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

[Kelly Walker]

Rare Wine Co sells oceans of "Tuscan Olive Oils" every year, from specific Tuscan producers. If the oil is not really Tuscan, it would be a fraud, and I do not believe they are committing a fraud.

Also, Rare Wine does not sell "oceans" of Tuscan olive oils. His annual offer usually sells out in 1 - 2 days and is allocated.

[Victor Hong]

At VinItaly several years ago, a well-known, higher-end olive oil merchant was boasting that he "sources" from the finest, family-run, hand-harvested olive groves in Italy. His stated volume sounded large, relative to those small groves.
I asked if those groves grow and extract all their own oils, or if they import from Greece, Spain, Lebanon, or other countries for re-sale to him. He threatened to harm me.

[D@vid Bu3ker]

So an imported oil that is a blend of 50% Spanish and 50% Italian would only pay the tariff on 50% of the value of the oil?

If the tariff is applied based on the country of origin of the product then would not only that portion of the product that the tariff is applicable to be taxed? I am assuming the tariff does not apply to Italian olive oil.

A country has to be declared. If you can figure out a way to ensure that the blend is precisely 50/50 then likely the country where it was blended (Italy or Spain) would be CoO.

[Nola Palomar]

At VinItaly several years ago, a well-known, higher-end olive oil merchant was boasting that he "sources" from the finest, family-run, hand-harvested olive groves in Italy. His stated volume sounded large, relative to those small groves.
I asked if those groves grow and extract all their own oils, or if they import from Greece, Spain, Lebanon, or other countries for re-sale. He threatened to harm me.

Look at the numbers please, please. I hate to be the bearer of unsettling news.
If you make 265.0 and you use 500.00 you’re already running a deficit of -235.0 how on earth can you export 185.8 When you are already at -235,000,000 liters???

I submit a SOIVRE for my EVOO when I ship. I harvest, mill, send a sample for analysis to SOIVRE (see below), as soon as I have my analysis I order my labels, bottle, label and ship. But please understand, I am a little micron of a producer and I have control a-z. When you are selling hundreds of million liters of a commodity, people find ways to stretch.

** SOIVRE — Servicio Oficial de Inspección, Vigilancia y Regulación de Las Exportaciones (Spanish: Official Service Inspection, Supervision and Regulation of Exports

I do not know what that inspection entity is in Italy and how incorruptible their regulatory structure is. I am also not saying that these producers from Tuscany that you buy from are sending you a blend of safflower oil. I am saying though that the corruption there did not stop with Cosa Nostra and that you cannot be an ignorant consumer. Know that this system is not perfect and that this adulteration is real. It is also easy to tweak the freshness by simply harvesting a quantity of green olives and adding that oil to the harvest.

As far as the exportation, they submit a sample to the regulatory body there, of what they have and the governing body analyzes the product and they export. If a few tankers of oil comes in in the middle of the night, who would know?? How would you know??

[Victor Hong]

As with wine or other food (saffron, honey, maple syrup), the more expensive is an olive oil, the greater is the temptation to stretch things.

[DanielP]

I know we're getting distracted from the main topic at hand, but how's the olive oil that Garagiste brings in? Some Sicilian and Slovenian oils were just offered and now I'm questioning everything I thought I knew about olive oil (which wasn't much)

[D@vid Bu3ker]

Ask Victor. I am sure he can explain why he knows it’s crap.

[PeterH]

I can't vouch for it personally, but the Slovenian oil appears to be the real thing.

http://lisjak.com/en/

Slovenial olive oils in general.

https://www.oliveoiltimes.com/olive-oil ... 2019/68013

[David Glasser]

Back to wine for a moment, and futures that have not yet been imported. I’m not sure if this has been mentioned upthread. MacArthur* has posted the following reassuring statement on their website:

As we are sure you’ve heard the US government has proposed 25% tariffs on wines below 14% alcohol from France, Spain and Germany. As of now the situation is still "fluid" and we do not know what will happen in regards to wine prices. But one thing is certain.

We will not raise prices on pre arrival wines already paid for or wines currently in stock. We certainly value your loyal business and hope that this situation is resolved quickly and painlessly.

Here’s hoping that other retailers will be in the financial position to be able to do the same.



*no financial interest other than having sent them many dollars for wine over the years

[Jeremy C]

Has anyone been in contact with Envoyer to ascertain how they will be handling this with respect to existing outstanding/pre arrival wines?

[Markus S]

Yeah, I have been saying this for forever. Italy does not produce enough olive oil for its own consumption. They buy Spanish Olive Oil, blend it, bottle it in Italy and sell it as Italian Olive Oil.

I think everyone knows this. If you look on many, if not most, bottles of olive oil 'from' Italy, unless it is from an estate, it usually says 'bottled in Italy', not 'produce of', and then they will list country of origin somewhere on the label, which is most likely a blend of Spanish, Greek, Tunisian, and others.

[Stan Y.]

25% tariff next week is a good way to rationalize ordering some good raw milk cheese this week! Here's what the Fedex driver just brought.

[YLee]

Where can I get some high quality brie? I dont know anything about cheese.

[Michae1 P0wers]

Where can I get some high quality brie? I dont know anything about cheese.

Murray's NY is always a decent place to start, if you don't have a local cheese monger you trust.

Honestly there's so much good domestic cheese that the cheese part of this equation doesn't hurt too much, at least for soft-ripened cheese and cheddar. The only real problem I see is Parmesan. At first I thought to just buy more Pecorino, which I find to be acceptable, if different. Because it is sheep's milk I assumed it would not be included in the tariffs, which are quoted upthread as affecting only UK and French sheep's milk cheeses, but I'm reading elsewhere that Pecorino Romano is mentioned by name, along with Parmigiano, as being included in the 25% tariff.

[Jay Miller]

I didn't even think about cheese. Might be a good idea to stock up on Parmigiano Reggiano if prices haven't already jumped in anticipation.

[Michae1 P0wers]

Look at the numbers please, please. I hate to be the bearer of unsettling news.
If you make 265.0 and you use 500.00 you’re already running a deficit of -235.0 how on earth can you export 185.8 When you are already at -235,000,000 liters???

I submit a SOIVRE for my EVOO when I ship. I harvest, mill, send a sample for analysis to SOIVRE (see below), as soon as I have my analysis I order my labels, bottle, label and ship. But please understand, I am a little micron of a producer and I have control a-z. When you are selling hundreds of million liters of a commodity, people find ways to stretch.

** SOIVRE — Servicio Oficial de Inspección, Vigilancia y Regulación de Las Exportaciones (Spanish: Official Service Inspection, Supervision and Regulation of Exports

I do not know what that inspection entity is in Italy and how incorruptible their regulatory structure is. I am also not saying that these producers from Tuscany that you buy from are sending you a blend of safflower oil. I am saying though that the corruption there did not stop with Cosa Nostra and that you cannot be an ignorant consumer. Know that this system is not perfect and that this adulteration is real. It is also easy to tweak the freshness by simply harvesting a quantity of green olives and adding that oil to the harvest.

As far as the exportation, they submit a sample to the regulatory body there, of what they have and the governing body analyzes the product and they export. If a few tankers of oil comes in in the middle of the night, who would know?? How would you know??

Obviously you know far more about this Nola, but isn't it possible that a large part of the Italian consumption, particularly by restaurants, industrial food production, etc., is less expensive imported oil from Spain, N. Africa, etc.? Thus they'd export a lot for higher prices? This does seem to conflict with the idea that Italians eat mostly locally produced foodstuffs, but it seems like at least one possibility. And I'm not suggesting there isn't a lot of fraudulent labeling, but rather that it seems if you buy higher quality oil it is probable that it is what it says it is. Maybe the larger brands of Italian olive oils on every supermarket shelf in America aren't what they claim to be, but then with the larger brands it would also be extremely risky for these very large companies to knowingly commit fraud to mislabel their products. For my part I've had excellent oils from Italy, Spain, and France, though I don't see the French oils very often.

[Michae1 P0wers]

I didn't even think about cheese. Might be a good idea to stock up on Parmigiano Reggiano if prices haven't already jumped in anticipation.

Costco sells 2-lb. cryo wrapped packages and I plan to grab a couple of those, which should keep for a very long time. Will likely grab some Pecorino as well. Maybe some Gruyere...

[YLee]

Where can I get some high quality brie? I dont know anything about cheese.

Murray's NY is always a decent place to start, if you don't have a local cheese monger you trust.

Honestly there's so much good domestic cheese that the cheese part of this equation doesn't hurt too much, at least for soft-ripened cheese and cheddar. The only real problem I see is Parmesan. At first I thought to just buy more Pecorino, which I find to be acceptable, if different. Because it is sheep's milk I assumed it would not be included in the tariffs, which are quoted upthread as affecting only UK and French sheep's milk cheeses, but I'm reading elsewhere that Pecorino Romano is mentioned by name, along with Parmigiano, as being included in the 25% tariff.

Thanks, will check them out.

[RichardFlack]

Picture1.jpg

27.46 divided by 21.97=1.25, so 25% price increase at retail.

I saw Sneaker-guy, a.k.a. Lyle Fass, posted this on their blog in relation to one importer's call to arms:
https://rockssandfruit.blogspot.com/201 ... omise.html

I’ve been thinking a lot about how Fass Selections should handle the recently announced tariff increase on selected wines. It occurred to me this morning that I’ve been very selfish. I live a comfortable life in New York and I’ve been thinking only of how this new tariff will impact me and my customers. I have thought about it some more and I think that I’ve come up with a way to limit the damage to the winemakers and also to our industry as a whole.

First, I need to reiterate that the real victims here are the winemakers. They are now harvesting and

many are expected to pay for their grapes. Many of them have bank loans to pay on top of their operating and living expenses. This tariff could be a life or death situation for their businesses.

Of course anything that I do in isolation will have a minimal impact on our industry and the winemaking community. So I have decided to lay out the economics and propose a simple solution that can help contain any increases in prices so that the farmers do not have a significant decrease in their revenue.

Next, I’d like to give some background on wine industry pricing. Through standard 3 tier, a wine purchased at the winery that costs $10 will cost $30 at retail. If the price of the wine increases by $2.50, the retail price increases by $7.50. In this case, a $2.50 increase in price causes a $7.50 increase in price to the consumer, so the pass through is 3:1, even though the cost of the wine paid to the winery is only 33% of the cost of the wine paid by the consumer. The rest is shipping, sales costs and miscellaneous costs.

In order to minimize the pass through of these tariff costs, we as an industry must have a concerted and coordinated effort to minimize their impact. I am suggesting that we all agree to pass through only the tariff cost itself (a 1 to 1 pass through on a dollar basis). In the above example, the wine cost would increase only by $2.50 to $32.50 or 8.33%. This is a small enough increase in costs that it should not cause a major disruption. After all, we have exchange rate changes of that much with some frequency over a 5-10 year period.

One can see the difference in the sample pricing below (some of the markups may be off by a bit at certain levels and will certainly differ by wine, importer, distributor and retailer)...

Screen Shot 2019-10-08 at 11.31.04 AM.png
As you can see, the percentage markups at each level of the distribution system fall but the per bottle markups remain the same.

So each level of the distribution system would make the same profit per bottle under my proposal.

This will not be easy.
Importers will have to agree to this.
Distributors will have to agree to this.
Retail stores will have to agree to this.
And salespeople at importers and distributors will have to agree to this. They are typically paid 10-15% on the value of the wine that they sell. They will have to agree to take a commission on the price less the tariff amount. So if they were selling a wine that sold for $20 and the price increased to $22.50 because of the tariff, they would agree only to take a commission on the original price of $20. If the salespeople don’t agree to this, the importers and distributors will have to increase their prices more than the tariff amounts in order to pay their salespeople.

I know that this will entail some sacrifices in our industry. But I know that people in our industry are not only in it for the money but also because they love wine and wish to encourage and support the winemakers. I’m requesting that everyone I know E-Mail me and I will add their name to the list of people signing up for this. I will try and update the list daily.

International trade is a very complex topic and I can’t hope to try and solve it. But I think that if we work together, we can try to mitigate the effects of this situation in our little corner of the world.

This makes a lot of sense to me.

In general, it's not clear to me why a full markup is necessary on taxes. Whether they are normal taxes or a trade war surcharge.
Markups would seem to me to be for various reasons:
- cost of transport, storage, marketing, overheads etc (most of these are per unit not dollar related, but I digress, slightly)
- cost of capital if wines are being held for a material time
- cost of returns etc
- profit (which may be a residual from what ultimate price the market will bear).

Only cost of capital is impacted by increased taxes. (But I'm not sure what the tax treatment of returns is).

PS: Seeing these numbers, it is absolutely staggering the impact of 3 tier system. At the 30,000 foot level it beggars belief that a $10 bottle of wine winds up costing $30. We have this in Canada but the bulk of the additional $ are in effect taxes going to the government (which begs a whole bunch of questions of course but there is a theory that is for the public good and other things being equal keeps other taxes lower) .... in the supposedly free market in US these numbers would point to staggering inefficiency.

[Doug Schulman]

Rare Wine Co sells oceans of "Tuscan Olive Oils" every year, from specific Tuscan producers. If the oil is not really Tuscan, it would be a fraud, and I do not believe they are committing a fraud.

Also, Rare Wine does not sell "oceans" of Tuscan olive oils. His annual offer usually sells out in 1 - 2 days and is allocated.

Yes, I'm sure his is authentic, and quantities are always very limited.

I find the whole olive oil fraud depressing (most is not even really olive oil), but the specific fraud regarding Italian (especially Tuscan) olive oil is just weird. I've had oils from Lebanon, Spain and other places that were fantastic, and very fairly priced. I tend not to buy Italian because the real stuff seems so expensive. I guess it's a brand of sorts.

[Kelly Walker]

We have a great liquor store just over the South Carolina border that always has an amazing selection scotch and bourbon. The manager sent out an e-mail this morning giving the heads up on the impact of the tariffs on scotch prices. His example was that a $41 bottle of scotch will be a $51 bottle once the tariff'd stock hits. Might be wise for scotch lovers to stock up now.

[L e o F r o k i c]

Yes, I'm sure his is authentic, and quantities are always very limited.

I find the whole olive oil fraud depressing (most is not even really olive oil), but the specific fraud regarding Italian (especially Tuscan) olive oil is just weird. I've had oils from Lebanon, Spain and other places that were fantastic, and very fairly priced. I tend not to buy Italian because the real stuff seems so expensive. I guess it's a brand of sorts.

Did you ever had a Costco Tuscan olive oil? It runs around $12 per bottle and it's outstanding plus guarantee to be real.

[Nola Palomar]

Yes, I'm sure his is authentic, and quantities are always very limited.

I find the whole olive oil fraud depressing (most is not even really olive oil), but the specific fraud regarding Italian (especially Tuscan) olive oil is just weird. I've had oils from Lebanon, Spain and other places that were fantastic, and very fairly priced. I tend not to buy Italian because the real stuff seems so expensive. I guess it's a brand of sorts.

Did you ever had a Costco Tuscan olive oil? It runs around $12 per bottle and it's outstanding plus guarantee to be real.

I have read here and heard elsewhere that Costco has procured some really good olive oil.

[Doug Schulman]

Yes, I'm sure his is authentic, and quantities are always very limited.

I find the whole olive oil fraud depressing (most is not even really olive oil), but the specific fraud regarding Italian (especially Tuscan) olive oil is just weird. I've had oils from Lebanon, Spain and other places that were fantastic, and very fairly priced. I tend not to buy Italian because the real stuff seems so expensive. I guess it's a brand of sorts.

Did you ever had a Costco Tuscan olive oil? It runs around $12 per bottle and it's outstanding plus guarantee to be real.

I haven’t, but I’ve heard good things, and was corrected on this board when I foolishly assumed it was not authentic. Thanks for the reminder. I need to try it. I should have said that the real stuff generally seems expensive. I’m sure there are other exceptions.

[Edward H. Earles]

As regards olive oil: I've taken to buying Lebanese and Syrian olive oils from a Persian grocery. Great oil, of high quality, and less expensive than oil from European countries. I buy big bottles (1.5 liters and larger) and we use a lot of it now.

[D@vid Bu3ker]

How are you getting Syrian oils? They are essentially forbidden from US markets due to sanctions.

[Mike Reff]

So I started to sell a portfolio that is 95% French wine, bad timing?

Wine shops are commenting that due to their markup they might pass, but restaurants which seem to have a higher markup are having the opposite affect. Will see how this plays out over time.

[Edward H. Earles]

How are you getting Syrian oils? They are essentially forbidden from US markets due to sanctions.

I don't know, I hadn't thought about that. They're on the shelf.

[Victor Hong]

How are you getting Syrian oils? They are essentially forbidden from US markets due to sanctions.

I don't know, I hadn't thought about that. They're on the shelf.

Easy. Italians export them as "bottled in Italy", and re-label them here as "hand-crafted in Syria".

[D@vid Bu3ker]

Illegal in so many ways

[p. raghib]

Anyone have any idea what will happen when an American tourist comes back to the US with a couple cases of burgundy? In the past, there was no issue since the duty was collected on alcohol volume. Now I'm not sure what will happen with customs. Trivial in the grand scheme of things, but since I am going next month it has me wondering.

thanks

[John Morris]

I would guess they won't bother collecting it on wine you bring in, since they never collected the duty on personal imports in the past.

[David K o l i n]

As regards olive oil: I've taken to buying Lebanese and Syrian olive oils from a Persian grocery. Great oil, of high quality, and less expensive than oil from European countries. I buy big bottles (1.5 liters and larger) and we use a lot of it now.

Lebanese olive oil has been in our rotation for a number of years now. As with everywhere, quality varies, but when we find one we like, we lay some in

[Sh@n A]

Anyone have any idea what will happen when an American tourist comes back to the US with a couple cases of burgundy? In the past, there was no issue since the duty was collected on alcohol volume. Now I'm not sure what will happen with customs. Trivial in the grand scheme of things, but since I am going next month it has me wondering.
thanks

Spit balling: I imagine you are not importing the wine, having paid VAT locally

[D@vid Bu3ker]

Nope - it is being imported to the USA by you, the tourist returning home.

That being said, I am with Jay. I doubt the airport customs folks are going to bother. We'll see though.

[Dan Kravitz]

to Richard Flack,

The three tier system in the U.S. is essentially mandated by the various states. I agree about the inefficiency.

Dan Kravitz

[PeterH]

Here's one I saw in the comics today- sort of.

"Gouda is dead" ...




... at retail.

[Jason T]

As regards olive oil: I've taken to buying Lebanese and Syrian olive oils from a Persian grocery. Great oil, of high quality, and less expensive than oil from European countries. I buy big bottles (1.5 liters and larger) and we use a lot of it now.

Lebanese olive oil has been in our rotation for a number of years now. As with everywhere, quality varies, but when we find one we like, we lay some in

Thanks for the tip guys

[D@ve D y r 0 f f]

Does anyone know if Italian vermouth is on the list? It’s over 14% but I wonder if it’s picked up somewhere else on the list. Wondering if I should buy an extra bottle or two of Anitica Formula now...

[D@vid Bu3ker]

My earlier reviews did not catch anything that would hit Italian Vermouth.

[James Billy]

Does anyone know if Italian vermouth is on the list? It’s over 14% but I wonder if it’s picked up somewhere else on the list. Wondering if I should buy an extra bottle or two of Anitica Formula now...

Aren't I-talians exempt from tariffs?

[Robert.A.Jr.]

Well, I took care of my business, had my case of Magdelaine from the UK shipped in right before the tariff. Paid an extra 51 pounds for more expedited shipping plus styro and thermo-liner. Showed at 10:30 AM, perfect, cool to the touch. Hated the fire-drill, but glad to have done it this way.

[A Songeur]

Fingers crossed! Burg 2018 may be slightly cheaper on this side of the pond... or not get increase as much as expected... Dream on!

[AndrewH]

Well, I took care of my business, had my case of Magdelaine from the UK shipped in right before the tariff. Paid an extra 51 pounds for more expedited shipping plus styro and thermo-liner. Showed at 10:30 AM, perfect, cool to the touch. Hated the fire-drill, but glad to have done it this way.

Cue the knock on the door from the Florida Department of Revenue in 3 . . . . 2 . . . . 1

[John Morris]

Anyone have any idea what will happen when an American tourist comes back to the US with a couple cases of burgundy? In the past, there was no issue since the duty was collected on alcohol volume. Now I'm not sure what will happen with customs. Trivial in the grand scheme of things, but since I am going next month it has me wondering.
thanks

Spit balling: I imagine you are not importing the wine, having paid VAT locally

The fact that you paid VAT abroad is irrelevant to whether the US charges duties and tariffs. But, as I said above (and David B also said), I think it's unlikely that the tariffs will make any difference to the airport customs practice of waiving you through if you have only a case or two. (Qualification: That's true landing in NY and NJ, but if you touch down and clear customs in other states, you may run into state tax issues, which US customs evidently enforces in some states.)

[D@ve D y r 0 f f]

Does anyone know if Italian vermouth is on the list? It’s over 14% but I wonder if it’s picked up somewhere else on the list. Wondering if I should buy an extra bottle or two of Anitica Formula now...

Aren't I-talians exempt from tariffs?

The one category that includes most table wines under 14% excludes Italian wines, yes, but there are other categories that include products of Italy. I don’t know what category Vermouth comes under (wine, liqueur, or its own separate category, etc.), which is why I asked. If it falls within the wine category, it would be exempt from the main wine tariff both by virtue of being Italian and by virtue of being over 14% ABV.

[Chuck Miller]

I always thought that airport customs didn’t collect duty since it was pennies per liter, and not worth their time. Tariffs are 25% of the value, not per liter, and could be a significant dollar amount. If they are authorized to collect tariffs, I have a feeling they will.

[D@vid Bu3ker]

Does anyone know if Italian vermouth is on the list? It’s over 14% but I wonder if it’s picked up somewhere else on the list. Wondering if I should buy an extra bottle or two of Anitica Formula now...

Aren't I-talians exempt from tariffs?

The one category that includes most table wines under 14% excludes Italian wines, yes, but there are other categories that include products of Italy. I don’t know what category Vermouth comes under (wine, liqueur, or its own separate category, etc.), which is why I asked. If it falls within the wine category, it would be exempt from the main wine tariff both by virtue of being Italian and by virtue of being over 14% ABV.

Vermouth falls under major heading 2205 (see https://hts.usitc.gov/?query=vermouth ), which is not on the list of HTS codes subject to the Airbus retaliatory tariffs.

[Jonathan Loesberg]

Dulles in VA used to occasionally collect taxes, I think to discourage bringing in wine to a wine producing state (though I don't know that). As Chuck said, a case of wine would cost something on the order of $1.50. The only deterrent is it usually took 30 minutes to get to the customs agent who did the figuring another 20 minutes for him or her to figure out what you owed (they always had to consult a book that was evidently not easy to consult) and then another 15 minutes for a cashier to take your money, so the extra time in custom was a pain. But you could also see that it was a pain for them and so they stopped doing that. As Chuck said, 25% of the value of the wine would be appreciably more (even a case of $20 bottles would be nearly $50) and it might be much more worth their time. I should note that Dulles waves virtually everybody through these days, though,including, I expect, people who might owe decent money on the amount of their purchases.

[Jay Miller]

Kudos to Seabrook which put a rush in and delivered my wine last Friday. I was impressed.