Politics

Despite US tariffs and Brexit concerns, French wine and spirits exports hit record high in 2019

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Key Points
  • French exporters hit a new record in 2019 despite a growing cloud of economic and geopolitical anxiety.
  • Overseas sales of wines and spirits rose 5.9% to a record $15.3 billion, according to the latest figures from the Federation of French Wines and Spirit Exporters.
  • Sales to the United States, the largest export market for French wines and spirits, rose 16% to $3.9 billion in 2019.
Bottles of French Champagne sit in a cellar in Reims, France, on February 20, 2020.
Amanda Macias | CNBC

PARIS — From Bordeaux to Cognac, French exporters hit a new record in 2019 despite a growing cloud of economic and geopolitical anxiety.

Overseas sales of wines and spirits — France's second-biggest export after aerospace — rose 5.9% to a record $15.3 billion, according to the latest figures from the Federation of French Wines and Spirit Exporters.

Sales to the United States, the largest export market for French wines and spirits, rose 16% to $3.9 billion in 2019. The increase in sales, according to the industry group, was due to anticipation of heightened transatlantic trade tensions.

Last year, the Trump administration imposed 25% duties on a plethora of European goods including French still wine, in response to aircraft subsidies. Following those tariffs, the industry braced for another round of duties in retaliation for a French tax on digital services. Those negotiations are ongoing, adding another layer of uncertainty. 

"The U.S. 25% additional duties led to a 17.5% decrease of French bottled still wine exports during the last 2019 quarter alone, with a €40 million [$43 million] loss of turnover," according to the industry groups' report.

What's more, negotiations related to Brexit, the United Kingdom's exit from the European Union, resulted similarly in anticipated shipments. Sales to the United Kingdom, the second-largest export market for French wine and spirits, rose by 4.4% to approximately $1.5 billion.

Despite gains, the president of the French Association of Wines and Spirits Exporters expressed concerns that 2020 would be a difficult year for the industry.

"The 2019 positive result must not be misinterpreted: international political environment and trade tensions had a severe effect on French wines and spirits exports, suggesting 2020 will be a challenging year," wrote Antoine Leccia in a statement.

"The arbitrary sanctions that have affected our sector since Oct. 18, [2019] threatens our development on the world's leading market, which will have a heavy impact on exporting companies and, more broadly, on the 500,000 players in the wine sector," he added.

Meanwhile, in one of the world's most celebrated wine regions, French Champagne saw a slight drop in exports amid a growing cloud of economic and geopolitical anxiety.

Champagne exports declined  from 301.9 million bottles in 2018 to 297.5 million in 2019, according to the latest figures published by the Comite Champagne, a trade association that represents growers and Champagne Houses.

The Comite Champagne cited the looming economic circumstances in the United Kingdom and the United States — the region's top two export markets — as reasons for the 1.6% drop.

"In a context of deep uncertainty in our two leading export markets and a worrying macroeconomic and geopolitical environment, these results demonstrate the remarkable resilience of the Champagne market," co-presidents of the Comite Champagne, Jean-Marie Barillere and Maxime Toubart, wrote in a joint statement.

Despite the dip in exports, the Comite Champagne estimates that the region brought in $5.4 billion in sales.

In 2018, the United Kingdom accounted for 26.7 million bottles while the United States saw 23.7 million bottles.

Still, Champagne exports eclipsed domestic consumption for the second year in a row at 155.5 million bottles or 52.5% of total production. The French market accounted for 141.5 million bottles, which represents about a 4% drop compared to the year before.