Ep. 2221 Juliana Colangelo interviews Benjamin Aneff | Masterclass US Wine Market

Do think it's noteworthy to say Italian wine was not included on that first list, but that a lot of Italian products were. They decided to not put tariffs on Italian wine, but a whole series of other Italian products were. So theoretically, if they really wanted to, because Italy was a part of that award. So if they really wanted to, Italian one could certainly be at risk for the Airbus issue. Hello. Welcome to Masterclass US wine market with me, your host. Juliana Colangelo. This show has been designed to demystify the US market for Italian wineries through interviews with experts in sales and distribution, social media, communications, and so much more. We'll we'll quiz each of our esteemed guests in every episode to solidify the lessons that we've learned from the episode. So sharpen your pencils, get out your notebooks, and join us this week to learn more about the US market. Hello. Welcome to Master US US wine market. Today, I am thrilled to welcome Ben Anaf to the Italian wine podcast. Ben serves as the president of the US wine trade alliance and as a leading advocate against wine tariff, as the Managing partner of tribeca Weimer in New York City, then has long been at the forefront of the fight against tariff. Before the formation of US WTA, he spearheaded efforts that resulted in over twenty eight thousand letters to Congress through collaboration with the National Association of wine retailers and other industry groups. Ben has also testified at the International Trade Commission on the detrimental effects of tariffs online and continues to lead discussions and lobbying efforts to protect US wine businesses. We're very excited to have Ben on the podcast today as we prepare ourselves for the next year and the next presidential administration in the US. So, Ben, welcome to the show. It's really great to have you here. Well, thank you so much. Lovely to be here. So, Ben, for starters, before we dive into everything tariffs related, tell us just a little bit briefly about your background and your intro into the wine industry and specifically how you came to hold this role today with US wine trade alliance. Sure. Well, I was lucky enough to join the wine industry through tropical wine merchants. I had finished graduate school and was in the music world waiting on auditions and wanted to get started in the wine business sort of part time and fell in love with it the way probably many people that are listening to this podcast Right. Fell in love with it. And I I was lucky enough to figure out I was in a special place ironically because I had a question about wines of Piedmont. And I remember speaking to one of the founders of Trevor Oyme merchants and saying, gosh, you know, I really don't feel like I understand Piedmont well at all. I haven't tasted very many of the wines. It's difficult to come around great examples of older wines, and I just love, you know, an opportunity at some point to get to know them better. And he said, you know, it's funny. This week, there's gonna be a great dinner in the private room of eleven Madison. And back then, remember, Eleven Madison was not the three Michelin Star restaurant that it is today. It was, you know, I think Danny Meyer had sort of wanted to think about it as the greatest neighborhood restaurants, something along those lines. They did these amazing wine dinners with, producers. And I was lucky enough to go to a dinner with Roberto Contano and some great winemakers and great wine collectors. And it was an early experience for me that was very formative, and I realized just how special a place New York City was because of the access both to really passionate consumers who have, you know, great examples of these wines as well as, you know, it's a place where the great producers from all over the world come. It was a fun time and really led to kind of rethink what I was doing and say, gosh, this wine thing's pretty special. Yeah. That makes a lot of sense. What a great story. I wish the EMP was still that neighborhood spot with wine dinners. That sounds like the good old days for sure. It was the good old days. Yes. Absolutely. Well, Ben, again, we're very excited that you're taking some time to talk to us today about the tariffs as I think myself included, we're all very curious and a bit anxious about what comes next So for today's episode, we're going to talk more specifically about how the tariffs will impact Italian wine. And our three key takeaways for this episode are number one, how will tariffs affect every level of the three tier wine industry in the United States? Number two, how will tariffs impact Italian wineries selling wine in the US. And then finally, what's next and how do we prepare for what lies ahead in twenty twenty five? So for starters, let's just set the scene and and lay some background. What is the current situation with tariffs that looms ahead of us as a result of the recent presidential election. Sure. So where we sort of left off, you know, the previous round of tariffs were as a response to the illegal subsidies to Airbus. It's Proderva World Trade Organization Award to the United States that allowed the US to put tariffs on exported goods from a specific list of countries that were involved in subsidies to Airbus. From the wine side, Italy is actually not a part of the initial tariff round. These were the twenty five percent tariffs on most still wine, you know, up to fourteen percent alcohol from France Spain, Germany, and the United Kingdom was later expanded to include a few other formats because initially it was just seven hundred fifty milliliter bottles. Those tariffs were paused and they're paused through summer of twenty twenty six, and the list was expunged. So theoretically, if those tariffs do come back, they would need to go back through the process of coming up with a list again. So they wouldn't necessarily snap back. Okay. That's really good to know. An interesting piece there is I do think it's noteworthy to say. Italian wine was not included on that first list, but that a lot of Italian products were. They decided to not put tariffs on Italian wine but a whole series of other Italian products work. So theoretically if they really wanted to because Italy was a part of that award. So if they really wanted to Italian wine could certainly be at risk for the Airbus issue. Okay. Now the other two sort of buckets of risk on the tariff front right now are this broad universal tariff that president Trump has spoken about. It's unclear what the likelihood of that is and it's unclear what it would look like. For instance, does that mean a ten percent or a twenty percent tariff on every imported product coming into the United States? They've spoken that way before. At the same time, I'll remind everybody, you know, during the first Trump administration, they also suggested there would be a hundred percent tariff on every import from Mexico. And that did not work place. Right. Mhmm. So a universal tariff is something that could potentially come into effect to put it in long term. You likely need legislation to be passed through Congress, which is very difficult. The president doesn't really have the ability to put in a huge universal tariff long term without Congress. And so the minute you start getting Congress involves, you know, you're gonna have people asking questions and there's gonna be a lot of involvement around the potentials, for instance, for exclusions of given products. Now, it's possible he could put in a universal tariff on everything for a short period of time. Like, let's say a hundred and eighty days. There's like a national security exception that would allow that. It doesn't seem likely that he could use that same exception long term. Particularly for things that where it's not super clear that it's for a national security reason. I'll give you an example. They have used national security as a reason to immediately put in tariffs on steel and aluminum. And they'll say the US, you know, needs these industries to help its military, you know, capacity or whatnot. Right. And if we're not producing steel enough, you know, we'll lose our ability to defend ourselves or something. If you put a giant universal tariff in place on every imported product, and included in there are stuffed bunnies from Vietnam. I'm not quite sure how long you could really have, you know, a national security reason for putting a twenty percent tariff on a a stuffed bunny that's manufactured in And those only last a hundred and eighty days anyway. Correct? I think so. Well, it looks that way. The other thing I'm I'm just gonna say is, look, there's a lot of uncertainty that's gonna come. Of course. You know, we have the way things have typically been done. But I think it, you know, it's reasonable to say that, you know, during the Trump administration, we should expect a lot of uncertainty and people are gonna test a lot of boundaries. Maybe a more relevant example is the other big bucket of risk on the tariff world and on the wine world specifically will be around retaliatory tariffs. So, you know, we had a retaliatory tariff around Airbus. Was a part of a WTO award. Mhmm. But the US has also done what they call section three zero one investigations on other trade practices that they deem to be unfair. And the US will not again go to the WTO. They believe the WTO. That's the World Trade Organization takes far too long to decide a matter. And really, the governing body of the WTO and the arbitration process is not working right now anyway. There aren't enough arbiters and the US won't appoint anyone. So it's you won't see anything go that path again, which means they would do a unilateral investigation come up with an award value, and they could put tariffs in place where they see a discriminatory trade practice. Now for wine, the first one that's important is around the digital services taxes. Okay. So digital services taxes are exactly what they sound like. They're taxes on digital services companies. They were sort of designed in an effort to get some revenue from these big internet companies that are doing that are generating revenue in a given country. So for example, Google, Apple, Facebook, and Amazon. France has put in a DST, a digital services tax of three percent. They have just potentially voted to increase it to five percent, but the US feels that it is discriminatory because there's a very high floor before the tax comes into place. So for instance, in France, you need to be doing at least seven hundred and fifty million dollars of revenue in order to be taxed. Okay. The US feels this is discriminatory because it mainly it means it mainly impacts these huge American businesses. Like Google app. Right. It's clear who they're going after in a sun with a with a tariff like that. Exactly. So most of the French companies don't end up having to pay it. There had previously been you know, a proposal to put a hundred percent tariff on sparkling wine from France as a part of this. Now Italy has a DST, and this issue at the end of the Trump administration had sort of been punted where there was, you know, a quasi agreement that all of the countries that have DSTs in place would go before the organization for economic cooperation and development, the OECD, and they'd sit down and come to an agreement. What is a fair way to tax DSTs that doesn't discriminate against companies from any individual country. That agreement hasn't happened. So we expect to see DSTs, you know, an action around DSTs pretty early in the Trump administration. And a reminder for unless there is a digital service tax. Correct? That you're referencing with a DST? That's exactly right. These are these taxes on companies like Google, Apple, Facebook, and Amazon. Right. Okay. So you could see that would be retaliatory tariff in response to a DST is what we're we're thinking. Okay. And like you said earlier, and I'll repeat. So many unknowns, it's November twenty second. You know, there's still plenty of time between now and when the new administration comes into office. So things will, I'm sure, no doubt, they'll be evolving over the next couple months. Exactly. Right. Exactly. Okay. So thanks, Ben, for laying the groundwork of where we're at today. I mean, from, from what you're saying, there's what's been done in the past, you know, what we see potential, especially with the DSTs, and sounds like that's one of the hottest issues here, but still plenty of unknowns. But you know, if we're sitting here and working in the wine industry, let's talk a little bit about how potentially the tariffs could impact Italian wineries in your opinion. And I know you don't have a crystal ball, but let's just for argument say say that something does happen? Like, how might it impact wineries in Italy? Well, we can sort of look back to, you know, the impact of the Airbus tariffs on French and Spanish wine for what we would foresee happening to Italian wine. I mean, In the instance that there was a large tariff, particularly, you know, a twenty or twenty five percent tariff that was placed on Italian wine. There's absolutely no doubt that you would see ex, you know, Italian wine exports to the United States drop significantly. I don't have it the exactly the percentage that French wine exports drop, but it would be a healthy hit to the market. You know, we understand, obviously, that these products are not fungible. You know, there's not really a substitute for Italian wines, but it really doesn't matter. I mean, you'd see fewer purchases from the United States. So I'm not that's something people have to take in into consideration. Particularly, the other interesting piece here is, you know, the US wine market, you know, as you know, has really been struggling with you know, consumers have not wanted to absorb these higher prices. Right. And we've seen a lot higher prices in a whole series of different wines. And, I don't think that there is a restaurant or a retailer in the US who hasn't had a lot of negative feedback around that from customers. So, you know, the potential for another hit that would cause prices to go up is, you know, pretty concerning. Yeah. Absolutely. I mean, I think with everything is quite price sensitive these days from wine to milk and eggs and butter. Right? And like you said, the the industry is already taking a hit off recent rising prices. So it it's definitely something that's on everyone's mind. How about for importers that are importing Italian wine, European wine in general? How should they be thinking about what could happen with the tariffs and preparing for next year? Well, my honest strong advice would be if you're an importer of wine in coming to the United States. Reach out to the US wine trade alliance. We do a lot of work around this issue. You know, unfortunately, we are the primary organization working around tariffs. Most of the other large advocacy organizations simply don't have the time to do it. But importers that really know their products and moreover know their customers can be a real value add. You know, one of the very best ways that we fight tariffs is by showing members of Congress and members of commerce department and the US office of a US trade representative showing them how important these products are to small US businesses around the country. Mhmm. And while they might not specifically be that concerned about whether or not an importer takes a hit, you know, sort of by definition, you understand, gosh, if you import a a given product, you're gonna kinda take a hit if there's a tariff on it. When you can show that there's loads of small businesses in effectively every congressional district in the country that need these products and depend on them, then you really have a story to tell. And so if you're an importer, you know, obviously it's a great idea in general to know who your customers are and to have good relationships with the restaurants and retailers that buy your wines, but it's more important now than ever maybe. Because if you can help reach out to those folks and for instance connect us at US wine trade alliance to the to the restaurants that you know are particularly good, and care about these products in particular markets, you can really tell a story that people in Congress absolutely care about. Right. Yeah. And that leads me to my next question, Ben, which is gonna be, what are the primary ways in which the USA wine trade alliance under your leadership is reacting to this news. And what are some of the tactics and things that you all are doing as an organization? Well, our real goal is to tell the whole story. Right. You know, the whole point of a tariff is or particularly these retaliatory tariffs is to try to convince a target country to change behavior. For instance, if you believe there's an unfair trade practice going in, you're gonna put a tariff in place that will convince that country to change that behavior. Right. The other piece here, obviously, that some people talk about is, you know, helping your own, you know, domestic producers. The good news is in the United States, the domestic wine growers, they really understand that tariffs on imported wine don't help them. You know, because of the three tier system, everybody needs healthy wine distributors, in order to supply restaurants and retailers. And so domestic growers, they really rely on distributors for access to market. And so when you have a really unhealthy wine distributor, which can happen if you get hit with huge tariff bills, their capacity to bring on new domestic growers is really hit. So luckily, you know, all of the big domestic grower organizations from wine America to the wine institute to the Napa Valley vendors. They all tell folks in Congress that they're against tariffs on imported wine. And I do also believe that the fungibility piece, you know, the question of whether one product is an actual substitute for another is getting to be a lot more understood. You know, Barolo is not Napa Valley Cabernet. Campaign is not sparkling wine from California. It's just not. They're different products. They have different customers different businesses depend on them. And so it's really not a proper substitute. I mean, almost by definition, like, if you have a preference, there's not a substitute. You know, I'll give you the inverse where it is truly fungible and you do not care You know, have you ever looked or cared where the aluminum foil you buy is manufactured? No. Nope. Never. So you put a tariff on aluminum coming in from other countries. It makes it more expensive. They start manufacturing aluminum foil. From, you know, more American sources of aluminum. Do you care? No. You have no preference whatsoever. But people have strong preferences on why. It's really a different product. And, you know, I think everybody on this podcast probably understands that kind of implicitly. You know, sometimes what you want is, you know, a great red wine from Italy. Sometimes what you want is a Napa Valley Cabernet. Sometimes you want something sparkling from France. That's the way it is. And luckily, I do think that that argument that people in DC are really starting to understand that a lot more now. Yeah. That this won't tariffs on European wine don't equate to increase consumption and sale of US wine. That's what we're understanding or what ongoing to understand. Exactly right. And the businesses that rely on these wines, you know, if you really rely on, you know, Kianti, there's not a substitute here in the US. So if you put a huge tariff on it, the only thing that happens is the US businesses that depend on them. And again, I'm not just talking about importers and distributors. I'm really talking about rust restaurants. Restaurants are everywhere. They're the star businesses and, you know, even small communities in every single state. There's no other option for them. So they just end up taking a hit to their profits. And they really can't afford to. You know, restaurants are a very, very low margin business. They're losing money on the food. They really sort of require at least one area of their business that they can make outsize margins. And I think people are sort of starting to under in that. But so what we at the US wine trade alliance do is we make sure that folks all over the United States, particularly influential folks around trade are able to have those conversations with those local businesses to understand why it's important. And again, the point is not for me to tell them, hey, let me show you why why you shouldn't put tariffs on wine. We want people we want their own constituent businesses to say that Right. They do a great job. And so we connect with local businesses from, you know, Tulsa, Oklahoma to Adelaide, Texas, to Lancaster, Pennsylvania, to Tampa, Florida, and those constituent local businesses telling their story can have a huge impact. Right. So the restaurants and retailers really advocating for themselves and how this will impact their business and and their bottom line after, you know, undoubtedly a very difficult four, almost five years with COVID and and everything else, the rising cost of food, and everything else that restaurant ones have been facing. Absolutely. That makes a lot of sense. So really starting almost at the end of the line of where these tariffs will impact and working our way up in a way if we think about strategy. Like, let's start with who this is gonna impact at at the front line with the consumer first and then, you know, work ourselves backwards to how that then relates to our distributors, importers, and our suppliers. Right. I mean, the folks that are gonna make decisions about this stuff, the list is crafted, you know, a retaliatory trade list is crafted in the commerce department. And it's sort of approved and implemented by the Office of the US trade representative. But all of those folks also listen to, you know, influential members of Congress, particularly members of ways and means on the house side or Senate finance on the Senate side. So connecting particularly with US small businesses is really important Unfortunately, I don't know that, you know, one argument that people sort of used that I saw, you know, written a lot in letters and the first go around, which you know the negative impact of consumer choice. And I don't know that people really care. What I mean when I say people, I mean, I don't know that the people who craft the list necessarily care about that. Like if if we're saying that right now you have five thousand skews and you're gonna go down to three thousand skews. I don't know that they think that that's a big problem. But hearing how small businesses, particularly care and depend on these products, that makes a real difference. You know, we make sure that we have all the conversations with the right people, both in commerce and the Office of the US trade representative. That stuff is very important. It's really critical that they understand why wine is a poor remedy to relieve unfair trade trade practices overseas and why it disproportionately damages small US businesses, but it's also imp important that those guys hear the confirmation from all of the members of Congress that they value. You know, it works really well or we think sort of the best recipe for success here is to have high level conversations with the deciders as it may be in DC and to make sure that they hear all of these confirming stories from all of the members of Congress that they care about that they've heard from their own small businesses in their back are. Basically, we need to make sure that when they think about a tariff on wine, the face that they're thinking of when they're thinking who's gonna get hurt, we don't need them thinking about, you know, a French champagne producing. You know, because they flatly, they do not care. They absolutely do not care about that. We need to change the image of who gets hurt to that small local business and, you know, the restaurant tours, you know, around the country and the people who depend on these products. Yeah. Absolutely. That that makes a lot of sense. And thank you for kind of explaining that clearly, Ben, and and reiterating that point. So as we wind down on today's episode, what's next? How is everyone involved from the restaurants and the retailers, the importers to the wineries, you know, sitting overseas in Europe prepare? Is there anything they can be doing? Is it more of a sit and wait? Or are there some things that you think that European based wineries should be looking into right now as we as we prepare for next year? It's a great question. Right now, you know, I don't think panic does anybody any good. You know, in the United States, we're preparing the best we can to tell the stories we can. You're gonna hear, you know, sort of spaghetti at the wall information. Yeah. There are gonna be things you hear that may or may not come to pass. You know, I'll use the example again of at one point. It was suggested there would be a hundred percent tariff on every product from Mexico. Right. So if you hear something, take a deep breath. No. It's gonna get handled step by step. We've gotta wait to see how things flush out. We're still waiting to see who's gonna be the US trade representative. Obviously, we've heard the nominee for Commerce Howard Lettnick, who is the CEO of counterfeits Gerald. So we'll wait to see how those sorts of things play out. We're again pretty far away from understanding what's gonna happen on this broad universal tariff risk. It could be, you know, a range of options from it does not happen at all through there is a tariff on almost every imported product, but there are exclusions. We just really don't know. So we really are in a bit of a wait and see right now. Okay. So just I guess read up stay informed, listen to the news, follow along with, imagine everything you're doing bad with USA wine trade alliance. And like you said earlier, if you are a US importer and you wanna get involved, reach out, and do your best to be patient. It sounds like is is what we can recommend for the time being. That's absolutely right. I mean, look, tariffs are certain. There is no doubt that the US is gonna put tariffs on a whole swath of products. Mhmm. Terrace on wine are absolutely not certain. It could happen. Mhmm. But it is not certain. We do have a stronger case than most imported products. Because of the way the three tier system works and because we actually can point to small businesses all over the United States who depend on these products in a way that loads of other options that USDA will have from all over Europe. Those businesses aren't gonna have the story to tell that we do. I mean, the very fact that there are so many people in the United States concerned about tariffs on imported wines sort of points to that. We simply have more employees around the country who make their living selling these products. And that makes our position stronger than a lot of the other options that they're gonna have. Right. Effectively, USDA is gonna go to the mall of, you know, European exports and it's a it's an amazing mall. You know, there's French and Italian luxury products. There's meats and cheeses and oils and airplanes and security services and technology companies, and there's wine, and there's fashion houses and cosmetics, and they're gonna say, what is the most impactful thing we can put a tariff on to remedy problematic trade behavior? And don't get me wrong. The US absolutely believes EU is a bad trading partner. They just do. They believe that the European Union puts up trade barriers for huge numbers of, you know, American products. You know, US agriculture is a really good example. So they're gonna try to correct in their mind some of this problematic trade behavior. But wine is the worst possible option here because it does more damage to US businesses than it does to businesses abroad, and because it's really unlikely to bring about change overseas by putting a tariff on imported wine. Right. Absolutely. And I think that last part, you said, about it does more damage to US businesses and restaurants and retailers specifically than it does overseas is really key and and continue continuing to reinforce that message to Congress, but also, you know, as importers, for those of us listening, you know, working with our partners here locally in the US as well. So that makes a lot of sense. But then you've you've offered so much great insight today. Thank you so much for sharing all this information with us and joining me on the podcast. As we wind down, we'll do our rapid fire quiz that we do at the end of every episode. If you can do your best to answer these questions in just a couple sentences, that'd be great. So number one That's my best. Number one, what is your number one tip for mastering the US wide market? Know your customers. You know, I'd say the number one tip for mastering any market know your customers, know what they value, and know how your product is particularly important to them and can be differentiated from others. Absolutely. Great advice. Number two, what is something you might have told your younger professional self about selling wine? As you were getting into the industry in New York City. You're very lucky. You know, I feel like I've I sort of lucked in to being a part of this, you know, extraordinary industry. You know, the idea that you actually get to participate in the wine world in a in a hobby that you love and you get to make a living at it, it's pretty lucky. So, you know, I'd say, you know, hold on and enjoy the ride. I love that advice. Yeah. That's really great. I think and a good reminder to all of us when we are in these uncertain times in our industry is we are still very lucky for for what we do. Absolutely. And finally, number three, as you just said, we're very lucky because we often get to travel overseas and get into vineyards and drink great wines. What is your number one or one of your favorite travel hacks when you're out there traveling for work? Oh, well, you know the answer to this. You go to the restaurants that the wineries go to. Ask a winemaker where to eat and drink. And you will never be disappointed. Oh, that's a good one. Absolutely. Alright, Ben. Well, thank you so much for joining us today on master class US wine market on the Italian wine podcast. How can our listeners connect with you and the USA wine trade alliance? You're welcome to email me at ben at tribecawine dot com. You can certainly connect with with you Juliana and you can forward any contacts to us. And if you're an importer, you can go to wine trade alliance dot org. Please do sign up We'd love to hear from you. And I just remind everybody. Tariffs online are not certain. You have a great story to tell. We can help you tell it. Hope to hear from you soon. Fantastic. Thanks again, Ben. Appreciate you being here. Thank you so much. Thank you for joining me today. Stay tuned each week for new episodes of Master Class US wine market with me, Juliana Colangelo. And remember, if you've enjoyed today's show, hit the like and follow buttons wherever you get your podcast.