U.S. tariffs to keep lid on French wine exports amid COVID-19 crisis

PARIS (Reuters) - U.S. tariffs could hinder a rebound in French wine and spirits exports, after a 13.9% drop in 2020, if coronavirus restrictions that shut restaurants, bars and airport duty free stores in many countries were to be lifted, industry group FEVS said.

FILE PHOTO: A glass of French red wine is displayed at the Chateau du Pavillon in Sainte-Croix-Du-Mont, France, July 29, 2019. Picture taken July 29, 2019. REUTERS/Regis Duvignau/File Photo

Sales abroad of wines and spirits - France’s second-biggest export after the aerospace industry - fell by 2 billion euros to 12.1 billion euros ($14.7 billion), the Federation of French Wines and Spirit Exporters (FEVS) said on Thursday.

Shipments to the United States, the largest overseas market for French wines and spirits and one which represents a quarter of all such exports, slumped 18% to 3.1 billion euros in 2020.

In 2021, French still wine exports to the United States were likely to shed about 1 billion euros in revenue of a usual total of 1.2 billion euros, FEVS chairman Cesar Giron told Reuters.

Additional taxes on spirits such as Cognac and Armagnac, which started in January, could mean a further loss of several hundred million euros, he said.

“Even if we perform well on other markets, it will be very difficult to compensate such a significant drop on the U.S. market,” FEVS Chairman Cesar Giron told Reuters.

French wine and spirits exports had jumped in 2019 as exporters booked sales ahead of the imposition of U.S. tariffs.

The U.S. government imposed additional tariffs of 25% on an array of European Union products, including French wine, in October 2019 and raised them on another set of products in January as part of a 17-year battle over aircraft subsidies between Washington and the European Union.

Giron did not expect U.S. tariffs to be lifted soon as U.S. President Joe Biden’s new administration still had to be confirmed.

The global pandemic was the main reason for weaker sales in the rest of the world.

It broke out in China on the eve of the Chinese New Year, hitting consumption during the festive period and causing exports to China to fall 15% last year. Sales to Singapore and Hong Kong fell 31% and 6% respectively, FEVS said.

In the European Union without Britain, which accounts for about a third of total exports, French wine and spirits sales shed 6.9% while they dropped 6.5% to the UK.

A rise in consumption at home only partly compensated for the closure of bars, restaurants and airport shops, FEVS said.

Global exports of champagne and cognac, by far the largest wine and spirits exports, both lost more than 20% in sales last year.

FEVS was optimistic that the vaccination campaign against COVID-19 would help a rebound in 2021 with some positive signs in some countries in the last quarter of 2020.

Reporting by Sybille de La Hamaide. Editing by Richard Lough, Mark Potter and David Evans