Cutting Edge Selections on Fox Business: “Something to Wine About. Wine Industry Taking a Hit Amid Coronavirus, Tariffs.”

In a July 8th segment on Fox Business “After the Bell,” our COO Eric Faber was interviewed about wine tariffs. FOX Business' Kristina Partsinevelos reports on the wine industry being hit hard by falling sales to restaurants when coronavirus hit. Cutting Edge Selections COO Eric Faber says 2020 is the year no one saw coming, saying tariffs on the wine industry are one of the last things the business needs right now.

Faber’s interview appears at the 2:19 minute mark in the video.

FOX Business' Kristina Partsinevelos reports on the wine industry being hit hard by falling sales to restaurants when coronavirus hit. Cutting Edge Selections COO Eric Faber says 2020 is the year no one saw coming, saying tariffs on the wine industry are one of the last things the business needs right now.

Check it out on the Fox Business website: https://video.foxbusiness.com/v/6170236815001/


Transcript (starting at 2:19):


Jackie DeAngelis:
Yeah, well here to discuss the impact on the wine industry is Eric Faber, Cutting Edge Selections, chief operating officer, and general manager. Eric, good to see you. I think Kristina has set the landscape, set the scene for us pretty well. Your industry facing two major issues here. The first would be tariffs, and that was an issue before the Coronavirus. And now of course, consumption is down because of the pandemic. How do you think that the wine industry is going to rebound from everything that's happening and which is worse?

Eric Faber:
Well, it's very difficult to say how we're going to rebound at this point. Obviously, 2020 is a year none of us really saw coming. For our industry, we started the year with a fight over the initial tariffs that were levied. And then moving into the pandemic of course, no one really was able to predict that. And it has had a very drastic effect on our sales really industry-wide.

Eric Faber:
In terms of how we rebound from this, one of the big things is as things reopen, being able to offer good price points to restaurants and retailers, specifically as these are industries, the whole wine industry works on pretty notoriously slim margins, as does the restaurant industry. Looking at adding a tariff right now is, is pretty much the last thing we need in order to get our business back on track. And it's something that we're very concerned about.

Jackie DeAngelis:
And what are some examples of ways that you could manage the cost rather than just passing it straight off to the consumers? Buying in bulk, is that an option? Working with the wineries, international wineries that is, to create better deals? I mean, it's a tough time to try to create those cost savings, right?

Eric Faber:
It's a very difficult time to do that. Everybody is hurting right now based on the level of sales that we're seeing really globally, even outside the United States. We have worked with wineries really since the beginning of the tariff issue to try and lower our margins a little bit and lower their margins a little bit, to try and keep the prices down for consumers. But every state has its own unique set of laws when it comes to the regulation of alcohol.

Eric Faber:
As an example in Ohio, where we're based, we have to charge a certain margin to retailers or restaurants by law so that the state can get its tax revenue from that, which means when the wine arrives, we pay the tariff on the wine. It's not paid by anybody in Europe. We have to pass the price increases along to the consumer. It's not necessarily the same in every state, but each state has their own very unique laws that make this very, very problematic.

Jackie DeAngelis:
In Kristina's report, she talked about one of the aspects to this being that there may be more consumption of domestic wines. You obviously are an importer, you import wine from other countries, your thoughts on how you could work or restructure your business in some way, if there is a way, to work with some of the domestic producers?

Eric Faber:
Well, we're actually a distributor as well as an importer, so we work with nearly 100 domestic wineries already. Certainly there is some small opportunity for there to be more sales there, but it would be very incorrect to look at domestic wineries and think they can simply up production of wine to fill the gap left by wines that are going to become more expensive or maybe no longer available, if the tariff goes through at 100%.

Eric Faber:
It takes years for vines to grow to a point where you can make quality wines out of them. And it's also important to note that wine from different parts of the world, even if it's Sauvignon Blanc, Sauvignon Blanc from California doesn't have the same taste and flavor profile of Sauvignon Blanc from certain regions of France or from New Zealand.

Jackie DeAngelis:
Yeah.

Eric Faber:
As a result, you're really limiting consumer choice by putting a tariff on things. And it's important to remember the tariff is being placed because of a dispute between Boeing and Airbus.

Jackie DeAngelis:
Yeah.

Eric Faber:
So our industry is really being shaken to its core for something that we had nothing to do with. We're really being thrown in the middle of something at the worst possible time.

Jackie DeAngelis:
You bring up some great points, Eric, and as consumers of international wine, we had nothing to do with it either.

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