- The Bordeaux sector points to the devastating effects on its exports to the United States of the new 25% tax on French wines.
- It requests the creation of a fund to compensate for its losses and maintain its market shares across the Atlantic.
- She believes that the French State must act urgently, otherwise it will permanently penalize the sector.
The Bordeaux wine industry is raising its tone on Monday, with one voice. It requests the creation, as a matter of urgency, of a compensation fund by the French State after the establishment by the United States, of an Airbus tax of 25% which strongly penalizes the export of its wines across the Atlantic .
The tax has been in effect since October 18, and the industry is already starting to measure the extent of the repercussions on its exports. And, to listen to it, they are catastrophic: in November 2019, Bordeaux wines recorded a decline of 46% in their turnover and 24% in volume on their second export market, which was until then stable.
A decrease in sales observed
"Aeronautics is taxed at 10% and French wines, in an aeronautical dispute, are taxed at 25%", remarks Bernard Farges, president of the Bordeaux interprofession. For the American consumer it comes down to that a product which was worth 10 dollars suddenly finds itself at 12.5 dollars "and behind, with the game of the American distribution, it can become 15 dollars", he points out .
“The only solution we have today to keep our shares is to take charge of the tax, that is to say to reduce our prices by 25% which is enormous and undermines the profitability of our companies ”, adds Georges Haushalter, vice president of the trade union and director of a medium-sized trading house (50 million euros in turnover).
So that the prices offered to American consumers do not increase, the sector wants the French State to create a compensation fund of up to 300 million euros per year (25% of about 1.2 billion, i.e. the figure French wine export business), pending the resolution of the conflict.
"We do not question the commercial choices of France but these choices must be assumed by the creation of this fund", insists Bernard Farge. What is at stake for the interprofession is nothing less than the maintenance of this commercial flow towards "an old and structured market".
American customers, aware that the level of taxes can change every four months are waiting and slowing down their orders from Bordeaux merchants. "We can see that our wines are dereferenced, replaced by Italian wines or other non-taxed origins and obviously that the recovery will be extremely long, expensive and difficult," warns Georges Haushalter. For him, the urgency is there and the sector does not have six months before it, to await a possible conviction of Boeing for example. "In six months we will be dead," he says.
No other commercial alternative
Export sales drop to China "for geopolitical reasons", it is not easy with Hong-Kong because "the market is closing", that of the United Kingdom is uncertain because of Brexit and "in Europe the consumption dynamics are decreasing, "says Bernard Farges for whom there is no possible alternative to the American market, which must be preserved.
If the gafa tax is pushed back, that on Airbus remains and even threatens to increase. A real "sword of Damocles" for the mayor of Bordeaux Nicolas Florian who proposed to vote on Monday a special motion to support the world of wine at the city council. He speaks of a "fatal blow" for the sector if this tax were to increase further.
In two months will take place in Bordeaux the great premiere meeting, during which the 2019 vintage will be presented, and which attracts foreign customers, especially American. "They may be a little reluctant when the wines presented will be delivered in two years and the taxes may change by then", worries Jean-Marie Garde, president of the Federation of great wines of Bordeaux. By then, the industry hopes that the government will have heeded its distress call.
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