospect of tax hikes in the US leaves Provence unmoved

By Vitisphere October 14, 2019
The prospect of tax hikes in the US leaves Provence unmoved
In 2018, one in ten bottles of Provence wine was sold in the United States, by far the leading export market for the region’s rosés. - crédit photo : DR

ith industry members still reeling after the announcement by the US that it would raise custom duties on still bottled wines from France (and Germany, Spain and the United Kingdom) by 25%, French exporters are quantifying the risks they face in the short term; the increase is due to come into force on 18 October. “For the past week we have been trying to reassure our partners in Provence”, reported one marketing firm, confirming the importance of the American market for Provence’s wine exports (46% of volume shipments and 50% of values last year). “We haven’t had any feedback from suppliers who have had their orders cancelled or changed. All of them are liaising with their importers to plan ahead”, confirmed Brice Eymard, managing director of the Provence wine marketing board (CIVP). “Some wonder if the taxes are still negotiable. But we are not counting on it: we will be affected by them”, he added. His resignation is not shared by all of the French wine industry – Sancerre, for instance, is optimistic that the issue will be resolved ahead of October 18.

+$3 to +$6/bottle

The CIVP has estimated that the sweet spot for sales of Provence wines in the American market is in the 15 to 25 dollars a bottle retail bracket (i.e. 14-23 euros a bottle). So a 25% increase in the purchase price would lead to a hike of 3 to 6 dollars in the cost of a bottle of Provence rosé for consumers (i.e. 3 to 5 euros more). “The direct impact on our average prices will be small, and our target audience is wealthy, urban consumers”, said Eymard. “The continuous increase in the price of Provence rosé that the American market has accepted will always be much higher than its taxes”, was the ironic comment made by one broker in the South of France.

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