Anyone who has traveled to and spent time in France will have noticed how inexpensive wine is there. The average price for a bottle of red wine in France was €4.91/liter in 2020, for white wine the average price was €5.65/liter according to FranceAgriMer.
Yet at the same time, French and European wines in general are much more expensive in the US market. Apparently, it is not the fault of French winemakers. Word on the street is that European wines retail for an average of 4 x EXW or more in the US. Why is that? The simple answer: Too many hands in the cookie jar. An article written by Jenny Hughes for Frenchly a few years ago comes to mind.
While it pretty accurately describes the current state of affairs according to most people, does it have to be like this? No. Wine regulations in the US market are constantly evolving. As long as French wines are too expensive, most American consumers will prefer wines that represent a better value from other parts of the world including the United States. But we can help French winemakers and regions to gain a new perspective on things including the three-tier system and to lower the cost of their wines in the US market.
Let’s take a look at the cost associated with importing wines from France and Europe in general. The Euro is essentially at par with the US Dollar and will probably stay like that for the foreseeable future. That makes European wines a great value for US buyers.
The cost to ship a 40’ reefer container (13,800 bottles @ 750 ml palletized) from a French winery to the ports of New York, Houston, or Los Angeles varies between $12,000 and $16,000, depending on the origin in Europe.
Quality Brand Imports now offers a flat per bottle import service for as low as $0.10/bottle. It allows vineyards in Europe to sell directly to US wholesalers in many states based on retailer demand. Retailers can select any wholesaler of their choice to buy the product from. This import system offers plenty of room to lower the overall margins. Understanding the relationship dynamic between retailers and wholesalers is key.
Let’s do the math per bottle (based on a refer 40’ container; 13,800 bottles):
|€5 bottle of wine||$5.00|
|Inland Transport/Ocean Freight||$1.00|
|Total FOB US Port||$6.65|
The federal taxes can be reduced by available tax credits by as much as $1.00/gallon.
The transport cost is an estimate based on the use of 40’ reefer containers. Depending on the origin point in Europe, the destination port in the US, and the type of container used (20’ vs. 40’; reefer vs. non-reefer), this cost could be higher or lower.
Could a bottle of French wine that sells for €5.00 EXW in France or anywhere else in Europe retail for under $12.00 in the US? Yes, under the right circumstances. The idea that French wines have to be overpriced in the US market is outdated.
While traditional importers act as gatekeepers and attempt to predict which wines will sell well in the US market that is easier said than done. But using a traditional importer is not a requirement.
Advances in state alcohol regulations have also opened the door to many new opportunities in online DTC sales. Does it always have to involve the traditional three-tier system? Not necessarily.
Our group helps French and European vineyards with both lowering the import cost of their wines and successful marketing strategies in the US market to reach and attract end consumers. Why do we do both? Spending money on promoting an overpriced product won’t work all that well.
Want to learn more? We recently hosted a series of webinars about wine import, sales, and marketing in the US market that will answer many of the questions you might have.