Worried about higher prices due to EU tariffs? No need if you convert to California wine

In November 2019, news sent shockwave across the wine industry: the US was imposing 25% tariffs on wine exports from select EU countries; affected wines include those under 14% alcohol by volume from France, Germany, Spain and the UK. Wine drinkers in the US were afraid that this meant even higher prices for the indulgence.

However, it seems that the fear is overblown – for those who don’t hold a particular dislike for homegrown wine, at least. A new CNN report this week showed that the price of wine is expected to drop to its lowest levels in five years thanks, in part, to a surplus of California grapes. And the cheaper prices may even last up to three years.

This is a good illustration of the long investment cycle and the volatility of the wine industry. Vineyards in Northern California began planting thousands of acres of new vines in 2016, and with more efficient harvesting methods, it has led to more bountiful harvests of grapes. Until 2015, wine shipments had grown, almost predictively, for two decades. But wine consumption dropped for the first time in 2016 and the slowdown in growth has caught the industry by surprise. Since it takes up to five years to bring wine to market from the initial planning stages of planting a vineyard, it makes hitting future demand very complicated. In this case, the 2015-2016 planting overshot demand. That’s why we’re seeing lower price wines hitting the shelves this year.

So let's raise our glasses and toast to cheaper wine.