Retail worry: Will wine, cheese tariffs hurt holiday sales?

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Retail worry: Will wine, cheese tariffs hurt holiday sales?

2019-10-17 00:55 Last Updated At：01:00

The tariffs the Trump administration is about to impose on wine, liquor and cheese from Europe couldn't come at a worse time for small retailers.

"It's kind of scary in the sense that we're getting to the holiday season," says Joseph Kakos, owner of Kakos Fine Wine & Spirits in Birmingham, Michigan. "October, November and December are the time when you really make your money for the year."

No one expects consumers to completely abandon Bordeaux and other wines from France, Scotch whisky or cheeses like Parmesan or Roquefort when the 25% tariffs take effect Friday. Still, Kakos says, shoppers may turn price conscious just as shelves are well-stocked for the holidays.

"People come in with the perceived idea of, is this more expensive? Has this gone up?" he says.

Wine retailers, distributors and importers already expect some customers to seek reds and whites from countries whose products aren't being taxed. And any signs that customers are balking at higher prices will force retailers to absorb their increased costs.

The tariffs are mostly on food and alcoholic beverage products such as cheese from Britain, Switzerland and Italy; olive oil from Spain; Scotch whisky and French, Spanish and German wines. They're also being imposed on equipment from kitchen knives to large aircraft. The administration is imposing them in retaliation for the European Union's subsidies of aircraft maker Airbus, the competitor to the U.S. producer Boeing.

The tariffs will be slapped on goods that arrive in the U.S. from Friday onward. One bit of good news is that much of the food and beverages to be sold during the holiday season is now in the country and headed to store shelves, so retailers generally won't have to suddenly come up with extra cash to pay for holiday merchandise.

"Most people are going to be OK" in terms of buying for the holidays, says Joe Gellert, president of World's Best Cheeses, a distributor with operations in New York and California.

But retailers who are his customers are worried about the long-term impact of the tariffs; they're hoping for trade talks between the U.S. and EU and that the Trump administration will withdraw the tariffs as it recently did with some imposed on Chinese goods.

And while retailers believe customers willing to spend top dollar on upscale products like Bordeaux and single-malt Scotch will be willing to pay extra to get the labels they want, the business owners aren't complacent.

"We have not yet made any changes in respect to tariffs being implemented but we will be sure to keep an eye on the market," says Giles Cadman, owner of Golden West International, a San Francisco-based fine wines retailer.

Price-sensitive customers are aware they have many other choices when it comes to purchases like wine and cheese, so owners may need to change the products that they stock. Shoppers may opt for buy wine from a country like South Africa or Chile whose products are not subject to tariffs, or they may switch from a single-malt Scotch to a cheaper blend or domestically made bourbon. Instead of Stilton, they may choose an artisanal cheese from Vermont.

"We will have to make changes to our mix because in this competitive wine market, it's not easy to pass rising costs to retailers and consumers," says Brett Vankoski, wine director for Latitude Beverage, a wine seller headquartered in Boston.

Perhaps a bigger concern is what will happen after the holidays. People in the wine business are concerned that if the tariffs are still in effect, sales of popular French rose wines will fall next summer. Those wines are scheduled to be shipped to the U.S. early in 2020.

"French rose is one of the fastest-growing wines in the country and is a big contributor to the growth of our company and the industry as a whole," says Kevin Mehra, CEO of Latitude Beverage. "The tariff has the potential to slow that growth."

Retailers, distributors and importers have strategies to cushion the impact of the tariffs and avoid having to charge consumers the full 25%. Each business in the distribution chain can agree to absorb a portion of the tariff.

"One strategy is to raise the price on everything 1% and marking up these items (with tariffs) only 5%," Gellert says. Another tack is for a distributor or retailer to look at merchandise critically, with an eye toward winnowing out products they really don't need on their shelves, he says.

Retailers have less pricing leeway in states where alcoholic beverage control agencies regulate wine, liquor and beer prices and the timing of price increases.

In New Hampshire, for example, prices are set twice a year. "This could be detrimental to companies that will now lose money on products affected by the tariffs for potentially up to six months," Mehra says.

But retailers of products like wine and cheese have advantages over, for example, companies that need to import steel and aluminum from the EU that's also being taxed by the Trump administration. It's not easy to find metal and metal products without tariffs, but food and alcohol purveyors have many options.

Cadman noted that even if a particular French wine becomes too pricey, there are plenty of similar ones from other countries. Sauvignon blanc, a white wine produced in California and New Zealand, is similar to France's Sancerre.

And, Vankoski noted, another huge European producer isn't being hit by import duties.

"Italian wines are not impacted by the tariffs," he says.

Follow Joyce Rosenberg at www.twitter.com/JoyceMRosenberg . Her work can be found here: https://apnews.com

Venice tests a 5-euro entry fee for day-trippers as the city grapples with overtourism

2024-04-25 19:52 Last Updated At：20:02

VENICE, Italy (AP) — Under the gaze of the world’s media, the fragile lagoon city of Venice launched a pilot program Thursday to charge day-trippers a 5-euro (around $5.35) entry fee that authorities hope will discourage visitors from arriving on peak days and make the city more livable for its dwindling residents.

Visitors arriving at Venice's main train station were greeted with large signs listing the 29 dates through July of the plan's test phase that also designated separate entrances for tourists, and residents, students and workers.

“We need to find a new balance between the tourists and residents,’’ said Simone Venturini, the city’s top tourism official. “We need to safeguard the spaces of the residents, of course, and we need to discourage the arrival of day-trippers on some particular days.”

Not all residents, however, are persuaded of the efficacy of the new system in dissuading mass tourism, insisting that only a resurgence in the population will restore balance to a city where narrow alleyways and water buses are often clogged with tourists.

Hundreds of Venetians protested against the program, marching festively though the city's main bus terminal behind banners reading “No to Tickets, Yes to Services and Housing.” Protesters scuffled briefly with police with riot gear who blocked them from entering the city, before changing course and entering over another bridge escorted by plainclothes police. The demostration wrapped up peacefully in a piazza.

Tourists arriving at the main station encountered almost as many journalists as stewards on hand to politely guide anyone unaware of the new requirements through the process of downloading the QR code to pay the fee.

Arianna Cecilia, a tourist from Rome visiting Venice for the first time, said she thought it was “strange” to have to pay to enter a city in her native country, and be funneled through separate entrance ways for tourists. She and her boyfriend were staying in nearby Treviso, and so downloaded the QR code as required, but she was still caught off-guard while soaking in her first view ever of Venice's canals by the sight of the entrance signs and her boyfriend telling her to get out the ticket.

On the other side of the entrance ways, workers in yellow vests carried out random checks at the train station. Transgressors faces fines of 50 to 300 euros ($53 to $320), but officials said “common sense” was being applied for the launch.

The requirement applies only for people arriving between 8:30 a.m. and 4 p.m. Outside of those hours, access is free and unchecked.

Venice has long suffered under the pressure of overtourism, and officials hope that the pilot project can help provide more exact figures to better manage the phenomenon.

The city can track the number of hotel visitors, which last year numbered 4.6 million and is down 16% from pre-pandemic highs. But the number of day visitors, which make up the majority of the crowds in Venice, could only be estimated until recently.

A Smart Control Room set up during the pandemic has been tracking arrivals from cellphone data, roughly confirming pre-pandemic estimates of 25 million to 30 million arrivals a year, said Michele Zuin, the city’s top economic official. That includes both day-trippers and overnight guests.

But Zuin said the data is incomplete.

“It’s clear we will get more reliable data from the contribution” being paid by day-trippers, he said.

Venturini said the city is strained when the number of day-trippers reaches 30,000 to 40,000. On peak days, local police set up one-way traffic for pedestrians to keep the crowds moving.

Residents opposing the day-tripper tax insist that the solution to Venice's woes are to boost the resident population and the services they need, limiting short-term rentals to make available more housing and attract families back from the mainland.

Last year, Venice passed a telling milestone when the number of tourist beds exceeded for the first time the number of official residents, which is now below 50,000 in the historic center with its picturesque canals.

“Putting a ticket to enter a city will not decrease not even by one single unit the number of visitors that are coming,’’ said Tommaso Cacciari, an activist who organized a protest Thursday against the measure.

“You pay a ticket to take the metro, to go to a museum, an amusement park. You don’t pay a ticket to enter a city. This is the last symbolic step of a project of an idea of this municipal administration to kick residents out of Venice,” he said.

Venice officials expected paid day-tripper arrivals Thursday to reach about 10,000. More than 70,000 others had downloaded a QR code denoting an exemption, including to work in Venice or as a resident of the Veneto region. Hotels in Venice, including in mainland districts like Marghera or Mestre, should provide a QR code attesting to their stay, which includes a hotel tax.

Venturini, the tourist official, said that interest in Venice’s pilot program has been keen from other places suffering from mass tourism, including other Italian art cities, and municipalities abroad such as Barcelona, Spain, and Amsterdam.

But Marina Rodino, who has lived in Venice for 30 years, doesn't see the fee as the cure-all. Neighboring apartments in her residential building near the famed Rialto Bridge once inhabited by families are now short-term apartment rentals.

The corner butcher shop closed. Yet she noted that the new entrance fee requirement will still allow young people to flood the city in the evening for the traditional aperitivo, which can grow rowdy.

She was passing out mock European Union passports for “Venice, Open City,” underlining the irony of the new system, and challenging its legal standing with citations from the Italian Constitution guaranteeing its citizens the right to “move or reside freely in any part of the national territory."

“This is not a natural oasis. This is not a museum. It is not Pompeii. It is a city, where we need to fight so the houses are inhabited by families, and stores reopen. That is what would counter this wild tourism,’’ Rodino said.