US Tariffs on Wine and Prosecco

The US tariff on importing wine to America is now 15% for all types of wine.

The increase in the wine tariff has sparked cries of alarm and dire predictions for Italian exports. But if we look at the numbers rationally, we can see that a 15% wine tariff isn't as catastrophic as it seems. We should consider the historical trend of declining wine consumption in the United States: -50% over 14 years. If we want to explain the drop in demand, the tariff increase is just a scapegoat.

For years, new American consumers have been leaning towards other forms of wine consumption, such as canned wine or hard seltzer water. It would have been nice to see at least an attempt at adaptation from Italian producers [assuming the need to sell takes precedence over the pride of sacrificing oneself at the altar of purity..] 

In 2024, the value of Italian wine exports to the United States was $2,235,564,070, practically the same as in 2023. In terms of volume, we're talking about 348,497,868 liters with an average import price of $6.415 per liter. The average US tariff on Italian wine imports now amounts to $0.962 per liter.

There are import techniques that allow the tariff to be neutralized so that the value doesn't increase throughout the distribution chain. In other words, the import tariff of $0.96 per liter remains the same and is passed through the long distribution chain for wine in the United States without increasing.

In the American market, it's normal for a bottle with an import price of six dollars to be sold to the consumer at a retail price of 25 dollars.  In this scenario, would an increase of $0.96 in the final price of a $25 bottle [or 3.8%], caused by the tariff, really cause imports to collapse? Not to mention that the $0.96 tariff is calculated on a liter of wine while a bottle typically contains 75cc
 

US Wine Market Overview (2024)

The demand for wine: the United States is the 4th largest wine producer in the world and is also the largest wine consumption market, but wine consumption in the US has been declining for years (both total and per capita). The decline slowed between late 2023 and early 2024, but the trend hasn't reversed.

Wine consumption in the United States, Domestic/Import Mix: Americans purchased $78.9 billion of domestically produced wine and $31.6 billion of imported wine in 2024 (+3.4% in value vs 2023)

Weight of imports: imported wine represents about 37% of the US market

Wine imports from Europe: 72.3% of the wine imported into the US comes from EU countries; 49% of American consumers regularly or occasionally drink European wine.

Main countries exporting wine to the US: France, Italy, and New Zealand are among the main sources of US imports (with the EU dominating among the countries of origin)

 

Trends in Wine Consumption in the American Market