French Wine Matters in Our Global Economy

There are few industries that are strikingly more global than wine. Wine has been produced and shipped around the world for thousands of years, but it has truly become a global industry in the last 50 years. The conditions of one wine producing region can ripple through the global economy affecting trade, market prices, and the supply chain. Probably more so than any country, the wine sector is critical to the French economy. It represents the second net trade surplus after the aeronautics industry and creates jobs for many in rural regions where other economic activities are scarce. But in this global economy, what happens in France doesn’t stay in France. And when the world’s largest producer of wine experiences challenges we all feel them.

Wine tariffs Suspended…

The ongoing wine tariff debate was abated earlier this month when the Biden Administration suspended added wine tariffs on certain French, Spanish, and German still wines for four months. The European Union agreed to do the same with its tariffs imposed on US goods as both sides seek a resolution to an unrelated and protracted aviation trade dispute. There were sighs of relief on both sides of the Atlantic but not after damage had already been done—an estimated $480 million decrease in the value of French wine shipments to the US had already impacted suppliers and tremendous damage to restaurants, retailers, importers, and distributors here in the US had already occurred.

…but Vineyard Devastation Creates Uncertainty

But just at the lifting of the tariffs generated optimism in this still-uncertain pandemic economy, an arctic frost affected about 80% of France’s wine regions, including Bordeaux, Burgundy, Loire, and Languedoc. France’s government plans to declare an “agricultural disaster” as destructive impact is expected for the country’s 2021 harvest. Already the government plans to distribute $1.2 billion in aid to the vineyard owners and farmers affected, even as the full impact of the April frost is still being calculated. Regardless, it is certain these frosts will pile on to a year of challenges, and whose impact we will surely feel here in the US in the form of higher prices, reduced access to wine, and further imbalance in the global wine market.
Whether it be environmentally or economically, having a broad view of our global wine industry helps us remember how interconnected we are and how necessary our support to small and family-owned wine suppliers is both here and abroad.

Erlinda and Martha, les Dames dans Le Vin