'Positive Outlook': Champagne producers anticipate potential US tariff changes
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The champagne industry is feeling the brunt of Trump's tariffs on EU goods, with significant implications for both EU producers and US importers.
According to Christine Sevillano, a champagne grower, the US market accounts for nearly 10% of her turnover. Sevillano's champagne is one of many affected, as the US market purchases about 10% of the industry's production volume and contributes 14% of its total output value, amounting to 820 million euros ($955 million).
Maxime Toubart, co-president of Comite Champagne, has expressed concerns about the impact of these tariffs. He stated that they will negatively affect the entire champagne value chain, from growers to US consumers. Toubart acknowledged that new markets may not be able to compensate entirely for the potential losses in the US market.
The tariffs, combined with a weak US dollar, are expected to cause up to a 25% drop in sales in the US market, translating into over $1 billion in lost exports and threatening around 600,000 jobs in the French wine and spirits sector. Orders have already started to dry up over recent months due to the tariff threat and US inflationary pressures.
Toubart, however, remains optimistic about the champagne industry's resilience and adaptability. He expressed a desire for the industry to remain "very present" in the US market but also plans to target new markets in southeast Asia, Latin America, and Africa due to US uncertainty. Toubart did not provide any specific sales volume or value figures for the new markets being targeted.
The French drinks sector, including Champagne, may potentially become exempt from blanket tariffs, according to France's wine and spirits association FEVS. Ongoing EU-US negotiations are considered good news by Toubart, who hopes that they may result in a better deal for his sector.
In the meantime, Sevillano's US importers are in a state of limbo, hoping that the Trump administration will change course. Toubart expressed a concern that, unless this happens, the situation will become difficult for importers. He also mentioned that there are other markets waiting to be explored as potential alternatives to the US market.
The tariffs have upended global trade, and their impact on the champagne industry is a stark reminder of the economic repercussions that such policies can have. Negotiations between the EU and US remain critical to mitigating these effects.
The champagne business heavily relies on the US market, as it contributes a significant portion of the industry's production volume and output value. The prospect of continued tariffs on EU goods may force businesses to explore new markets to compensate for potential losses.
