In the wake of recent tariff announcements by the US, the CEO of Vin-X, James Shakeshaft, has highlighted potential market shifts that could significantly impact wine investments, particularly in the UK and EU. Shakeshaft, speaking to The Drinks Business, noted that iconic US wines such as Opus One, Screaming Eagle, and Scarecrow, which are already held in bond in the UK, are poised to see a substantial increase in secondary market value. This is largely due to the wines’ favorable position ahead of potential tariff impositions on EU and UK imports.
Shakeshaft explained that these wines, including many back vintages, could become “tremendous” investment opportunities in the coming years. As EU and UK suppliers seek to avoid tariff-related costs, they are likely to source these high-demand wines from within the UK or EU, rather than importing them from the US.
Interestingly, there was no mention of tariffs on Australian wines in the recent announcements, which could affect high-profile labels such as Penfolds Grange. Shakeshaft emphasized that investors often look to market fluctuations to identify opportunities, and this situation may benefit certain wine categories. He pointed to the potential resurgence of Australian wines, which faced a decline due to Chinese tariffs but could see a rebound following their recent removal.
Shakeshaft also pointed out that American wines already in the UK, along with any wines exempt from tariff negotiations, could experience price increases. He speculated that Australian wines might have a comeback, noting how they suffered under the previous Chinese tariffs but could benefit from improved trade relations.
A recent report from The Sydney Morning Herald echoed this sentiment, revealing that the US accounts for 40% of Treasury Wine Estates’ earnings, the owner of Penfolds. Following the tariff announcement, the company’s share price increased nearly 5%, signaling potential gains for Australian wines.
However, Shakeshaft also cautioned that French and Italian wines could face more adverse effects. The CEO referenced the 25% tariffs imposed on French wine and spirits in 2019, which led to a 14% drop in French wine exports to the US in 2020. On the other hand, Italian wines and Champagne, which were not subject to the tariffs, saw significant market growth. Massetto 2010, for example, traded 73% higher in 2022 compared to 2020, while Champagne saw a 14% overall uplift, with in-demand brands like Salon Mesnil 2002 seeing a 185.7% increase in value.
While the exact timeline for the potential 200% tariffs remains unclear, Shakeshaft warned that such tariffs could decimate French and Champagne wine sales in the US, with losses potentially ranging from 70% to 90%. He also cautioned that such increases would lead to substantial price hikes for US consumers.
However, Shakeshaft remained optimistic that the 200% tariff threat might be scaled back. He drew comparisons to the 47th President’s previous decisions to reduce tariffs on Canada and Mexico, which had initially proposed blanket tariffs of 25% but were later adjusted to include key exemptions.
“We’re predicting something similar for wines,” Shakeshaft said, noting that while tariffs are likely, the final rates may be far lower than the current 200% figure. He speculated that the US administration might implement tariffs closer to the 25% level seen in 2019, which applied to wines from France, Germany, Spain, and the UK, along with other spirits such as Scotch whisky.
In summary, while potential US tariffs on wine remain uncertain, industry experts are closely monitoring developments, with predictions indicating significant market shifts for both US and international wines in the coming months.
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