Ep. 2435 Juliana Colangelo interviews Benjamin Aneff of US Wine Trade Alliance | Masterclass US Wine Market

We don't quite have certainty for the long term yet. As you probably know, a couple of weeks ago, the president announced the results of the negotiations in terms of the broad reciprocal tariff rate. So this is the tariff rate. The United States is gonna apply to effectively every product coming in from the European Union, and that rate right now is fifteen percent. For the wine world, the big question is what's gonna happen with alcohol. The fact that we haven't heard an agreement around alcohol with an exemption only for spirits, but not for wine is good news. I think, you know, we have a few weeks to influence the negotiations. Wine has a real shot to be excluded. But both sides of the Atlantic need to do their work. And I do think that the winemakers in Italy are in a particularly powerful position in terms of, you know, the connections that you all may have. 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 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 on the Italian wine podcast. We're here for a short special edition update. With Ben Anaf, of the US Windrade Alliance. He's also the managing partner of trade back a wine merchants. But today, we're here with Ben to get an update on a topic that is, everyone's minds these days, the tariffs. So, Ben, thank you again for joining us here on a Friday afternoon. We really appreciate it, and thanks for being back on the podcast. Absolutely. Very happy to be here. Well, let's just dive right in. You know, we've had you on the show before, and our guests really enjoyed your episode previously learning about your background and the USA wine trade alliance, but just give us a quick refresher on what the USA wine trade alliance does first, and then we'll dive right in. Sure. So our organization in a nutshell is the umbrella group that's fighting tariffs online. We're made up of importers, distributors, retailers, restaurants, and even domestic producers, and we advocate for free trade in the wine world. Great. Thank you for the quick refresher. And thank you also for all the great work that you're doing on behalf of the entire industry. So it's, August eighth. Where are we sitting right now currently with the tariff situation? Well, it's a great question. We have more clarity than we did, I'd say, thirty days ago, but we don't quite have certainty for the long term yet. As you probably know, a couple of weeks ago, you know, the president announced sort of the, let's say, the results of the, negotiations between, you know, he and the EU in terms of the broad reciprocal tariff rate. So this is the tariff rate the United States is gonna apply to effectively every product coming in from the European Union. And that rate right now is fifteen percent. And for the vast majority of products that's what we'll see. There are some exceptions there, autos have a different rate. Steel has a different rate, etcetera. For the wine world, the big question is what's gonna happen with alcohol. Right. And about three to four weeks ago, it seemed the most likely scenario would be that spirits would get an initial exemption, but that wine would not. And one of the reasons was because spirits is a much bigger market in the EU for US domestically produced spirits, then the EU is for domestically produced wines. But the good news is the fact that we haven't heard an agreement around alcohol with an exemption only for spirits, but not for wine is good news. And it means that all of the work that is being done on both sides of the Atlantic telling the story of how important, you know, the European wine trade is for huge numbers of businesses here in the United States. It means that negotiations are still ongoing around potential future exclusions for alcohol. So I think that there's still a lot of work to do, but there's a solid chance that wine could get an exclusion or reduction in the tariff. The Comatita Van and other groups in the European Union or so the good news is we're in a position where the US and the EU are still negotiating on potential exclusions around alcohol. There's lots of good work being done in the European Union by the Comatate Van and others to tell the story of how important, you know, the US market is for European producers, which is important on your side. And in the United States, the US wine trade alliance and other organizations are you know, telling the story of how critical EU wines are for the health of the entire ecosystem in the United States. Right. As you know, you know, most of the revenue for critical importers, distributors, retailers, restaurants, is driven from sales of EU wines. So, you know, a tariff on EU wines would have a tremendously negative impact on huge numbers of small businesses in the US. Yeah. And what tactics are you using then to really explain that and tell that story to US government representatives and to those involved with decision making and the tariffs? Well, we really have to make it easier for them to understand, you know, the, you know, the economics tier. And because we're guided by the three tier system, you know, it's not readily apparent to folks. You know, we sell about twenty four billion dollars worth of European wine in the United States, but only about five point three billion gets sent back to the European Union. There's a huge economic surplus on the sale of EU wines. And that's not true of really almost any other imported product. You know, if you had twenty four billion dollars worth of, you know, French fashion goods, only, you know, twenty three and a half billion dollars would go back to Europe. So that huge economic surplus is what powers, you know, hundreds of thousands of businesses across the United States. And so, you know, we work to, you know, explain to the relevant agencies and also people in Capitol Hill, exactly, you know, the details of how these work. And look, we honestly, we introduced them to the businesses in the United States that actually do the job of selling wine. You know, we want them to hear from importers and distributors and from restaurants, and even from domestic producers, they can hear what the negative impact is of real damage to the US distribution system even on domestic producers here in the United States. I mean, as you know, the last time we had tariffs there are actually examples where US wine producers lost their distribution in Keys Street because their distributor came ended up having financial difficulties. Any business doesn't, you know, that requires distribution needs to have their key distribution partners and good financial health. And not to mention the retaliatory impact from other markets against US goods. Also was, I know, a tremendous impact in the last round back in April. Oh, you're exactly right. I mean, US domestic wine producers are having a terrible time. Their overall exports of US wine are down something like forty three percent year over year. Wow. It's a disaster. A big piece of that is obviously Canada, but an agreement on wine between the European Union and the United States could bring back a lot of the goodwill that, honestly, domestic producers in the US need to sell more goods around the world. And the European Union, while not the largest buyer of US wines, the exports have certainly collapsed. And I know that US producers would love to be able to sell more wine into the EU, particularly as they've effectively lost Canada. Right. And what you said before too is that their distribution networks are being disrupted by these tariffs in the US. So it's not just ex for. It's also just domestic sales that for domestic producers are being disrupted by the tariffs based on what's happening to distributors and importers and how it impacts them. So I think that's a really good point that might not be as obvious, but something really important to to keep in mind? No. You're exactly right. In a nutshell, we need to make sure that folks in commerce and USDA, they really understand the second and third order effects of the decisions that they make. And why thinking about trade in a very simplistic trade deficit versus trade surplus, you know, sort of context doesn't really work in the wine industry because we're the only industry that has this very odd three tier system that influences the economics of the whole chain. Exactly. Exactly. So, Ben, you, it's it's August eighth, again, for our listeners, and we're still in limbo when waiting to hear what happens there's gonna be a possible exemption. What are some deadlines and and things to keep an eye on for everyone who's anxiously awaiting some news on next steps on the tariffs? Well, it's a good question. You know, right now, there's ongoing negotiations, but what I would really say is particularly for your listeners. It's really important that producers in Europe raise their hand and speak up to their own representatives. Mhmm. You know, one of the big things that has held wine back flatly is the US sort of uses wine as a cudgel to get access to European markets for other agricultural products. You know, there are lots and lots of other agricultural industries in the European Union, where farmers in in Europe have done a really good job of convincing the Europeans to be very protectionist. For instance, there are whole categories of US products that are effectively banned from the European Union. And that is very much front and center in these negotiations. You know, the new sort of way of thinking from the US trade representative's perspective is we don't want free trade. We want fair trade. And fair trade means If we give you open access to your products to come into our markets, you have to give our products open access to your markets. And what the US trade representative in the US would say is that, you know, Europe has not given access to European markets for American agriculture. Now in the wine world, it is fair trade. Right? There aren't any, you know, particularly problematic trade barriers, There's not a large tariff. There's nothing that would prevent business in Europe from being able to import a wine from the United States. But for the rest of agriculture, there are loads of barriers. And Honestly, the USDA is, you know, that's what's holding things up. It's a big piece of this. And there's a degree to which European farmers have done, you know, non wine farmers, but European farmers have done a better job at telling their representatives in Europe, we want you to continue to protect our market from their perspective, but to make it harder for US products to be imported into the European Union. Right. But the people that will suffer from that are European winemakers. Because that's what the USDA will hold over them. And so I I would just say, you know, to winemakers, Italy, you wanna raise your hand and remind the your representatives how critical the US market is for you and to make sure that other industries in Europe aren't benefiting where at the cost of winemakers. You know, it's such an important cultural product. And for a long time, I think winemakers have been sort of reluctant to raise their hand. The other piece that I hear a lot is that, well, it doesn't make sense for us to raise our hand because, you know, there's these big industries, and that's the only people the government officials listen to. Well, it becomes self defeating, you know, and it sort of You make it become true if you never actually raise your hand because you say I sh it's a waste of time to raise my hand. It's self fulfilling prophecy. Right? Yeah. That's exactly right. And we've noticed time and time again that, you know, when small producers actually speak to their representatives that makes a big difference. As you know as well, the wine businesses is a really interesting one, meaning folks have connections. I absolutely guarantee you that there are winemakers on that are listening to your podcast that have incredibly helpful connections within the Italian government, within the European government that can make an impact and make sure that, you know, wine is held front and center in a way that it hasn't before. And the other obvious piece here is, you know, Italy is lucky to have a prime minister in Melanie who president Trump absolutely loves. So I would love for Italian winemakers to be asking her to be their advocate because at some point, these decisions are gonna be made at the very highest levels. Right. Misty, execute, and friends. Exactly. Right. And Italy is an in an incredibly enviable position in having a prime minister who president Trump absolutely loves. And I can tell you it would make a huge impact if the prime minister was more openly advocating for Italian wine And by the way, the story she should be telling is not just how important it is to Italian winemakers, but she should put a microphone to how critical, you know, the sale of Italian wines are to your US businesses. I mean, there are huge numbers of businesses in all fifty states who absolutely rely on the sale of Italian one, but Italy is lucky in that fact. So I haven't seen anything public from her yet, but, you know, folks that are listening to your podcast, someone knows someone who knows the prime minister. And this is the type of thing that could make a real impact here. Yeah. Absolutely. And I and Ben, thank you for calling that up so clearly and directly. And, you know, we talk all the time in the wine industry about the importance of of relationships, right, and how much that makes this industry go round. And I think the same is to be said for politics and many other industries as well. So the importance of that relationship that the Italian prime minister has with president Trump cannot be understated and and the, like you said, Italian wine industry is perhaps in one of the more critical positions as well and has one of the biggest pieces to lose as well. So I think what you're saying there is is really, really critical and important for our listeners to all hear. Absolutely. And and and the other piece, it's never say no to yourself. It's a very common thing you see where, you know, you don't make the you don't take the initiative and you turn yourself down. And I think, you know, winemakers in Europe, and the entire wine industry, we can't turn ourselves down. We need to make those asks. Because at the other other industries, I assure you will, there's absolutely no doubt that other big industries in every European country are gonna make the asks of their leaders and of their politicians, and it's important that the wine industry do the same And the other really interesting thing that we've sort of learned, you know, doing this is people love hearing from winemakers. People love hearing from the wine industry. This is the opposite of a boring, you know, antiseptic job. You know, this is something that people get excited about. So people are gonna wanna hear from you. Absolutely. And I think what you said before, the connections that winemakers and the wine industry has, there's so many people that have come into this industry perhaps later in life after successful careers as lawyers and and other professionals. So, it's not to be understated kind of the connections that this industry has that should be pulled on at at all levels right now to try to make an impact Ben, is there anything else as we wind down here and thank you again for your time this Friday, August eighth, to give us this update, but anything else out there that you'd like our listeners to to understand about the tariff situation? Not right at the moment. You know, I think, you know, we have a few weeks to influence the negotiations. Wine has a real shot to be excluded, but both sides of the Atlantic need to do their work. And I do think that the winemakers in Italy are in a particularly powerful position in terms of, you know, the connections that you all may have. There is no single voice in Europe that would more effectively communicate president Trump than Georgia Maloney. So I hope that I'm not telling anyone anything that they don't already know and that people are starting to reach out. Absolutely. Thank you again, Ben, for for reinforcing that message. Alright. Thank you again for joining us today in the Italian wine podcast. A Master Class US wine market. We really appreciate your time, Ben. Thank you so much. Pleasure to be here. 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.