Some Alcohol is Expected to Be More Expensive in 2021 for This Reason

Starting on January 12th, both France and Germany are gonig to be hit with tariff hikes from the U.S. and this could increase the prices of some of your favorite bottles of booze.

This week the Office of the U.S. Trade Representative (USTR) announced a 25% hike for certain wines and spirits from France and Germany, and a 15% hike for certain plane parts from the two countries.

The tariffs will almost certainly be passed on to U.S. consumers who can expect a roughly $1 increase on each 750 mL bottle of wine subject to the additional tariffs, says Adam Sagar, co-president of Winesellers, Ltd., one of the nation’s largest wine wholesalers.

Sagar says the measure will increase prices for individuals, restaurants, bars, and event venues that are already struggling due to the pandemic. He says it is unclear whether the 25% figure represents a final determination of the percentage increase.

Due to the price hikes, Winesellers Ltd. has abandoned its plans to launch a French rose in a 3-liter bag-and-box format because of the tariffs. “The cost really pushes the retail price over where we want to be,” Sagar explained.

Sagar points out that the duties cast a much wider net than previous tariffs. The alcohol tariffs apply to a broader range of “format” or container sizes, and a broader range of alcohol content levels.

“The previous tariff covered 375 mL, 750 mL, and 1.5 L formats,” Sagar said. “Now the tariff covers, for French wines and German wines, anything shipped in 2 L formats and above.”

Champagnes were excluded from the latest tariff, but “effervescent” wines like spritz are still subject to the duties.

“What a lot of producers tried to do, where they could, was increase the alcohol content of the wine over 14.1% to avoid the tariff. You can’t do that in every region because it could really affect the quality of the wine and the style of the wine,” Sagar said.

“It’s not even possible in some regions like Germany, which is known for Riesling.”