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Where There's A Wine, There's A Way

Oct 25, 2019
Originally published on October 28, 2019 9:52 am

New Trump administration tariffs threaten to raise prices on Italian cheeses, Spanish olive oil, and a wide range of other gourmet foods from Europe. But a Florida company has found a loophole in the new French wine tariff that's big enough to drive a truck through.

Florida Caribbean Distillers has begun importing truckloads of bulk wine from France and bottling the product at its plant between Tampa and Orlando. That conveniently sidesteps the 25% levy imposed last week, as part of a long-running trade battle between Airbus and Boeing.

"It was nice timing on the tariffs' part," said Dave Steiner, the company's national sales vice president. "Certainly was a bit of a gift, but we'll take it."

The company wasn't thinking about tariffs when it uncorked this plan. It simply wanted to capitalize on the fast-growing U.S. market for French Rose.

But its bulk importing strategy gives the company a serendipitous cost advantage, because the new tariffs apply only to wine in bottles of 2 liters or less.

Steiner's company is importing wine in 20- or 40-foot shipping containers, with a giant pouch inside. Think of the world's largest wine-in-a-box.

"It's several thousand gallons at a time we can bring in," Steiner said.

The company is packaging the tariff-free wine in standard bottles — expected to retail for $8.99 to $9.99 — as well as 375 ml cans, which will sell for about $3.99.

"It provides a nice opportunity for us to continue to offer something that our competitors won't be able to, which is tremendous value at a high-quality price point," Steiner said.

Other French wines are now subject to a 25% import tax, as are Scotch whisky, Irish butter, and numerous other European goods. The administration slapped tariffs on $7.5 billion worth of imports last week, in retaliation for what it calls illegal subsidies of Airbus jets.

Economists say rising tariffs encourage companies to look for workarounds. Some, like Steiner's plan, are perfectly legal. But others are less so, and can contribute to inefficiency and corruption.

"It does create this ecosystem which is not particularly healthy for economic activity," said Mary Lovely, a senior fellow at the Peterson Institute for International Economics. "With a 25% tariff, there's a lot of incentive there for people to legally evade or do something a little less up-front."

For Florida Caribbean Distillers, though, the protectionist policy is an unexpected windfall.

"We plan to take advantage, as long as the tariffs will be remaining in place," Steiner said.

The company is marketing its wine under the brand name "Le Rosey," using the hashtag #TrumpTariffFree. It expects to add a sauvignon blanc and a pinot noir next spring.

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New Trump administration tariffs are threatening to drive up prices for a wide variety of gourmet foods from Europe, including Italian cheeses, Spanish olive oil and French wine. But a Florida company has found a loophole in the wine tariff that is big enough to drive a truck through. NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: Florida Caribbean Distillers wasn't thinking about tariffs when it uncorked this plan. The 76-year-old company, best known until now for rum and sangria, was just trying to get a toehold in the burgeoning market for rose wine.

DAVE STEINER: Not only was rose outperforming in the wine category, but specifically, French rose was seeing a very good surge in popularity with American consumers.

HORSLEY: National sales vice president Dave Steiner says the company teamed up with a rose supplier that's well-connected with French vineyards in the Nimes region just outside Provence.

STEINER: It's the Southern Rhone Valley, which actually dates back in terms of wine-growing to the Roman Empire, so it really has about a 2,000-year run of wine-making history.

HORSLEY: Steiner's strategy is to put that old French wine into new American bottles. The company already had a state-of-the-art bottling plant halfway between Tampa and Orlando. It ships the wine across the Atlantic in tractor trailer-sized containers lined with a giant pouch. Imagine the world's largest wine in a box.

STEINER: Depending on the size of the order, it could be a 20-foot or a 40-foot shipping container. Roughly, it's several thousand gallons at a time that we can bring in.

HORSLEY: And that's fortuitous because the Trump administration's new 25% wine tariff only applies to bottles up to two liters. Bulk wine, it turns out, is exempt, so Steiner's company suddenly has a 25% cost advantage over rival rose importers.

STEINER: It was nice timing on the tariff's part. It certainly was a bit of a gift, but we'll take it.

HORSLEY: What Steiner's company is doing here is perfectly legal, but economist Mary Lovely of the Peterson Institute for International Economics says companies will go to unusual lengths to circumvent protectionist measures. The results are sometimes inefficient or even corrupt.

MARY LOVELY: It does create this ecosystem which is not particularly healthy for economic activity.

HORSLEY: For now, Florida Caribbean Distillers is enjoying its unexpected windfall. The company's marketing its first 50,000 cases of wine under the brand name La Rosey using the hashtag #TrumpTariffFree. Steiner expects the wine to retail for about $8.99 a bottle.

STEINER: I'd like to call it a very easy-drinking wine that can certainly claim to be with serious foodie roses but also has red berry fruits such as strawberry and raspberry, making it very approachable.

HORSLEY: Old World terroir with subtle notes of Florida's I-4 corridor and a smooth finish of tariff evasion. The company plans to add a sauvignon blanc and a pinot noir next spring.

Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.