Here we are. August and rather than focusing on the dog days of summer, most people involved in the wine industry are thinking about tariffs which have been in effect thus far at around 10% on imported products. However, that number is now going up to at least 15% if not 20% by August 7th.

There have been many articles written about tariffs and what they are and who pays for them. Tariffs are a tax, consumers end up paying for them because prices are rising and the dollar is falling.

I have been reaching out to many contacts in the industry looking to do new projects but everyone is very worried about the future and many are no longer looking to invest in the United States and are pivoting if they can to Asia. Others who are active and continuing to invest in the United States and are worried about what margins they will have and are trying to make deals with producers to share their new burdens. Retail stores are also trying to make it work in this new environment without raising prices beyond what people will still buy wine. Its not yet clear what that breaking point will be.

Some who I have spoken with mention that for the most affluent who purchase the most iconic wines, nothing much will change because they are not price sensitive in the same way people in the middle of the economic market are. It’s the wines that retail for between $15-$30 that will suffer the most. Food costs have been soaring over the last years and

I have been trying to help clients to keep a hand in the market, looking outside major markets perhaps and looking for reduced quantities in sales but trying to offset losses elsewhere.

We will see what the final tariff numbers look like later this week and begin to feel the impacts on our lives in the fall. What we do know now is that the tariff conversation is not going away anytime soon and that we will be plagued by volatility and uncertainty for the foreseeable future.

Many importers stocked up on inventory in April before the first tariff conversations and decisions were made. Now much of that inventory is drying up and they will see what they want to do next. Try as I might, I cannot help but think of all the work that went into creating our eco-system of wine – producers, importers, restaurateurs, retailers, distributors, sommeliers, journalists, consultants, educators, and others, and how many are suffering.

My own business has struggled so I have further diversify my activities. That’s what I have been suggesting to my clients as well. Each of them needs a plan to deal with this new economic climate. More to come on this topic later this week.

Happy August by the way.