MICHAEL FRIDJHON: Vote against Trump’s tariffs with your wine choices

The political and economic turmoil of the past week will have repercussions everywhere. It’s easy to assume that Trump’s tariff wars will have little effect on the price of goods in SA or that, if you are not an exporter to the US, it will be life as normal for the foreseeable future.

At the most basic level this may be largely true, though the weakened rand (as much a casualty of the lack of unity of the government of national unity as anything else) will produce knock-on price increases where you might least expect them. The cost of a loaf of bread could go up by more than a bottle of sauvignon blanc: one is subject to the dollar-based price of wheat, the latter is largely inured to import cost inflation. (This would be less true of high-end cabernet, which is aged in French oak barrels — an expense that cannot be deferred and which, together with cork closures, is sometimes greater than the cost of the fruit that goes into the wine.)

This doesn’t mean that what is happening is largely irrelevant to the average wine drinker: the loss of a major export market must have a ripple effect through the whole industry. The US — while not as important as the long-established European destinations — is still one of the Cape’s most important export markets. We feature tenth on the list of top wine suppliers to the US, way below several European countries — most notably Italy (the US absorbs 24% of all Italian wine) — for whom the Trump tariffs will be little short of disastrous.

Our sales to the US have see-sawed over the years (in 2023 we dispatched half the volume we sent in 2022). But even in a year as challenging as 2023 our bottled wine exports totalled more than 7.5-million litres — more high-end wine than we sent to Germany (a long-standing market) or even China.

There are also years when the US absorbs significant quantities of our bulk wine. This segment is most unlikely to survive the tariff hikes. It’s also the least important long term, given the shrinking vineyard area (so less low-priced surplus to dispose of) and that commodity wine simply gets shifted into another commodity market. Allowing for rand weakness, the net effect on producers (in rand terms) may be irrelevant.

But this turmoil is not ours alone: the US is France’s most important wine export market, the largest export destination in the world for Champagne, Burgundy and the Rhone. A 20% duty hike will certainly hurt those sales. It’s also the most significant consumer of Cognac and many other high-end European alcoholic beverages. How will producers in Bordeaux — already suffering a sales decline as a result of changing fashion — respond to the impact of these American taxes: the US is their single most important international market?

The answer to these questions can largely be predicted: French and Italian producers will look to other countries, like the UK — which is absolutely vital for Cape wine. There will be increased competition for shelf space and for share of the consumer’s mind and wallet. It’s possible that appellations with a strong established status (Champagne and Bordeaux, for example) will profit at our expense: after all, a special promotion (with suitably deep discounts) on a category that already enjoys significant brand equity is likely to mop up much of the discretionary demand.

Notwithstanding the pain, the Cape wine industry survived Covid-19. It will get through this too. But it will have to be careful not to neglect the local market — especially as the European wines that have fallen victim to Trump’s tariffs can easily come here too, with price-off deals to secure market share. We should not allow self-interest alone to drive our purchase decisions. Just as we all stepped up to help our producers when Nkosazana Dlamini-Zuma banned alcohol (and tobacco) sales to “save” the country from Covid-19, now might be a good time to express solidarity and buy more Cape wine.