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Welcome to Business Daily with me, John Lawrenson. Today we're in the French winemaking region of Burgundy that is confronting an import tariff offensive launched by US President Donald Trump. Can I ask you if you're worried? Yeah, sure, as everybody. That's French wine and the Trump tariffs in this episode of Business Daily.
Crouched in the cold mud under a thin spring rain, vineyard employee Elodie Bonnet snaps off shoots with her fingers and pruning clippers. We are removing the shoots that are unwanted because if we let them grow when we prune, it's going to damage the vine.
And you want to remove them so it can put all its energy into the shoots that you're interested in? Exactly, the one with the flowers, that's going to become the grapes. Can you see the grapes coming at all? Yeah, we can. If you look here, this little ball here is really, really tiny. Gnarled, thick, black, about a foot high. There are hundreds of vines in this plot and Elodie gives each one of them a lot of attention.
The variety of vine used to grow the grapes is one of the things that gives a particular wine its particular taste. These ones are Pinot Noir, the emblematic varietal of Burgundy Reds. How old are the vines in this field? These ones are 60 years old. I leave Elodie working her way down her rows of old vines and walk up to the house where I meet vineyard owner Cécile Tremblay. We're going down in the cellar now.
To discover some wines of the domain Cécile Tremblay. Ah, wow. Ah, it's a great smell here. Some of the most sought-after and expensive wine in the world comes from Burgundy, Bourgogne in French.
This one's a small vineyard, 7 hectares or 17 acres, but in Burgundy the Appellations or geographical origins are often tiny, especially for the most revered ones, the Grands Crus. And there are 15 Appellations on the few slopes that comprise this estate, surrounded by oak barrels and racks of bottles with labels weathered by mould and age engraved
Cécile Tremblay rattles off the list. I do some wines from Nuit Saint-Georges, Vaughan Romanée, Chambol Musigny and Moray Saint-Denis. Some Premier Cru in Vaughan and Chambol. And some Grand Cru in Echoseau Grand Cru, Clos Vougeau Grand Cru, Chapelle Chambertin.
and Griot-Chamertin-Grand Cru. For people who know about wine, these are some very famous names. But for people who don't know about wine, tell us what sort of wine you produce here. I produce in the domain only red wines. It's Pinot Noir grape variety. Very much the high end of the market. Yes, I hope we do. We are seven...
people who work at the domain to make seven hectares, so it's one person per hectare. I do between 25,000 and 30,000 bottles. It's small. 40% is for friends, only for restaurants and hotels.
For the United States, for example, it's around 10% of the production. So it's a big production for me. After threatening a 200% markup on alcohol from Europe, Donald Trump imposed a 20% tariff on practically all European products on April 5th.
On April 9th, he lowered that new tariff to 10%, with the threat that he'd hike it back up again to 20% in July, depending on how trade negotiations pan out. Can I ask you if you're worried? Yes, sure. As everybody. And that was all Madame Tremblay would say on the matter. French winemakers are fearful of saying anything that might aggravate a situation that's already potentially catastrophic.
Perhaps the winemakers' representatives would be more forthcoming. I get in my car and drive over to one of Cécile's neighbours, François Labé. He's the president of the Burgundy Wine Interprofessional Office, which represents this region's 3,500 winemakers. On the palate, a red cherry. You know, those big, red, juicy cherries that you crack when you bite it.
He pulls me out some of his 2023 vintage that he's taken from the vats down in his cellar.
For his wine, that bears the historic name of Vougeot, where wine has been made for a thousand years, the American market is even more important than it is for Cécile Tremblay. Our main appellation is the Clos Vougeot Grand Cru, a unique vineyard of 50 hectares, so 125 acres, surrounded by a wall, a wall which is 3.2 kilometres, which is the most well-known vineyard in Bourgogne.
This is where everything started around the turn of the first millennium with the monks who designed the landscape as it is today in choosing the best spots to produce mostly wines for mass celebration. We produced roughly 80,000 bottles.
that are shipped 90% out of the country, our biggest market being the UK, as a matter of fact. And we sell wine in 79 other countries around the world. What about the U.S.?
The US is the largest export market for the whole region, definitely. While French exports of wines and spirits dropped 4% last year overall, sales of Burgundy wines to the US rose sharply, up 16% from 2023 to last year. They've never been so high. What percentage are we talking about? What volumes? Exports for Burgundy, about 54%. And US, 25% of those 54%. And
And then UK. So it is the biggest in volume and the biggest in value. The global volume of production is between 200 and 220 million bottles a year. Let's say that we export 130 million bottles. US take 25% of that. In money terms, what does that represent?
All exports for Burgundy in the year 2024 represent approximately 95 million bottles for a value of 1.6 billion euros. Probably about 1.8 billion dollars. Yes. For the US, it was 21 million bottles.
Burgundy's reputation abroad is mainly for its red wines, its aged, deep red Grand Cru. Indeed, in the English-speaking world, Burgundy is not so much a wine as a colour.
By the way, the French word for the same colour is Bordeaux, which shows they know more about their wine, because while Bordeaux wines are mainly red, Burgundies are actually mainly white. Meursault, Bourgogne, Aligoté, Chablis, for example, that last one extremely popular in the United States,
They also make the increasingly successful sparkling white called Cremon, all of which is good for Bourgogne because while general red wine consumption just keeps going down, white is holding firm and sparkling white's going up. It's been almost an hour since I've seen any oak barrels, so we go down to François Labey's cellar, whose walls, rather startlingly, are black with mould.
This is a good thing? Of course, yes. Yeah, yeah, yeah, yeah. Penicillium. There's a lot of things that we cannot see or smell in a cellar that are important for the ageing of wines, just like the penicillium on the wall. What is the situation at the moment regarding tariffs?
Well, we have in memory the tough situation we were in from October 2019 until April 2021 with a 25% tax due to an aeronautic conflict between France and the US. We were hostages of that situation and it really did affect our sales to the US. To what degree? Do you remember?
Well, a drop about 50% of our exports to the US. The tariffs, we do consider that all what is food, all round food, and definitely wine is a round food, should not be hit by any kind of a tariff. So the 10% taxes in place, how is that affecting sales already? How is it going to affect sales, do you think?
Well, at the end, it is the American consumer who is going to be penalized. You know, if you like a product, it's because you like the product. You don't buy it because it's French or because it's Italian. You know, it's because the wine you buy, you like it. Probably some shippers and importers are going to complain
10% tax, so I take 5% on my margin on my side and you take 5% on your margin, just not to stop the flow of the export of your products. What would the impact be if after the end of this three-month suspension, President Trump decides to impose this 20% tariff as he threatened to do?
We will go back to the 2019 situation where the market was almost, you know, stopped. The bad thing for us is that the US are a dominant destination. There's no other country that could replace the US if high tariffs come in. You're listening to Business Daily on the BBC World Service with me, John Lawrenson.
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Today we're looking at how Trump tariffs are threatening France's wine industry. Up to now we've been concentrating on Burgundy, so for the outlook for French wine in general, I got in touch with Jérôme Boer, president of the French National Wines and Spirits Confederation.
Like Monsieur Labbé, he reckons the current 10% tariff is manageable, but 20% would be a disaster. Worse even than when European winemakers were hit by that 25% import duty during the first Trump presidency. When President Trump raised import duties by 25% for those one and a half years of his first mandate, we lost about $600 million very quickly.
But back then, champagne wasn't included and neither were wines stronger than 14 degrees of alcohol. So you can see the scale of the threat today. What do they stand to lose, your American customers? The best wines in the world are French. You won't be surprised hearing that from a Frenchman. There is tremendous wine in the United States as well. What is interesting, though, is the value for money.
In the States, as soon as you start getting up into the medium and high end of the market, things start getting very, very expensive. While with French wine, at the medium to high end of the range, you can still find some pearls at prices that remain very reasonable.
The entire world envies our Romanée Conti, for example, in Burgundy, or our Château Ozone in Bordeaux. No one could ever produce bottles like this that we've spent centuries learning how to make. What solution are you hoping for? What I'm hoping for is an open discussion between the United States and Europe. Of course, because, you know, this is an affair in which everyone stands to lose, your
The American consumer is going to lose buying power. French producers are going to lose sales. What I'm hoping for is a free trade deal where we will all be winners.
Even if it's true that we import less than we export to the US, we need to find a fair balance that satisfies everyone, because French wine provides a lot of work to Americans as well. You have to remember that there are a lot of wine merchants in the United States who are very frightened about losing market share, because they'll no longer have this diversity of wines to propose to their clients.
But how about winemakers in the United States? How is the prospect of big American tariffs on European wine going down with the U.S. competition? You might think that winemakers in Oregon and California would be cracking open something a bit special to celebrate. But in fact, it's not.
Well, to find out, I contacted an organization called Napa Valley Vintners, which represents 540 wineries in the sunny slopes of America's most famous wine region. I spoke to Vice President of Industry Relations, Rex Stoltz, and asked him how this looked from their point of view. This looks horrible from our perspective. We don't like it one bit.
Wine is an international product. Even here in the Napa Valley, our wineries primarily get their oak barrels, a key component in winemaking from France.
They're already expensive, and the potential is that they will get more expensive. Our corks come from Portugal, right? The glass for wine bottles, a lot of that comes from Mexico, it comes from China, some in the U.S. These issues are driving the cost of doing business up for our members in the Napa Valley. That's bad.
Our economy is going down. That means people are less likely to spend top dollar for high-end wines. That's bad. It's important for us that these retailers succeed and stay in business. We need them to. So when things get rougher for them and their business goes down, it's bad for us.
Also, trade wars cut both ways and, says Rex Stoltz, the tariffs announced against Canada are having a devastating impact on US wine exports. Canada is the most important export market for California wines.
and one of the top export markets for Napa Valley wines. And we've worked really hard to cultivate that market. It's an important market. We love the Canadians. Right now, there are zero Napa Valley wines on the shelves of stores in Canada. They've removed all American alcohol beverage products from their store shelves. That's horrible. So every way you look at this, this is bad for us.
You have to remember that 90% of American wine comes from California. When foreign governments retaliate and punish us, it does nothing to help them. And I think it's important that they keep that in mind because we really believe, as they do, that we should not be a part of this. We don't want their, whether it's Scotch whiskey,
or wines of Burgundy or Bordeaux to be a part of this. We're hoping and we're communicating that foreign governments making these decisions on how to retaliate should be mindful of that. Are these wines from France, for example, from Burgundy, for example, are they irreplaceable? Can you make wine like the wine in Burgundy? Can you make wine, can I dare say, as good as the wine in Burgundy? No, we cannot make Burgundian wines in California or in the Napa Valley.
The Napa Valley vintners firmly believe that wine is the ultimate product of place. And just as we cannot make Burgundy here in the Napa Valley,
They can't make Napa Valley, Cabernet Sauvignon, and Burgundy. Wine is the most expressive product of where it is from. That doesn't mean we cannot make good Pinot Noirs in California. We make fantastic Pinot Noirs in California, including here in the Napa Valley, in the southern end of the valley, in Carneros primarily. That said, they are not Burgundies because the only place that Burgundy comes from is Burgundy. We believe in that firmly.
We do not want to be a part of tariff wars, trade wars. We just want to compete on an even playing field with our friends and neighbors all over the world who we work closely together on all these issues. And that's our ask and that's our hope.
Thanks very much to Elodie, Cécile, François, Jérôme and Rex for taking part in this programme. You can find more episodes by searching for Business Daily wherever you get your BBC podcasts. From me, John Lawrenson, and all of us at Business Daily, goodbye. Do you ever find yourself playing the budgeting game? Shifting a little money here, a little there and hoping it all works out? Well, with the Name Your Price tool from Progressive, you can be a better budgeter and potentially lower your insurance bill too.
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