US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

Tasting notes, varietals, grapes - anything related to wine
Message
Author
User avatar
Andrew Kotowski
GCC Member
GCC Member
Posts: 4665
Joined: February 7th, 2012, 1:42 pm
Location: Sammamish, WA

Re: US to impose 25% tariff on many European wines; but 100% tariff called off

#1151 Post by Andrew Kotowski » January 20th, 2020, 5:14 pm

Michel Abood wrote:
January 20th, 2020, 4:46 pm
As someone with Champagne on the water, I am slightly relieved. This only resolved one issue (the DST), there is still risk of 100% on ALL wines from the EU, including Champagne, for the Airbus issue. So they just removed one nuke, the other one is still hanging over our heads.

Fun times.
We’ll be celebrating in Paris soon enough ;)
You can find me at the grill! Https://www.instagram.com/akgrill

User avatar
Mark Golodetz
GCC Member
GCC Member
Posts: 6399
Joined: May 29th, 2009, 8:49 pm

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1152 Post by Mark Golodetz » January 20th, 2020, 5:16 pm

When does Boeing’s transgressions officially become a bargaining chip?
ITB

User avatar
D@vid Bu3ker
GCC Member
GCC Member
Posts: 34751
Joined: February 14th, 2009, 8:06 am
Location: Connecticut

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1153 Post by D@vid Bu3ker » January 20th, 2020, 5:18 pm

Mark Golodetz wrote:
January 20th, 2020, 5:16 pm
When does Boeing’s transgressions officially become a bargaining chip?
It’s not relevant.
David Bueker - Rieslingfan

Dan Kravitz
GCC Member
GCC Member
Posts: 2069
Joined: May 10th, 2010, 3:47 pm
Location: Harpswell, Maine

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1154 Post by Dan Kravitz » January 20th, 2020, 5:25 pm

As the U.S. is refusing to have judges appointed after the current terms expire, Boeing's transgressions are irrelevant, as David pointed out. In theory, the blatant subsidies to Airbus by Europe might be more or less offset by the subtle U.S. subsidies to Boeing (through inflated defense contracts). But if there are no judges to hear Europe's case, it's moot.

Storms become shitstorms when there is panglobal defecation.

Panglobal Defecation would be a good name for a rock band.

Dan Kravitz
swillmaster - ITB


User avatar
D@vid Bu3ker
GCC Member
GCC Member
Posts: 34751
Joined: February 14th, 2009, 8:06 am
Location: Connecticut

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1156 Post by D@vid Bu3ker » January 20th, 2020, 5:37 pm

Dan,

Airbus also has defense contracts.

Boeing receives huge subsidies in the form of tax breaks. Sooner or later the WTO will catch up to them.
David Bueker - Rieslingfan

Dan Kravitz
GCC Member
GCC Member
Posts: 2069
Joined: May 10th, 2010, 3:47 pm
Location: Harpswell, Maine

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1157 Post by Dan Kravitz » January 20th, 2020, 6:36 pm

I know that Airbus has defense contracts. Please correct me if I'm wrong, but I have heard that Boeing's are something like an order of magnitude bigger... and more profitable by design.

The WTO won't catch up to them if the United States destroys the WTO, a work in progress.

Dan Kravitz
swillmaster - ITB

User avatar
D@vid Bu3ker
GCC Member
GCC Member
Posts: 34751
Joined: February 14th, 2009, 8:06 am
Location: Connecticut

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1158 Post by D@vid Bu3ker » January 20th, 2020, 6:42 pm

The US’ defense budget is more than an order of magnitude larger than that of the EU. Defense contracts are NOT the “subsidies” at issue in the cases.

Yes, the status of the WTO is a concern. That is a call to arms...for November.
David Bueker - Rieslingfan

User avatar
Michel Abood
GCC Member
GCC Member
Posts: 4794
Joined: February 3rd, 2009, 8:30 am
Location: New York/Paris

Re: US to impose 25% tariff on many European wines; but 100% tariff called off

#1159 Post by Michel Abood » January 20th, 2020, 10:23 pm

Andrew Kotowski wrote:
January 20th, 2020, 5:14 pm
Michel Abood wrote:
January 20th, 2020, 4:46 pm
As someone with Champagne on the water, I am slightly relieved. This only resolved one issue (the DST), there is still risk of 100% on ALL wines from the EU, including Champagne, for the Airbus issue. So they just removed one nuke, the other one is still hanging over our heads.

Fun times.
We’ll be celebrating in Paris soon enough ;)
Can't wait. champagne.gif
Guess what? I'm ITB-> Vinotas Selections

T Mikula
Posts: 15
Joined: June 28th, 2019, 7:23 am

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1160 Post by T Mikula » January 21st, 2020, 4:38 am

So does this mean that TotalWine will now be lowering the prices on their Bordeaux wines :)
T o m

Tom G l a s g o w
GCC Member
GCC Member
Posts: 5014
Joined: February 19th, 2010, 2:01 pm

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1161 Post by Tom G l a s g o w » January 21st, 2020, 4:43 am

T Mikula wrote:
January 21st, 2020, 4:38 am
So does this mean that TotalWine will now be lowering the prices on their Bordeaux wines :)
25% tariff is still in effect, so no.

User avatar
D@vid Bu3ker
GCC Member
GCC Member
Posts: 34751
Joined: February 14th, 2009, 8:06 am
Location: Connecticut

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1162 Post by D@vid Bu3ker » January 21st, 2020, 5:04 am

Correct.
David Bueker - Rieslingfan

T Mikula
Posts: 15
Joined: June 28th, 2019, 7:23 am

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1163 Post by T Mikula » January 21st, 2020, 5:20 am

Tom G l a s g o w wrote:
January 21st, 2020, 4:43 am
T Mikula wrote:
January 21st, 2020, 4:38 am
So does this mean that TotalWine will now be lowering the prices on their Bordeaux wines :)
25% tariff is still in effect, so no.
They were raising prices in anticipation of the 100% tariffs hitting.
T o m

User avatar
Richard T r i m p i
GCC Member
GCC Member
Posts: 13057
Joined: September 11th, 2009, 1:29 pm
Location: Within walking distance of William Penn's Walking Purchase

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1164 Post by Richard T r i m p i » January 21st, 2020, 5:26 am

Really psyched for all those with livelihoods on the chopping block. This is very good news. Not sure we're completely out of the wood since our administration is known for unexpected changes. Hopefully the European representatives and US counterparts keep the momentum moving in the right direction.

RT

User avatar
D@vid Bu3ker
GCC Member
GCC Member
Posts: 34751
Joined: February 14th, 2009, 8:06 am
Location: Connecticut

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1165 Post by D@vid Bu3ker » January 21st, 2020, 5:39 am

T Mikula wrote:
January 21st, 2020, 5:20 am
Tom G l a s g o w wrote:
January 21st, 2020, 4:43 am
T Mikula wrote:
January 21st, 2020, 4:38 am
So does this mean that TotalWine will now be lowering the prices on their Bordeaux wines :)
25% tariff is still in effect, so no.
They were raising prices in anticipation of the 100% tariffs hitting.
That is incorrect.

There was a 25% tariff imposed in October, based on the WTO Airbus case. That is what caused the price increases.
David Bueker - Rieslingfan

T Mikula
Posts: 15
Joined: June 28th, 2019, 7:23 am

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1166 Post by T Mikula » January 21st, 2020, 6:03 am

D@vid Bu3ker wrote:
January 21st, 2020, 5:39 am
T Mikula wrote:
January 21st, 2020, 5:20 am
Tom G l a s g o w wrote:
January 21st, 2020, 4:43 am

25% tariff is still in effect, so no.
They were raising prices in anticipation of the 100% tariffs hitting.
That is incorrect.

There was a 25% tariff imposed in October, based on the WTO Airbus case. That is what caused the price increases.
My apologies. I had read (I thought on this forum) that they were increasing prices beyond the 25% tariff, in order to soften the blow of the 100% increase. Incremental price increases, rather than a swift, 1 time increase.

I stand corrected if that isn't the case.
T o m

User avatar
Nola Palomar
BerserkerDay MVP
BerserkerDay MVP
Posts: 4397
Joined: April 19th, 2009, 2:34 am
Location: Ugijar (GRANADA) Spain and Dayton, Ohio

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1167 Post by Nola Palomar » January 21st, 2020, 6:21 am

T Mikula wrote:
January 21st, 2020, 6:03 am
D@vid Bu3ker wrote:
January 21st, 2020, 5:39 am
T Mikula wrote:
January 21st, 2020, 5:20 am


They were raising prices in anticipation of the 100% tariffs hitting.
That is incorrect.

There was a 25% tariff imposed in October, based on the WTO Airbus case. That is what caused the price increases.
My apologies. I had read (I thought on this forum) that they were increasing prices beyond the 25% tariff, in order to soften the blow of the 100% increase. Incremental price increases, rather than a swift, 1 time increase.

I stand corrected if that isn't the case.
The 25% tariff is what the importer pays, this would incrementally be increased throughout the wine distribution system as cost are not fractionated to each designated group.
ie: if a the starting point was $1 and now it is $1.25, then the wholesaler has his mandatory increase in percentage, then the wine shop or restaurant has theirs all based on their cost, not the cost the importer had. In Ohio, you would likely see a 50% - 75% price increase due to a 25% increase at the port. A 100% tariff would likely show a 150% or more increase in the final price from pre-tariff prices.
Nola
ITB

Veleta
Bodega Dominio Buenavista
D.O.P. Granada, Spain


Juan Manuel Palomar MD - 1948-2018 Husband, Father, Surgeon, Mentor, Winery owner & Winemaker, my everything...RIP
Bob Wood - 1949-2013 Berserker for eternity! RIP

User avatar
John Morris
GCC Member
GCC Member
Posts: 17217
Joined: June 21st, 2009, 2:09 pm
Location: Gotham

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1168 Post by John Morris » January 21st, 2020, 7:03 am

Nola - We discussed the markup/final price issue in depth several pages back and I'm afraid you've got the basic math wrong. If everyone keeps their same percentage mark-ups, the retail price will increase in proportion to the tariffs.

Plus, as was discussed, to maintain volume and profits in dollars (as opposed to percentages), the middlemen will cut their margins. That's basic economics -- the pain is divided along the chain. It would be economically irrational for them to stick rigidly to their percentages because that would cause a big drop in demand/sales and they'd end up making less in dollar terms than if they cut their margins.
"English doesn't just borrow foreign words, it stalks languages down dark alleyways, knocks them over and then rifles their pockets for new words." -- @Another NPC on YouTube

User avatar
D@vid Bu3ker
GCC Member
GCC Member
Posts: 34751
Joined: February 14th, 2009, 8:06 am
Location: Connecticut

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1169 Post by D@vid Bu3ker » January 21st, 2020, 7:19 am

All well and good John, until corporate types (e.g. Total) get involved and measure things by margin % versus dollars. That's when the full increase hits.

Hopefully independent places will look at it in raw dollars. I'm not as optimistic as you. It's much easier to just slap 30% on top of cost.
David Bueker - Rieslingfan

User avatar
John Morris
GCC Member
GCC Member
Posts: 17217
Joined: June 21st, 2009, 2:09 pm
Location: Gotham

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1170 Post by John Morris » January 21st, 2020, 7:31 am

If Total (or whoever) is foolish enough to think that demand is inelastic, they'll be disabused of that notion quickly enough.

Retailers are in a better position, though, because they can sell South American or Australian wines as substitutes. It's the importer and distributors with fixed, European-centric lists that are most vulnerable.
"English doesn't just borrow foreign words, it stalks languages down dark alleyways, knocks them over and then rifles their pockets for new words." -- @Another NPC on YouTube

User avatar
Nola Palomar
BerserkerDay MVP
BerserkerDay MVP
Posts: 4397
Joined: April 19th, 2009, 2:34 am
Location: Ugijar (GRANADA) Spain and Dayton, Ohio

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1171 Post by Nola Palomar » January 21st, 2020, 7:40 am

John Morris wrote:
January 21st, 2020, 7:03 am
Nola - We discussed the markup/final price issue in depth several pages back and I'm afraid you've got the basic math wrong. If everyone keeps their same percentage mark-ups, the retail price will increase in proportion to the tariffs.

Plus, as was discussed, to maintain volume and profits in dollars (as opposed to percentages), the middlemen will cut their margins. That's basic economics -- the pain is divided along the chain. It would be economically irrational for them to stick rigidly to their percentages because that would cause a big drop in demand/sales and they'd end up making less in dollar terms than if they cut their margins.
I know that in theory, the "middleman" will absorb some of these cost by cutting their margin, but in control states, where does that start? If my rose wine normally sells to my distributor at $6 per bottle and now it is going to cost me $7.50 (wine cost ex-cellar Spain, + Freight + Duties & Custom Taxes, + my piddly margin of <10% + Tariff) , the State of Ohio mandates the State minimum price. Ohio wholesaler pays around $7.50 Then the distributor must mark up that price by 33%, meaning that the manager at your local supermarket pays around $10.00 for that bottle. Then he must charge a 50% markup, so the before-tax cost of that bottle would be around $15, add taxes and you are out the door at $17 or more. That is the State minimum. Frontline price? $20/bottle where before that rose wine was retailed out at $12.00 a bottle. So keep in mind. The importer does not get a penny until the distributor buys the wine and pays the bill, normally it is a net 30 - net 60 days. Who is going to reduce their margin?? These laws mandate your minimum prices, how many States are still control states? 17 https://www.nabca.org/control-state-directory-and-info I happen to live in one of them.
Nola
ITB

Veleta
Bodega Dominio Buenavista
D.O.P. Granada, Spain


Juan Manuel Palomar MD - 1948-2018 Husband, Father, Surgeon, Mentor, Winery owner & Winemaker, my everything...RIP
Bob Wood - 1949-2013 Berserker for eternity! RIP

User avatar
RichardFlack
GCC Member
GCC Member
Posts: 1340
Joined: June 4th, 2012, 10:41 pm
Location: Toronto

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1172 Post by RichardFlack » January 21st, 2020, 8:10 am

John Morris wrote:
January 21st, 2020, 7:03 am
Nola - We discussed the markup/final price issue in depth several pages back and I'm afraid you've got the basic math wrong. If everyone keeps their same percentage mark-ups, the retail price will increase in proportion to the tariffs.

Plus, as was discussed, to maintain volume and profits in dollars (as opposed to percentages), the middlemen will cut their margins. That's basic economics -- the pain is divided along the chain. It would be economically irrational for them to stick rigidly to their percentages because that would cause a big drop in demand/sales and they'd end up making less in dollar terms than if they cut their margins.
To assume that people or businesses are rational is not rational . :)

(There’s a branch of economics that deals with this, I think)

User avatar
RichardFlack
GCC Member
GCC Member
Posts: 1340
Joined: June 4th, 2012, 10:41 pm
Location: Toronto

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1173 Post by RichardFlack » January 21st, 2020, 8:15 am

D@vid Bu3ker wrote:
January 21st, 2020, 7:19 am
All well and good John, until corporate types (e.g. Total) get involved and measure things by margin % versus dollars. That's when the full increase hits.

Hopefully independent places will look at it in raw dollars. I'm not as optimistic as you. It's much easier to just slap 30% on top of cost.
30% of nothing is, well, nothing.

User avatar
D@vid Bu3ker
GCC Member
GCC Member
Posts: 34751
Joined: February 14th, 2009, 8:06 am
Location: Connecticut

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1174 Post by D@vid Bu3ker » January 21st, 2020, 8:39 am

Given Canadian prices I am not sure you should talk. ;)
David Bueker - Rieslingfan

Dale Williams
Posts: 1247
Joined: April 27th, 2009, 10:19 am

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1175 Post by Dale Williams » January 21st, 2020, 9:16 am

Nola Palomar wrote:
January 21st, 2020, 7:40 am
I know that in theory, the "middleman" will absorb some of these cost by cutting their margin, but in control states, where does that start? If my rose wine normally sells to my distributor at $6 per bottle and now it is going to cost me $7.50 (wine cost ex-cellar Spain, + Freight + Duties & Custom Taxes, + my piddly margin of <10% + Tariff) , the State of Ohio mandates the State minimum price. Ohio wholesaler pays around $7.50 Then the distributor must mark up that price by 33%, meaning that the manager at your local supermarket pays around $10.00 for that bottle. Then he must charge a 50% markup, so the before-tax cost of that bottle would be around $15, add taxes and you are out the door at $17 or more. That is the State minimum. Frontline price? $20/bottle where before that rose wine was retailed out at $12.00 a bottle. So keep in mind. The importer does not get a penny until the distributor buys the wine and pays the bill, normally it is a net 30 - net 60 days. Who is going to reduce their margin?? These laws mandate your minimum prices, how many States are still control states? 17 https://www.nabca.org/control-state-directory-and-info I happen to live in one of them.
I feel sorry for those caught in this.But the math is the $12 bottle becomes $15 retail. Maybe some retailers would price it to be $20, but with those assumptions it would have previously been $16.

User avatar
M A T T H A R T L E Y
Posts: 2030
Joined: June 3rd, 2009, 8:54 am

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1176 Post by M A T T H A R T L E Y » January 21st, 2020, 11:25 am

Dale Williams wrote:
January 21st, 2020, 9:16 am
Nola Palomar wrote:
January 21st, 2020, 7:40 am
I know that in theory, the "middleman" will absorb some of these cost by cutting their margin, but in control states, where does that start? If my rose wine normally sells to my distributor at $6 per bottle and now it is going to cost me $7.50 (wine cost ex-cellar Spain, + Freight + Duties & Custom Taxes, + my piddly margin of <10% + Tariff) , the State of Ohio mandates the State minimum price. Ohio wholesaler pays around $7.50 Then the distributor must mark up that price by 33%, meaning that the manager at your local supermarket pays around $10.00 for that bottle. Then he must charge a 50% markup, so the before-tax cost of that bottle would be around $15, add taxes and you are out the door at $17 or more. That is the State minimum. Frontline price? $20/bottle where before that rose wine was retailed out at $12.00 a bottle. So keep in mind. The importer does not get a penny until the distributor buys the wine and pays the bill, normally it is a net 30 - net 60 days. Who is going to reduce their margin?? These laws mandate your minimum prices, how many States are still control states? 17 https://www.nabca.org/control-state-directory-and-info I happen to live in one of them.
I feel sorry for those caught in this.But the math is the $12 bottle becomes $15 retail. Maybe some retailers would price it to be $20, but with those assumptions it would have previously been $16.
Yeah, so the $12 to $15 is if you take $12 and add 25% to it. Congrats.

That is assuming nobody everyone just passed it along at the 25%.

But the importer owes the 25% within 10 days, and maybe they gave 90 day terms. Maybe their cash flow doesn't allow for that kind of float and they need to add an extra 5% to make it worthwhile. Maybe prices were going up anyway and this new shipment is now 40% higher than before. Maybe the importer can't float the container value x 25% and had to consolidate, raising shipping costs. Nola is discussing control states, some of which have minimum markup requirements, post and hold, and all sorts of other nonsense.

There are hundreds of variables at play here, and each state has its own set of variables to struggle with...

So these matter of fact statements, especially from people who really don't have intimate knowledge of how this works, are not very helpful.
___________________________
ITB

Dale Williams
Posts: 1247
Joined: April 27th, 2009, 10:19 am

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1177 Post by Dale Williams » January 21st, 2020, 12:23 pm

As I said, I feel sorry for everyone caught up in this. But saying because of 25% tariff "$20/bottle where before that rose wine was retailed out at $12.00 a bottle" is a statement that doesn't hold up. Sure, there are lots of variables that can affect, but saying "prices were going up anyway" doesn't have much to do with tariffs. I hope there is a resolution, I hope the small importers can pull through, but saying we get to make up our own math isn't very helpful either.

Jonathan Loesberg
Posts: 1801
Joined: April 27th, 2010, 5:59 am

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1178 Post by Jonathan Loesberg » January 21st, 2020, 12:34 pm

The 25% tariff went into effect in October, and, as has been reported, wine prices remained fairly stable because importers and the domaines they worked with, together absorbed the hit. This happened before when the Euro went up astronomically and wine prices did not. No doubt, smaller importers and domaines, suffered more, but that kind of price variation has happened before and was happening this time in a strong dollar environment. If these tariffs continue, I expect the importers and domaines will slowly raise prices over the coming years, as they will do when the market allows it or demands it. None of this could have been absorbed, though, if the 100% tariffs had gone through.

User avatar
M A T T H A R T L E Y
Posts: 2030
Joined: June 3rd, 2009, 8:54 am

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1179 Post by M A T T H A R T L E Y » January 21st, 2020, 1:37 pm

Dale Williams wrote:
January 21st, 2020, 12:23 pm
As I said, I feel sorry for everyone caught up in this. But saying because of 25% tariff "$20/bottle where before that rose wine was retailed out at $12.00 a bottle" is a statement that doesn't hold up. Sure, there are lots of variables that can affect, but saying "prices were going up anyway" doesn't have much to do with tariffs. I hope there is a resolution, I hope the small importers can pull through, but saying we get to make up our own math isn't very helpful either.
[head-bang.gif]
___________________________
ITB

User avatar
M A T T H A R T L E Y
Posts: 2030
Joined: June 3rd, 2009, 8:54 am

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1180 Post by M A T T H A R T L E Y » January 21st, 2020, 1:39 pm

Jonathan Loesberg wrote:
January 21st, 2020, 12:34 pm
The 25% tariff went into effect in October, and, as has been reported, wine prices remained fairly stable because importers and the domaines they worked with, together absorbed the hit. This happened before when the Euro went up astronomically and wine prices did not. No doubt, smaller importers and domaines, suffered more, but that kind of price variation has happened before and was happening this time in a strong dollar environment. If these tariffs continue, I expect the importers and domaines will slowly raise prices over the coming years, as they will do when the market allows it or demands it. None of this could have been absorbed, though, if the 100% tariffs had gone through.
Years?

A lot of people held prices through Q4 so they didn't have to deal with price increases during peak season.

Anything sub 14% alcohol I would expect to see higher prices hitting shelves all spring long.
___________________________
ITB

User avatar
Nola Palomar
BerserkerDay MVP
BerserkerDay MVP
Posts: 4397
Joined: April 19th, 2009, 2:34 am
Location: Ugijar (GRANADA) Spain and Dayton, Ohio

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1181 Post by Nola Palomar » January 21st, 2020, 2:10 pm

Dale Williams wrote:
January 21st, 2020, 9:16 am
Nola Palomar wrote:
January 21st, 2020, 7:40 am
I know that in theory, the "middleman" will absorb some of these cost by cutting their margin, but in control states, where does that start? If my rose wine normally sells to my distributor at $6 per bottle and now it is going to cost me $7.50 (wine cost ex-cellar Spain, + Freight + Duties & Custom Taxes, + my piddly margin of <10% + Tariff) , the State of Ohio mandates the State minimum price. Ohio wholesaler pays around $7.50 Then the distributor must mark up that price by 33%, meaning that the manager at your local supermarket pays around $10.00 for that bottle. Then he must charge a 50% markup, so the before-tax cost of that bottle would be around $15, add taxes and you are out the door at $17 or more. That is the State minimum. Frontline price? $20/bottle where before that rose wine was retailed out at $12.00 a bottle. So keep in mind. The importer does not get a penny until the distributor buys the wine and pays the bill, normally it is a net 30 - net 60 days. Who is going to reduce their margin?? These laws mandate your minimum prices, how many States are still control states? 17 https://www.nabca.org/control-state-directory-and-info I happen to live in one of them.
I feel sorry for those caught in this.But the math is the $12 bottle becomes $15 retail. Maybe some retailers would price it to be $20, but with those assumptions it would have previously been $16.
Don't forget the excise tax the distributor pays when they purchase form me and the sales tax when the consumer purchases. Ohio's sales tax is county specific, Dayton and Columbus are at 7.5% Cinci is at 7% and Cleveland at 8% It all adds up.

But I am curious, in Control States, where is this middleman to which you are referring?
Nola
ITB

Veleta
Bodega Dominio Buenavista
D.O.P. Granada, Spain


Juan Manuel Palomar MD - 1948-2018 Husband, Father, Surgeon, Mentor, Winery owner & Winemaker, my everything...RIP
Bob Wood - 1949-2013 Berserker for eternity! RIP

Nick Gangas
GCC Member
GCC Member
Posts: 7294
Joined: August 7th, 2009, 6:27 pm

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1182 Post by Nick Gangas » January 21st, 2020, 5:20 pm

So far all my distributors have told me they are eating the increase along with the importer.

Nick Gangas
GCC Member
GCC Member
Posts: 7294
Joined: August 7th, 2009, 6:27 pm

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1183 Post by Nick Gangas » January 21st, 2020, 5:20 pm

Nola Palomar wrote:
January 21st, 2020, 2:10 pm
Dale Williams wrote:
January 21st, 2020, 9:16 am
Nola Palomar wrote:
January 21st, 2020, 7:40 am
I know that in theory, the "middleman" will absorb some of these cost by cutting their margin, but in control states, where does that start? If my rose wine normally sells to my distributor at $6 per bottle and now it is going to cost me $7.50 (wine cost ex-cellar Spain, + Freight + Duties & Custom Taxes, + my piddly margin of <10% + Tariff) , the State of Ohio mandates the State minimum price. Ohio wholesaler pays around $7.50 Then the distributor must mark up that price by 33%, meaning that the manager at your local supermarket pays around $10.00 for that bottle. Then he must charge a 50% markup, so the before-tax cost of that bottle would be around $15, add taxes and you are out the door at $17 or more. That is the State minimum. Frontline price? $20/bottle where before that rose wine was retailed out at $12.00 a bottle. So keep in mind. The importer does not get a penny until the distributor buys the wine and pays the bill, normally it is a net 30 - net 60 days. Who is going to reduce their margin?? These laws mandate your minimum prices, how many States are still control states? 17 https://www.nabca.org/control-state-directory-and-info I happen to live in one of them.
I feel sorry for those caught in this.But the math is the $12 bottle becomes $15 retail. Maybe some retailers would price it to be $20, but with those assumptions it would have previously been $16.
Don't forget the excise tax the distributor pays when they purchase form me and the sales tax when the consumer purchases. Ohio's sales tax is county specific, Dayton and Columbus are at 7.5% Cinci is at 7% and Cleveland at 8% It all adds up.

But I am curious, in Control States, where is this middleman to which you are referring?
Isn't it wonderful when government tells you how to run your business ?

User avatar
D@vid Bu3ker
GCC Member
GCC Member
Posts: 34751
Joined: February 14th, 2009, 8:06 am
Location: Connecticut

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1184 Post by D@vid Bu3ker » January 21st, 2020, 5:28 pm

Nick Gangas wrote:
January 21st, 2020, 5:20 pm
So far all my distributors have told me they are eating the increase along with the importer.
At 100% they won’t be able to do that.
David Bueker - Rieslingfan

Dan Kravitz
GCC Member
GCC Member
Posts: 2069
Joined: May 10th, 2010, 3:47 pm
Location: Harpswell, Maine

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1185 Post by Dan Kravitz » January 21st, 2020, 5:41 pm

to Matt Hartley, you wrote: "But the importer owes the 25% within 10 days..."

Your argument is incorrect from this phrase on. The importer pays the 25% before the wine is released from customs. I know. I'm the importer. I've been writing the checks.

Dan Kravitz
swillmaster - ITB

User avatar
RichardFlack
GCC Member
GCC Member
Posts: 1340
Joined: June 4th, 2012, 10:41 pm
Location: Toronto

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1186 Post by RichardFlack » January 21st, 2020, 5:55 pm

Nola Palomar wrote:
January 21st, 2020, 7:40 am
John Morris wrote:
January 21st, 2020, 7:03 am
Nola - We discussed the markup/final price issue in depth several pages back and I'm afraid you've got the basic math wrong. If everyone keeps their same percentage mark-ups, the retail price will increase in proportion to the tariffs.

Plus, as was discussed, to maintain volume and profits in dollars (as opposed to percentages), the middlemen will cut their margins. That's basic economics -- the pain is divided along the chain. It would be economically irrational for them to stick rigidly to their percentages because that would cause a big drop in demand/sales and they'd end up making less in dollar terms than if they cut their margins.
I know that in theory, the "middleman" will absorb some of these cost by cutting their margin, but in control states, where does that start? If my rose wine normally sells to my distributor at $6 per bottle and now it is going to cost me $7.50 (wine cost ex-cellar Spain, + Freight + Duties & Custom Taxes, + my piddly margin of <10% + Tariff) , the State of Ohio mandates the State minimum price. Ohio wholesaler pays around $7.50 Then the distributor must mark up that price by 33%, meaning that the manager at your local supermarket pays around $10.00 for that bottle. Then he must charge a 50% markup, so the before-tax cost of that bottle would be around $15, add taxes and you are out the door at $17 or more. That is the State minimum. Frontline price? $20/bottle where before that rose wine was retailed out at $12.00 a bottle. So keep in mind. The importer does not get a penny until the distributor buys the wine and pays the bill, normally it is a net 30 - net 60 days. Who is going to reduce their margin?? These laws mandate your minimum prices, how many States are still control states? 17 https://www.nabca.org/control-state-directory-and-info I happen to live in one of them.
“Must” ... add the same % markup .... that’s the nub of this debate.
Nola, I do feel for you. You obviously feel your business is threatened and I obviously don’t have the direct experience you and others do.

But isn’t the goal to maximize either profits or sales (not necessarily the same thing)? That means the markup is a solve item. And unfortunately this is in a market where price elasticity isnt well understood. But in some sense the pain should be borne by each stage of the chain nit just the end consumer.

You make very good points about the prepayment aspects and limited capital or tight borrowing capacity. That makes decisions for an importer on future imports very difficult.

There is no doubt that tariffs are a terrible solution to these issues due to the collateral damage to US consumers and businesses. Unfortunately you are dealing with a government that speaks “bully” not diplomacy.

User avatar
RichardFlack
GCC Member
GCC Member
Posts: 1340
Joined: June 4th, 2012, 10:41 pm
Location: Toronto

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1187 Post by RichardFlack » January 21st, 2020, 6:13 pm

RichardFlack wrote:
January 21st, 2020, 5:55 pm
Nola Palomar wrote:
January 21st, 2020, 7:40 am
John Morris wrote:
January 21st, 2020, 7:03 am
Nola - We discussed the markup/final price issue in depth several pages back and I'm afraid you've got the basic math wrong. If everyone keeps their same percentage mark-ups, the retail price will increase in proportion to the tariffs.

Plus, as was discussed, to maintain volume and profits in dollars (as opposed to percentages), the middlemen will cut their margins. That's basic economics -- the pain is divided along the chain. It would be economically irrational for them to stick rigidly to their percentages because that would cause a big drop in demand/sales and they'd end up making less in dollar terms than if they cut their margins.
I know that in theory, the "middleman" will absorb some of these cost by cutting their margin, but in control states, where does that start? If my rose wine normally sells to my distributor at $6 per bottle and now it is going to cost me $7.50 (wine cost ex-cellar Spain, + Freight + Duties & Custom Taxes, + my piddly margin of <10% + Tariff) , the State of Ohio mandates the State minimum price. Ohio wholesaler pays around $7.50 Then the distributor must mark up that price by 33%, meaning that the manager at your local supermarket pays around $10.00 for that bottle. Then he must charge a 50% markup, so the before-tax cost of that bottle would be around $15, add taxes and you are out the door at $17 or more. That is the State minimum. Frontline price? $20/bottle where before that rose wine was retailed out at $12.00 a bottle. So keep in mind. The importer does not get a penny until the distributor buys the wine and pays the bill, normally it is a net 30 - net 60 days. Who is going to reduce their margin?? These laws mandate your minimum prices, how many States are still control states? 17 https://www.nabca.org/control-state-directory-and-info I happen to live in one of them.
“Must” ... add the same % markup .... that’s the nub of this debate.
Nola, I do feel for you. You obviously feel your business is threatened and I obviously don’t have the direct experience you and others do.

But isn’t the goal to maximize either profits or sales (not necessarily the same thing)? That means the markup is a solve item. And unfortunately this is in a market where price elasticity isnt well understood. But in some sense the pain should be borne by each stage of the chain nit just the end consumer.

You make very good points about the prepayment aspects and limited capital or tight borrowing capacity. That makes decisions for an importer on future imports very difficult.

There is no doubt that tariffs are a terrible solution to these issues due to the collateral damage to US consumers and businesses. Unfortunately you are dealing with a government that speaks “bully” not diplomacy, although the situation on the technology tax is interesting.

User avatar
D@vid Bu3ker
GCC Member
GCC Member
Posts: 34751
Joined: February 14th, 2009, 8:06 am
Location: Connecticut

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1188 Post by D@vid Bu3ker » January 21st, 2020, 6:30 pm

Dan Kravitz wrote:
January 21st, 2020, 5:41 pm
to Matt Hartley, you wrote: "But the importer owes the 25% within 10 days..."

Your argument is incorrect from this phrase on. The importer pays the 25% before the wine is released from customs. I know. I'm the importer. I've been writing the checks.

Dan Kravitz
Dan,

10 days is the standard period for the customs clearance process. After that we are into penalties and the post-entry adjustment process.

Overall it’s completely useless for people in this thread to be arguing about markups and who pays when. The tariffs are the enemy, not each other.
David Bueker - Rieslingfan

Dale Williams
Posts: 1247
Joined: April 27th, 2009, 10:19 am

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1189 Post by Dale Williams » January 21st, 2020, 6:45 pm

Nola Palomar wrote:
January 21st, 2020, 2:10 pm
Dale Williams wrote:
January 21st, 2020, 9:16 am

I feel sorry for those caught in this.But the math is the $12 bottle becomes $15 retail. Maybe some retailers would price it to be $20, but with those assumptions it would have previously been $16.
Don't forget the excise tax the distributor pays when they purchase form me and the sales tax when the consumer purchases. Ohio's sales tax is county specific, Dayton and Columbus are at 7.5% Cinci is at 7% and Cleveland at 8% It all adds up.

But I am curious, in Control States, where is this middleman to which you are referring?
Pretty sure I never mentioned a middleman. And taxes would go up .....25% (8% on $12 bottle is $0.96, on $15 $1.20.) So total price still goes up 25%

User avatar
Michel Abood
GCC Member
GCC Member
Posts: 4794
Joined: February 3rd, 2009, 8:30 am
Location: New York/Paris

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1190 Post by Michel Abood » January 21st, 2020, 8:59 pm

Dan Kravitz wrote:
January 21st, 2020, 5:41 pm
to Matt Hartley, you wrote: "But the importer owes the 25% within 10 days..."

Your argument is incorrect from this phrase on. The importer pays the 25% before the wine is released from customs. I know. I'm the importer. I've been writing the checks.

Dan Kravitz
+1. I get the invoice the moment the wine lands, frankly. And I better pay up the moment I get the invoice.
Guess what? I'm ITB-> Vinotas Selections

User avatar
Nola Palomar
BerserkerDay MVP
BerserkerDay MVP
Posts: 4397
Joined: April 19th, 2009, 2:34 am
Location: Ugijar (GRANADA) Spain and Dayton, Ohio

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1191 Post by Nola Palomar » January 21st, 2020, 9:01 pm

Michel Abood wrote:
January 21st, 2020, 8:59 pm
Dan Kravitz wrote:
January 21st, 2020, 5:41 pm
to Matt Hartley, you wrote: "But the importer owes the 25% within 10 days..."

Your argument is incorrect from this phrase on. The importer pays the 25% before the wine is released from customs. I know. I'm the importer. I've been writing the checks.

Dan Kravitz
+1. I get the invoice the moment the wine lands, frankly. And I better pay up the moment I get the invoice.
+1.
Nola
ITB

Veleta
Bodega Dominio Buenavista
D.O.P. Granada, Spain


Juan Manuel Palomar MD - 1948-2018 Husband, Father, Surgeon, Mentor, Winery owner & Winemaker, my everything...RIP
Bob Wood - 1949-2013 Berserker for eternity! RIP

User avatar
Victor Hong
Posts: 15784
Joined: May 30th, 2009, 1:34 pm

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1192 Post by Victor Hong » January 22nd, 2020, 5:47 am

https://www.washingtonpost.com/business ... us-allies/

Trump threatens Europe with fresh tariffs in Davos, deepening a rift with longtime U.S. allies.
WineHunter.

User avatar
D@vid Bu3ker
GCC Member
GCC Member
Posts: 34751
Joined: February 14th, 2009, 8:06 am
Location: Connecticut

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1193 Post by D@vid Bu3ker » January 22nd, 2020, 6:04 am

No specific wine threats. (Noted just to keep blood pressure down)
David Bueker - Rieslingfan

User avatar
Troy Stark
Posts: 362
Joined: March 7th, 2012, 9:51 am
Location: Tampa, FL

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1194 Post by Troy Stark » January 22nd, 2020, 6:41 am

D@vid Bu3ker wrote:
January 21st, 2020, 6:30 pm
Overall it’s completely useless for people in this thread to be arguing about markups and who pays when. The tariffs are the enemy, not each other.
Thank you. The issue about margins vs markup and who should pay what has been discussed ad nauseum in this thread. deadhorse
Insta: @lofiwineguy

User avatar
M A T T H A R T L E Y
Posts: 2030
Joined: June 3rd, 2009, 8:54 am

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1195 Post by M A T T H A R T L E Y » January 22nd, 2020, 9:14 am

Dan Kravitz wrote:
January 21st, 2020, 5:41 pm
to Matt Hartley, you wrote: "But the importer owes the 25% within 10 days..."

Your argument is incorrect from this phrase on. The importer pays the 25% before the wine is released from customs. I know. I'm the importer. I've been writing the checks.

Dan Kravitz
Do you owe it within 10 days?
___________________________
ITB

User avatar
D@vid Bu3ker
GCC Member
GCC Member
Posts: 34751
Joined: February 14th, 2009, 8:06 am
Location: Connecticut

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1196 Post by D@vid Bu3ker » January 22nd, 2020, 9:18 am

There is a 10 day grace period given by the Customs Border and Protection Agency for all duties and taxes to be paid on an entry.
David Bueker - Rieslingfan

User avatar
M A T T H A R T L E Y
Posts: 2030
Joined: June 3rd, 2009, 8:54 am

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1197 Post by M A T T H A R T L E Y » January 22nd, 2020, 9:36 am

D@vid Bu3ker wrote:
January 22nd, 2020, 9:18 am
There is a 10 day grace period given by the Customs Border and Protection Agency for all duties and taxes to be paid on an entry.
yeah I am just curious as to what I got wrong there?
___________________________
ITB

User avatar
D@vid Bu3ker
GCC Member
GCC Member
Posts: 34751
Joined: February 14th, 2009, 8:06 am
Location: Connecticut

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1198 Post by D@vid Bu3ker » January 22nd, 2020, 9:43 am

M A T T H A R T L E Y wrote:
January 22nd, 2020, 9:36 am
D@vid Bu3ker wrote:
January 22nd, 2020, 9:18 am
There is a 10 day grace period given by the Customs Border and Protection Agency for all duties and taxes to be paid on an entry.
yeah I am just curious as to what I got wrong there?
Trying to get into detailed analysis during what is now an emotional debate.
David Bueker - Rieslingfan

User avatar
AndrewH
Posts: 2505
Joined: May 14th, 2010, 1:34 pm

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1199 Post by AndrewH » January 22nd, 2020, 11:38 am

M A T T H A R T L E Y wrote:
January 22nd, 2020, 9:36 am
D@vid Bu3ker wrote:
January 22nd, 2020, 9:18 am
There is a 10 day grace period given by the Customs Border and Protection Agency for all duties and taxes to be paid on an entry.
yeah I am just curious as to what I got wrong there?
The math assuming an efficient market is correct. Those in the business note practical considerations that may lead to passing along more than 100% of the tariff through the supply chain (which could be because of legal reasons, practical reasons, or as a hidden way of trying to increase margins).
Andrew H e i m e r t

Dan Kravitz
GCC Member
GCC Member
Posts: 2069
Joined: May 10th, 2010, 3:47 pm
Location: Harpswell, Maine

Re: US 25% tariff on European wines; 100% "digital" tariff on French products called off for the moment

#1200 Post by Dan Kravitz » January 22nd, 2020, 5:01 pm

I'm trying to be neither boring nor emotional, just the facts please folks.

My customs broker, who we have been using for several decades and who is totally professional, told us to pay for the tariff on the day the boat docks. This was not standard practice before the tariffs, when they would invoice us on docking with 7 day terms (I assume giving them wiggle room on the 10 days); of course we use interbank transfer, not paper checks. Maybe they are just CYA, but it sounds like other importers have had the same experience.

Nobody on this board is my enemy. It's amazing how few members of the board even irritate me and believe me, I am easy to irritate [snort.gif] .

Despite the usual Trumptrum in Davos, I remain cautiously optimistic that in mid-Feb we will have some clarity that current tariffs will remain in place through 2020. Breathing room is good.

Dan Kravitz
swillmaster - ITB

Post Reply

Return to “Wine Talk”