Homepage

Local Vineyards Could Struggle if Tariffs on Wine Remain Local Vineyards Hurt by Tariffs

By Luke McGrath

A grape vine in the foreground with Seneca Lake in the background.
© 2018 Luke McGrath

Luke McGrath: Tariffs set on U-S wine exports are starting to become a real problem in the local wine industry. With hefty tariffs sets by the European Union and China, many US wines are getting priced out by wines from other countries facing much lighter export tariffs. Scott Osborn is the president and co-founder of Fox Run Vineyards on Seneca Lake and says he’s already begun to see the effects of these tariffs on his business.

Scott Osborn: We were just ready to send a container load of wine to China and they cancelled the order because of the tariffs and so that’s a lot of money.

Luke: Now once an avenue to grow and expand the business, foreign exports have become more of a nuisance than an opportunity.

Scott: Well, we’ve been expanding our export business both in Europe and in to China and you know we’ve expanded based on potential sales there and now we have to sit on product until hopefully things blow over.

Luke: Now you don’t need to hear it through the grape vine to know that tariffs on international sales could have a huge impact on wineries across the country but was also happens is when companies need to sell their wine, they’ll sell it in the U.S. market for much cheaper prices than normal which will dilute the price domestically which could lead to a price so low that wineries like this one aren’t able to compete with.

Scott: Where’s that wine going to be sold? The only outlet is within the United States and so all of a sudden we’re going to have a lot of very cheap, inexpensive wine being dumped on the market place of which I can’t compete with.

Luke: But the major effects of these tariffs have not begun to take much of an effect on local wineries, who hope the tariffs will go away soon.

Scott: Oh yeah, the domestic market is maintaining, you know we haven’t seen much loss as of yet and you know, things are going well and we’ve got a lot of customers who come visit, you know it’s a beautiful time of the year, we just finished harvest and that’s always a good time.

Luke: But what will happen to local businesses like Fox Run Vineyards if these tariffs don’t go away soon?

Scott: I don’t know the answer to that, I haven’t thought that far ahead because I assume that they’re going to go away but you know six months from now you can ask me that question and I’ll have a different answer.”)

Luke: Reporting in Yates County, Luke McGrath … N-C-C News

By Luke McGrath PENN YAN, N.Y. (NCC News) — Tariffs levied on the United States over the past year are beginning to pile on, especially for the wine industry.

In September China increased its tariffs on United States exported wines an additional ten percent after previously increasing the tariff 15% in April, according to the Wine Institute. Compounded, this brings the tax and tariff rate to about 79%.

These types of tariffs can effect what products China will purchase and what products the United States can afford to export, according to Fox Run Vineyards President and Co-Founder Scott Osborn.

“We’ve been expanding our export business both in Europe and in to China and you know we’ve expanded based on potential sales there and now we have to sit on product until hopefully things blow over,” Osborn said.

The Fox Run Vineyard does about 15% of its sales outside the U.S., according to Osborn. With these new tariffs the U.S. is often priced out as other countries with much smaller tax and tariff rates are able to sell wines for much cheaper.

Exporting overseas is one of the best ways to expand and grow his business and with the current tariffs he is going to have a much harder time doing so, Osborn said.

“If you want to expand and be an international brand and represent the United States and New York about wine you have to export and if you don’t export than you can’t expand,” Osborn said.

Osborn, who just had a Chinese order cancelled, said the inability to do business overseas has also led to an over saturated market in the U.S. as companies are trying to get rid of their product and are willing to sell it domestically for cheaper than usual prices.

“Where’s that wine going to be sold? The only outlet is within the United States and so all of a sudden we’re going to have a lot of very cheap, inexpensive wine being dumped on the market place of which I can’t compete with,” Osborn said.

Osborn is not extremely concerned the current tariffs will remain long term, but does not know what he would do if they remained in effect for the foreseeable future, he said.

“If the tariffs on wine continue that’s going to be a problem not only for me but for many other of my neighbors who export and for exporting wine from the state of New York, I mean it’s going to have a large impact,” Osborn said. “It effects how many grapes I’m going to purchase from local grape growers, how many tanks I’m going to purchase from the local tank manufacturer. I mean it effects all those things down the road.”

Related Articles