New Zealand wine industry could benefit from US trade war - report

A new tariff imposed by the US on European wine imports could potentially open up opportunities for New Zealand and other wine suppliers, according to a new report.

The 25 per cent 'ad valorem' tariff came into effect on October 18th on wines imported from Spain, France, Germany and the UK.

Rabobank's latest global Wine Quarterly report said the tariff would have the biggest impact on French and Spanish wines, with the US accounting for around 18 percent of French and 12 percent of Spanish wine exports in value terms. 

Under the current terms of the tariffs, while sparkling wines and wines with over 14 percent alcohol content are exempt, it estimated around 60 percent of wine sales from France and Spain to the US would be affected by the tariffs.

Report author, Rabobank senior wine and horticulture analyst Hayden Higgins .
Report author, Rabobank senior wine and horticulture analyst Hayden Higgins . Photo credit: Supplied

In Germany around 90 percent of wine which was exported to the US was expected to be impacted.  

"The tariffs will force wineries to make difficult choices between sacrificing margins by absorbing the increase or passing on the costs and losing hard-won market share that can be difficult to regain," the report said.

"But given the size of the tariffs, wine exporters will "likely be forced to pass on at least part of the extra tariff to their importers and ultimately the consumer", with the report saying retail prices could increase by 10 to 15 percent.

It said that could trigger a substitution effect and other wine suppliers - including New Zealand - could benefit from transferred demand. 

However, higher-priced wines were likely to be less sensitive to the price increases.