Ep. 2296 Juliana Colangelo interviews Gary Fisch and Scott Ades | Masterclass US Wine Market

Today's episode, we're talking about the two hundred percent potential tariffs announced just last week on March twelfth on your all European wine by the US. Currently, in the EU exports roughly five billion dollars of wine to the US in twenty twenty four, So a two hundred percent tariff would be detrimental in many ways as we know to the industry. Almost half of that five billion came from France and forty percent came from Italy. The three key takeaways for today's conversation, what we really wanna understand and and with your help is number one, just the the current state situation. How are these tariffs gonna impact US businesses specifically for Italian wine? And if anything, what can Italian wineries be doing right now or preparing themselves for? 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 will 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 Masterclass US wine market. Today, I'm thrilled to welcome Gary Fish back to the Italian wine podcast. Gary is the president and CEO of Gary's wine and marketplace. Welcome to the show, Gary. It's so great to have you back on the podcast. Good morning. It's great to be back. And I appreciate you jumping on. You know, we just had tariffs announced last week. So we wanted to get some perspective from some industry experts and veterans like yourself. So thank you again for joining me on this topic. Well, it's been a sleepless week for sure. I bet. I can't imagine. But, Gary, before we dive into the topic of tariffs, just give our listeners a very brief refresher on who you are and a little bit about Gary's wine and marketplace. That's great. We own and operate three stores in Northern New Jersey, Madison, Burnsville, and Closter. We're a fine wine shop, but we also carry a wide range of everyday wines and spirits cheeses, meats, charcuterie gift items. So, you know, we play in online and in store. Okay. And you're working with wines and and spirits around the world. Correct? Absolutely. Yeah. For sure. Definitely the tariffs I bet. Like you said, it's been a sleepless week trying to figure out how this is gonna impact us all. So today's episode, we're talking about the two hundred percent potential tariffs announced just last week on March twelfth on your all European wine by the US. Currently in the EU exports roughly five billion dollars of wine to the US in twenty twenty four. So a two hundred percent tariff would be detrimental in many ways as we know to the industry. Almost half of that five billion came from France and forty percent came from Italy. So again, I mean, two of the largest exporting countries, and definitely these will have an impact. So there's still a lot of uncertainty and speculation, but we're really eager to learn from your perspective as a retailer in the US. You're you're based in New Jersey, but I know you have a national column business as well, how to understand the situation. So the three key takeaways for today are number one, what is the current state of US tariffs on EU wine? How will these tariffs impact the US wine business in retail in particular? And finally, what can wineries and and maybe Italian wineries in particular do if anything in response? So for starters, you know, we're here Monday, March seventeenth. These tariffs were announced last week to your knowledge, Gary, and then from your perspective, where are we currently standing with these tariffs? Well, we don't know. Right? It was a a tweet, not a directive, but as time has gone on, tweets become reality. And so we've been talking with our importers are wholesalers, other retailers around the country to see if anybody has a better read on it. We're part of, US WTA. That's an organization of, you know, wine retailers, importers, wholesalers. To, you know, work with them to try and understand it. And nobody really knows exactly what's going on except a two hundred percent tariff would be devastation. Yeah. Absolutely. And the uncertainty, obviously, as we're still waiting to see what actually happens, you know, everyone is scrambling to put models together to figure out how these tariffs could potentially impact their business. Yeah. I I'd like to touch on that for a second, uncertainty. Right? Mhmm. And there's nothing worse in business. Than uncertainty. You can't make decisions as a retailer in in our case. Do we load up on imported wines? Do we hold and wait and see? You know, it's devastating from that point of view. You know, you have to make decisions as a business. No matter whatever your business is. And there are short term decisions in the long term. And this has just put a freeze on all real decision making. Yeah. I I think that's a powerful statement, you know, that indecision how detrimental that is for business. And even if again that we're still speculating, we don't know exactly what happens, it's still hard to make strategic business decisions with the threat looming over us. You know, that makes it incredibly hard to run a a successful business. So let's hope at the very least that we have some answers within the next couple weeks. I mean, from what I've read and heard by end of the month of of March, we should know more. But in the meantime, we're doing our best to understand the potential impact and and ways we might need adjust and adapt to what could potentially happen. So Gary talked to us a little bit from the retail perspective how you understand these tariffs could impact your business if they are to go through. Well, there's a couple things. One is, you know, from our personal retail business, thirty three percent of our total business is imported wine. Okay. Twenty four and a half percent is domestic. So if you took away that thirty three percent of business from us, it can't switch to domestic a hundred percent. First of all, I, you know, I was thinking about it. Wineries, as you know, they're also making decisions based upon economic situations, and also, you know, they're growers, so climate decisions. Mhmm. And I can't call winery up today and say, by the way, I need an extra five hundred cases. They haven't produced it. Yeah. So even if they wanted to support it, even if, you know, they would love to grow their business with me. They don't have the physical juice available to do that. So from that point of view, to say it's gonna be great for American wineries, Well, that's b s. You know, wineries that have overloaded inventory, it may help their inventory flow. But it's not a long term benefit to them. Right. You know, so and I don't think it's a benefit to any American business that's related to beverage alcohol. Yeah. And I mean, also certain categories that just aren't substitutes. I mean, how do you think, for example, your customers that are coming and buying burgundy you know, what are are they gonna switch over to Oregon? Or are they gonna stop buying wine? Like, what do we think that impact could be for certain categories that really don't have a substitute? Yeah. Absolutely. As you know, I'm a big fan of Napa Valley, but that's not all I drink. And if I wanted a a bottle of burgundy, I want burgundy, and burgundy tastes very different than Oregon P and O or California P and O. And we've tasted a lot. And so consumer, you can't say, okay, I'm not gonna drink Berundy, I'll just start buying Oregon pinot noir. It doesn't work. I believe you're right. I think they will slow down or completely stop their buying. You know, especially Burgundy is something they buy for saving because it appreciates the value and it just gets better and better. So Berundy is a huge problem. Champaign is also a problem. You know, French Champagne tastes very different than domestic sparkling. I read a a great column by Letty Tige last week offering some domestic alternatives to friendship. A hundred percent right. You have Schromsberg and domain canaros. I had a friend of mine, Paul, a Cornell makes some great sparkling wine, but they don't taste like Don Peroune or krug or, you know, Tattenshire. So could American switch? I guess so. Would they appreciate what they're getting as much? No. It it would be a shift. But the same thing, there is not enough wine sitting in their warehouses to flip the switch and suddenly be able to provide product for everybody in the country. Exactly. Exactly. And, you know, what are you hearing on the floor in your stores? I know you're very, you know, you're in all your stores every day, both from your employees, but also customers. Employees are concerned because they know that if we lose a large percentage of our imported wine business, we'll have to lay off people. Mhmm. There's no question. We, as a small family owned an operated business, we can't possibly absorb losing you know, even if it's half of the total imported business and we lose fifteen percent of our total business, we would have to lay off at least ten to fifteen percent of our staff. So that's a problem. Customers are coming in and they're concerned. Some are buying in, but they're also concerned because they don't feel as good with disposable income as they did a year ago. Right. So they're reluctant to spend their money. Mhmm. So we're getting hit from two sides. People are spending less money because they're nervous. And we have to make buying decisions long term about, you know, protecting our inventory, I guess, the great way to put it, because we don't wanna be the first people to run out of imported wine. So we have to buy in, but we can't afford to buy too much because we have no idea. Right. Exactly. We have no idea. And that's like you said earlier, one of the hardest parts in business is to have all this incredible uncertainty to try to navigate and deal with. Beyond tariffs, obviously, it's been a challenging start to the year. And I'd say last couple of years for our industry with other things as well, you know, declining rates of consumption, all the the headlines that are attacking alcohol. What are some ways you've been adapting and responding? We know wine and and spirits is this incredibly resilient industry, and and we will get through this, but it will require also some change in adaptation. So, Gary, I'm curious from your perspective as a retailer how you've been shifting some of your business decisions in this new environment. Well, so, you know, it's been a challenging couple of years this year in particular. I think for us, you know, we're in a very high demographic communities. So we're heavily involved in Wall Street. So if the economy if the stock market is good, our clients are good. Right? So we tend to live and die by that. We've been holding our own against the tidal wave of bad news. But what we've started to do is shift inventories. We're trying to reduce inventory. We're reducing definitely inventory at the higher end. Napa cab, Bernee, over a hundred dollars. We're buying less than we bought in the past. We're trying to do more presales when we get opportunities or an allocation instead of automatically taking it, which is what we would have done five years ago. We're saying, okay. Could you hold that allocation for a day a week. A couple weeks, give us a chance to pre sell it. We're trying to do more consumer activations, I'll call it, in store tastings, wine tastings, dinners, at local restaurants, just events that create more activity to try to keep our clients and our guests engaged. Okay. So in quite a number of ways you're shifting to adjust to the economy and to to what's happening, more engagement, different purchasing patterns, more presales, more events, where are you seeing maybe the greatest impact or success among those efforts? For us, it's the in person tastings. Right? You know, because we're bringing winemakers or owners of wineries, into restaurants with small groups of people and really one on one relationship building, I'll call it. So if, you know, I got in this business because I fell in love with wine and the people of wine, not necessarily in the business of wine. So when we're showing a bottle of wine, it's a bottle. Right? It could be a widget. When you show the owner of the bottle of wine or the winemaker to a select group of high end clients, the response has been overwhelmingly positive. So we've been really focused on that. But as you know, that takes a lot more time and energy Right. And just buying a case of mind putting it on yourself and waiting for people to come in. Yeah. A lot more resource coordination, effort on both sides, you know, to create that event and then getting people in the door, you know, it's a ton a ton of effort. So a lot more effort, but it's also positive. And encouraging to hear if some of those things are working and those tactics are seeing an impact. Can I just jump in for a second? Because I don't wanna lose my train of thought on this. And as, you know, you know, selfishly speaking, I focus in on the effects of retail because that's how I make my living. Right? Right. But I also I've feel for our, especially our small independent wholesalers and importers, because many of these small wholesalers that we deal with and importers, all as they bring into the country are French wine. Or Italian. They're very specialized. Right? Their teams are focused and very trained on French wines will say. And that's what they bring in. And they'll be out of business immediately. They're small companies. They can't afford to bring in a year's worth of inventory and hope people buy it. Right? So the small independent suppliers will be totally devastated, and virtually every one of their employees will be out of a job and probably you know, there's thousands of them around the country. Yeah. Yeah. And I'm not a restauranteur, but, you know, restaurants are just getting over COVID. Right. And if I'm a French bistro, my menu and food tastes better with French wine. Yeah. Right. I'm we're in New Jersey, and we have Italian restaurants. Right. Italian wine tastes significantly better with Italian food and domestic wine. Yeah. Trust me. I've tried it. You you take those restaurants, a, they'll have to change their wine lists. It definitely will negatively impact their business. It would be devastating. Yeah. And also the cost, I mean, the domestic, the the average price of a domestic bottle of wine is is higher than imported wine. I mean, despite imports. So you can't just, again, there's not an equal substitute for the domestic products. And then, like you said, the trickle down impact of what this is gonna do to American jobs in all sectors of the industry is not able. So Yeah. There's there's no way anybody could say this is good for American consumers. American businesses. I don't understand how if it was, I would love it. You know, I'm I'm I'm all about good and good for America. I don't I don't see how this is. Yep. Absolutely. I mean, and like you said, it's even the the uncertainty of it all and and the looming threat. So to speak of it all is still detrimental to the businesses and and what's happening in the industry. So anything you could recommend, you know, as we try to navigate any any words of wisdom or advice as as the whole industry tries to navigate this situation? I'm a retailer. Nobody's ever asked me for wisdom. But having said that, you know, it's we have to be patient, but we also have to be proactive. Yeah. You know, I'm not sure it will help, but reach out to Congress people, reach out to your senators, try to shed some light on the bigger picture. And I understand, you know, we're in a war here. The difference of this war hopefully is people won't die, but people will be hurt by this war and negatively impacted. So as whether it's individual people, importers, wholesalers, retailers, we should be rallying around this. And begging the the government to take a deep breath, and maybe let's try to put this war on hold Yeah. And try to negotiate to a settlement as opposed to, shooting, you know, Right. War. Yeah. Absolutely. And I think that's great advice in in lots of parts of life, but to take that pause and and react carefully before responding so quickly in these situations. I also wanna ask, you know, in terms of lobbying, you know, you you mentioned earlier your membership with the association of wine retailers. Is there anything that that organization? What are they saying? Any, anything you can care about what that association might be doing right now? Yeah. Well, their work, I think, you know, their goal is through legislation. Right? They're talking to Congress and stuff, but they've made it clear that their belief is over thousands of jobs will be lost. I read this. Three hundred and fifty thousand restaurants will be negatively impacted. Wow. Fifty thousand retailers will be negatively impacted and over four thousand importers. And this comes from them, not me, will be negatively impacted. That's stunning. Yeah. You know, and it's scary. Because and I go back and, again, you know, I think of these restaurant tours. I'm friends with a lot of restaurateurs. They're just getting over the effect of COVID. Right. We we wanna put another burden on them. Yeah. I don't think so. Right. Well, Gary, thank you again for joining. And I know this is not an easy topic, and and we try to stay positive in in this industry. But like you mentioned earlier, there's also the reality of being prepared and knowing what's happening also and balancing those two sides. Anything else that you wanna add before we wrap up? I think just we should be drinking great wine and celebrating the good things. Yes. Agreed. And if you can give one word, just one word that you think the industry needs to hear right now, what would that one word be? There is a bright one word? I I've I can't say hello in one word. Hope. Alright. You can have three. Okay. Hope. Hope. Hope. Yes. Hope. Alright. Thank you again, Gary, for joining us. I really appreciate you taking the time. My pleasure, Julian. Take care. Have a great day. You too. Hello. Welcome to Masterclass US wine market. Today, I am thrilled to welcome Scott Addis to the Italian wine podcast. Scott joined Delatera as president in November twenty sixteen. Before Delatera, Scott spent eleven years with the Weinbo group where he rose to the role of chief operating off with, sir. Scott, welcome to the podcast. It's so great to have you here. Welcome. Thank you for having me. Really appreciate it. I wish we were maybe meeting over a glass of wine, perhaps of Italian wine instead of talking about the tariffs. But alas here we are March seventeenth, you know, just a little less than a week after tariffs have been announced and an important topic. So I'm really excited to hear your perspective today and thank you again for joining me. Sure. Before we dive in, can you just briefly tell us a little bit about Dialaterra for those of our listeners who might not be so familiar with the company? Sure. Dalatera's, an importer and national sales agent focused solely on Italian wine and spirits. We represent about thirty different family owned wineries and distilleries and have a strong network of distributors providing national distribution across the entire US. Fantastic. And how long have you been around a little history? Sure. Dalatera's been in business since nineteen ninety. So this is our thirty fifth year. And we have a fairly tenured staff. Many of our people have been with the company between ten and twenty years. And so it it's been a very successful well run family business for a long period of time and hoping tariffs doesn't bring that to an end. Hopefully not. And, Scott, on that note, just to tee up their our conversation and a reminder listeners about some of the facts. Last week, there was a tweet that announced potential two hundred percent tariff on all European wines. So that's what we're here to talk about. The potential impact. Of course, nothing is set in stone just yet, but we know it could have an impact in twenty twenty four. The EU exported approximately five billion dollars of wine to the US. So obviously a tariff would have a a a huge impact on the industry not just for the wineries exporting but of course for all the companies here that rely on that business. About half of that five billion came from France and forty percent came from Italy. So obviously the lion's share coming from France and Italy of of those exports. So our three key takeaways for today's conversation, what we really wanna understand and and with your help is number one, just the the current state situation. How are these tariffs gonna impact US businesses specifically for Italian wine? And if anything, what can Italian wineries be doing right now or preparing themselves for? So for starters, you know, from your lens, At Delatera, where do we sit right now with the announcement of these potential tariffs? Yes. So currently, it's a waiting game. We're waiting for some definitive action that will let us know if there will be or or won't be a tariff. Also do wanna point out you mentioned that the two hundred percent was a threat. There is no formal proposal for two hundred percent, but there certainly has been, a lot of discussion of tariffs. In theory, we should learn more in early April. April one was a deadline set by the Trump administration for their own internal organizations to their agencies and departments to come back with proposals on actions across a number of different areas of the government. We don't know how long it will take for those proposals to be put into action. But things have moved pretty quickly. So April one is a very important date. While we're waiting, I think the most important thing that's going on now that people should be aware of is there's a a fairly extensive effort going on to educate the various constituencies in the government that could impose or have an impact on the tariffs imposed to make them aware of the negative impact on US businesses of putting tariffs on imported wine. The majority of the impact of the tariffs actually goes to people and businesses in the US, not the foreign entity. And we really want people to understand that before they make a strategic decision that doesn't have the outcome that they're looking for. Yeah. Absolutely. I think that's a really critical part. And Scott, can you tell us, you know, sitting in your role with Dalaterra, how these tariffs could potentially impact your component of the business as an importer? So, you know, tariffs are effectively a price increase, especially because this is a finished good. Right? It's not an input to another product. It's the good itself. And so when the good comes in with a tariff and the tariff is twenty five percent, that's basically a twenty five percent price increase on product. And as with almost any other good, when the price goes up, the volume goes down. And depending on how much the price goes up, you know, it'll have a more and more significant impact on the volume. So from our perspective, as we see if tariffs play out, it will result in less volume of sales for the products, which will, you know, have less volume of revenue for us and less profitability for us. And and that's really the impact on us as I think every other importer, in this is the way they're looking at it. Yeah. Could we take even an example or a case study? Let's say it's, you know, a twenty dollar bottle of Kianti. What does that look like, you know, coming just down through the chain and and ultimately look like on the on the shelf to the end consumer if these tariffs are imposed? Yeah. Twenty dollar bottle of wine is gonna come into the country at about ten dollars, and then it's gonna get a tariff, and then it's going to get marked up by the importer, by the distributor, and then by the retailer. So that at the end of the day, if it was twenty dollars on the shelf beforehand with a twenty five percent tariff, it'll be twenty five dollars on the shelf. To your point earlier, if it's two hundred percent tariff, the twenty dollar bottle of wine is now a sixty dollar bottle of wine. And that's where you really have problems because people aren't paying sixty dollars for a twenty dollar bottle of wine. Right. Exactly. And that's where we really find ourselves, you know, in trouble, especially for Italian wine. So are there any categories you think within Italian wine that could be impacted more negatively by tariffs than others? Like, do you think there's any regions or categories that might have some more some more resiliency, you know, in this situation? Probably a little bit at the very high end and more so, though, on the low end, believe it or The reason on the high end is there's always gonna be someone willing to pay a lot for a bottle of wine if they want to get it. Right. But also high end wines will have the greatest impact because of their value, the tariff will will be the largest dollar amount than any other wine. Low end wines on the other hand, you know, a big percentage of the cost of a low end wine is just it actually getting from point a to point b, getting from Europe to the US. Right. And so the cost of the product is a little bit less impact So if you're bringing the bottle of wine in for four dollars a bottle, and it now goes to five dollars a bottle, that might be manageable. If you're bringing a bottle of wine in at forty dollars a bottle, and it now goes to fifty dollars a bottle, and then that gets marked up, that's going to be less manageable. So so the low end, believe it or not, may have less of an impact as a result of tariffs versus the high end. Interesting. So we might see, you know, we've seen obviously incredible increases in in Perseco in that category in sales in the US, we might see some of those wines. Perhaps make it out okay, but, you know, time time only. At the low end. Yeah. Yeah. That's a low end. Exactly. Yeah. Yeah. You know, Scott, you probably sit in in a tough position this last week communicating to of your winery partners, but also your team. What what are you telling your partners both internally and externally right now? So, you know, not much different than what we just discussed to some extent. I mean, with the wineries themselves, we are sharing whatever news we can and putting everything in perspective, sharing dates. There was obviously a lot of concern when that two hundred percent tweet came out. And, you know, we explained that and tried to put it in context. And we're just trying to keep them abreast of the latest things that are both being communicated by the government to the extent there is anything as well as what other people are doing that we're aware of. How are distributors approaching this? What do we know of other producers? How they're approaching it? Basically, everyone knows that there's not much we can do until there's something definitive, but no one wants to be left behind or out of the loop. So we're just trying to keep people on the loop, basically, as much as we can. And are there any lobby efforts that you're aware of or anything you've heard of on the ground from organizations, like you mentioned earlier, that's trying to get that message out to constituents about the impact that these will have on US businesses specifically. We do really spend a lot of time communicating that as well, sharing with the wineries. Here's what we're doing to try to avoid these tariffs. What you just described is what we're doing a lot of communication with internally, both to our team and to our distributor partners and anyone in the trade. Here are the things that you can do to help prevent this from happening to us to communicate to your local politicians to whoever to make sure they're aware that if a tariff goes in place on imported wine, it's gonna hurt me the domestic business as much or maybe more. And, you know, one thing we didn't really touch on too much was restaurants, which, you know, if you think about Italian restaurants is the largest category of ethnically or geographically themed restaurants in the country. And, you know, Italian wine goes with Italian food, you know, on purpose. Right? That's how how they would both develop. And you can't just substitute domestic wine or South American wine if they don't get tariffs or something like that for Italian wine. And as you probably know, restaurants have a very difficult time over the last few years, and they start with very thin and local margins and losing Italian wine sales could have a big impact on them, a significant impact on them. Yeah. As we know, restaurants in the US rely a lot on the margins behind alcohol in their business to to stay afloat. And like you said, protect those very thin margins already. So Yes. Yes. Absolutely. That could have a detrimental impact. Is there anything you think that people sitting over in Italy that are listening to this can do proactively, or is it more of a waiting game for our partners? No. I think they can be very proactive in the same way that we're being proactive with our government to try to make sure they're aware of the impact on US businesses. They need to be just as proactive on their side with their trade negotiators and and the people in their government that have a voice because one of the things that we've heard, and I've only heard this second hand, but from reliable sources who are actively involved in this, is that the EU trade negotiators are part of the challenge here that for years, not just recently, they've not been the most collaborative partners in negotiating in situations like this. And we need to make sure that the wineries that we represent are making sure that those trade negotiators understand, you know, they're very clear eyed on the impact this can have on an important industry to to Italy and to other countries. So get vocal over there as well. Call your representatives. Yeah. And and make the impact known of of what this will do to the industry. That's really good advice. You know, speaking of advice, is there anything, you know, as we continue into navigating these waters and understanding the impact of these tariffs, any, like, words of advice or wisdom that you might offer? You've been in this industry quite a long time and held some really important roles. So we'd love to just hear if there's any advice you might give to our listeners. That's a great question. I think making sure you understand what drives your business and that all the constituents involved understand that. You know, in this process, you learn that you think other people understand what's going on in your business because you're living it day to day, and most people don't. Just the way we don't understand what's going on day to day and other people's businesses. And you never know what can come around the corner, whether it's a pandemic or a tariff or, hail. You know, you need to be prepared for these things. Unfortunately, these days can't expect the coming year to be like the last year or not like the last year. However it is, you need to be prepared to be nimble. The more entrenched you are, the more challenging it is to react to what's going on in the market. Yeah. Which is very quite a bit. Mhmm. To really understand your business, be prepared, have that bigger picture of you as well of what's happening in the rest of the world, and, you know, how it ultimately could impact your business. I think that's that's great advice. Exactly. Is there anything else that you wanted to add to today's conversation? About Dalatera or about the tariffs? No. I think we've covered it. I think it's been been a great conversation. Yeah. Yeah. Great. Typically, we do a rapid fire quiz, but for this special topic, I'm asking instead our guests to give one word of encouragement, advice, hope, anything that you think are listeners who are working Italian wine might need to hear right now. I think a good word is focus. I think if you focus on what you do, and you do it well, you'll be successful. You may have to ride out some storms like now, but I think you'll be successful. I also think in the wine business specifically, there is often a desire to spread your focus a little thin, make eight team different wines instead of maybe four or five. And in situations like this, I think that focus can really help as well. So focus is is my word of the day. I like that. I'll have to take that advice myself. Well, thank you again, Scott, for joining us today on the Italian podcast. To talk about a topic. Maybe perhaps not so no fun, but, we'll have you back another time to talk about some more fun topics. But thank you again. Please take that. No, thank you for having me. Thank you for joining me today. Stay tuned each week for new episodes of Master Class US wine market with me, Juliana Colangelo. 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