TRADE / ECONOMY | MARKET CONDITIONS | MARKETING | DISTRIBUTION | WINE TOURISM

€11 billion surplus for French wines and spirits in 2020

Tuesday February 16 2021 by Vitisphere
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The French government raised the issue of a moratorium on the Trump taxes, which César Giron believes “is the only measure that can secure the development of our industry in the medium and long term”. The French government raised the issue of a moratorium on the Trump taxes, which César Giron believes “is the only measure that can secure the development of our industry in the medium and long term”. - Photo credit : FEVS

With a surplus of €11 billion (-13.4% compared to 2019), the wine and spirits industry is still “the second largest contributor to the French trade surplus”, according to César Giron, chairman of the Federation of Wine and Spirits Exporters (FEVS), in a video press conference on 11 February. And that’s despite an “extraordinary” year in 2020 with the “global impact of Covid – bar, hotel and restaurant closures and the ban on festive gatherings – American taxes and uncertainties surrounding Brexit (and its eleventh-hour agreement on December 24)” causing losses of €1 billion in export sales for wines, and a commensurate amount for spirits.

Wines and spirits rank second to the aviation industry with its €16.5 billion surplus (-14.7%), but rise to first place if State aid is factored into the equation, according to the FEVS. By removing the €7 billion of specific aid to the aviation industry – and €80 million of public funds for storing and distilling wines – César Giron claims “that wines and spirits are the leading net contributors to the trade surplus”. He also hammered home the fact that “the French wine and spirits industry should not be sacrificed on the altar of the aviation industry”.

“We are being unfairly hit by American taxes in an [aviation] dispute which has nothing to do with us”, stressed César Giron, for whom “the real battle involves suspending and putting an end to the import taxes on either side of the Atlantic”.

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Nicholas Karavidas 16 february 2021 - 18:49:30
We all need to contemplate the meaning of “free, open, and fair trade” while understanding the fact that “tariffs” are a single cost barrier in the import/export equation. Tariffs, VAT’s, Fees, Duties, and other costs incurred by an exporter of goods add up to “the total cost of exporting into that foreign nation”. The US exporter of wine incurs anywhere from nearly 50% to over 300% to export wine into a foreign nation. This is an unprecedented literal ‘wall’ of which not nation importing wine into the US has ever imagined. Forget the term ‘tariff’ for a moment and consider the total added costs country to country for importing wine and then determine what is ‘free, fair, and open trade policy. No, airplane parts or other industries should not be leveraging for trade policies on wine. Could you imagine if US wine held over 30% of the dollar share of wine sales on the French or Italian or Spanish retail shelf? What an outpouring of outrage we might witness but this is the condition of the US shelf for domestic US wine suppliers. This condition has now caused the direct conflict between the US wine suppliers and the US wine retailers with the entire US wine wholesaler system in the middle. How long will the US suppliers slumber in ignorance of this ‘decimation’ of domestic wines on the US retailer shelf while walls are fortified internationally to keep US wines from competing on the international shelf while the floodgates of imported wines are opened in this deluge of direct or indirectly subsidized wines? Whatever the “total accumulated costs to import into a foreign country are”, free, fair, and open international policies should “equalize all those costs from one country to another”. Final note: with only the largest of all domestic US wineries able to adjust with reducing or enlarging their imported wine sales for the US retail system, it only encourages the growth and control by the largest producers and reduces the capability of the small to medium sized wine suppliers in the US to flourish. This imbalance only encourages the monopolization of the US wine industry and creates an impermeable barrier for new entries to compete. Needless to say, the small farmer in the US is bombarded with a roller coaster of choices ultimately resulting in the sale of land to consolidation with large corporate entities exacerbating the issue. The answer: equal percentage and equal total import-export fees from one country to the next concerning wine. It is the only way to allow free competition to thrive. Remember, “tariff” is not the term but the “total accumulated costs to import a wine product into a foreign nation”. This should be the basis for our conversations and this should be the topic matter for our international wine trade policies.
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