The U.S.-China tariffs dispute has impacted other parts of California’s wine industry glass bottles, as the wineries are sourcing glass from new manufacturers to control costs.
“The glass from China has jumped up in price due to tariffs. Our production team is right now sourcing glass from other countries,” said Michael Parr, vice president of Wente Family Estates in Livermore, Northern California.
“We are going to walk away from glass manufacturers in China and looking now to other countries or in the Unites States,” said Parr, who manages the international business for the oldest family-owned winery in California.
He said the other wineries also are doing the same thing: canceling glass orders from China and trying to find other glass producers locally or from Mexico.
In an escalation of the trade tensions, Washington on May 10, increased additional tariffs on 200 billion U.S. dollars’ worth of Chinese imports from 10 per cent to 25 per cent.
Similarly it has threatened to raise tariffs on more Chinese imports.
In response, China raised additional tariffs on a range of U.S. imports on June 1.
Most California wineries use bottles made in China, which are subject to tariffs from the U.S. and end up raising production costs, Stuart Spencer, executive director of Lodi Winegrape Commission, told Capital Public Radio in a recent report.
“The environmental regulations and cost of producing glass in California has shifted in production to China over the last 20 years.
“And so, I think all wineries, regardless of size, are being affected by this as the cost of the glass continues to rise,’’ he told the media outlet.
Winegrape said that it’s likely those costs are absorbed by the wineries, which cuts into profits.
Wente Vineyards is expected to release new wines in August or September. “If we want to get our wines onto the shelf, we need glass bottles to put them in,’’ said Parr.
“I was told that the price will go up by 18 per cent per glass bottle from China. So that’s high enough to warrant our reasoning for sourcing out new glass manufacturers,’’ he said.
On the other hand, California’s wine industry has lost revenues in the Chinese market because of the retaliatory tariffs from China.
The U.S. wines now face a total of 93 per cent of tax and tariff rate in the market.
The industry saw a nearly 25 per cent decline in exports to China by value in 2018, which was the largest contributor to the softness of Asian market, compared to the healthy growth rates of the prior two years, according to a recent report by the Wine Institute of California.
The organisation has been urging the U.S. administration to resolve the tariff dispute with China as soon as possible so that the wineries do not suffer a long-term market loss.