Italian Wine News

 

Weak Dollar Worries European Wine Producers and US Importers
Staff Writer – October 2, 2007

American wine expert say there is no reason to panic.

US wine buffs appreciative of high quality Italian and European wines, are worried that the dollar's new historic low rate of exchange compared to the Euro will make Brunello, Prosecco, Barbera and company unaffordable.

 
De Yong Museum of Modern Art
 
De Yong Museum of Modern Art
 
"Making Wine"
De Yong Museum of Modern Art,
San Francisco, California
   

Some American wine experts though, say that there's no reason to panic.

Jon Frederikson of Gomberg-Frederikson, a wine consultancy firm from California, said that: "Imports are continuing to come in because demand here is quite strong and prospects for growth over the next decade are excellent .." as ".. wine is finally gaining some traction in the US."

Though consumption is still very low compared with other types of drinks and other countries, the growth perspective for wine sales are very good.

Many US importers and European producers are currently splitting amongst themselves the very heavy losses due to the low dollar rate on the foreign exchange either to get into, or maintain position in the US market, thus gaining customer loyalty at the time when wine drinking is on the rise in this country.

Sopexa, the French government agency that promotes agricultural French products abroad, revealed that during the first six months of 2007 the euro-dollar exchange rate averaged 1.316 dollars to one euro, or up 9% over the same period in 2006, when one euro was exchanged at 1.206 dollars.

This notwithstanding, in the same period Italian and French wine imports were up 11% and 10% respectively in volume. The volume of wine imported from other European countries, such as Germany, Portugal and Spain, was also up.

Cyril Penn, editor of the California-based Wine Business Monthly, in confirming that the volume of imports is on the rise despite the strong euro, said also that the United States is on its way to becoming the largest wine-drinking market world wide.

Not all experts though, are convinced that the recent drop of the dollar will not actually hurt imports and potentially cripple the smaller importers, as well as those focused on high quality boutique wines.

"It's unfortunate, but in order to cover the latest rate exchange losses and the higher, ever growing, cost of shipping, wholesale prices must be raised," said Loris Scagliarini, president of California-based WineCountry.IT.

In fact, the latest drop in exchange rate value though, which recently brought the dollar rate exchange to over $1.42 per euro, has European producers and exporters, as well as US importers of their products, worried. Another negative effect that the current rate exchange generates for the European wine industry is the fact that US winemakers hope to take advantage of the weak dollar to open new markets in Europe, including England, winning over new European consumers for wines in the price range from 2.99 to 6.99 per bottles.

Michael Houlihan, founder of California's Barefoot Cellars, said that "There has always been some resistance in Europe to American wines, especially in France, but I believe Europeans appreciate good value and the weak dollar is certainly going to make American wines more irresistible to them."

"This is an excellent opportunity for Europeans to discover the quality of American wines that were less competitive until now," concluded Houlihan.

 
   
 
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