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US Champagne tariffs threaten critical blow to powerhouse market - just-drinks thinks

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These are trying times for Champagne exporters. Three months after dodging a tariff bullet through their exclusion from a list of retaliatory US taxes on imported European goods, they now find themselves caught up in a separate trade war. That both of these transatlantic spates are over, respectively, aeroplanes and tech firms -  a world away from the vineyards of north-east France - must make the turmoil even harder to take.

The Champenoise will be holding their breaths right now

The Champenoise will be holding their breaths right now

If the US Government makes good on yesterday's pledge and implements a 100% tariff on Champagne, it could deal a critical blow to the category's powerhouse export market.

According to figures from trade association the Comite Champagne, the US is by far Champagne's biggest export market by value - two-fifths larger than the second-biggest, the UK.

Meanwhile, according to GlobaData, Champagne is the largest segment within the US sparkling wine market, valued at US$509.6m in 2018. The segment is twice the size of Cava and 15 times that of Prosecco. In estimations compiled before the tariff threat, Champagne's value in the US is expected to rise to $610m by 2023, a healthy compound annual growth rate of about 4%.

Champagne is banking on more growth in the US with a stronger appeal to female consumers and young people, the latter of which the Champagne industry views as being attracted to its aspirational image.

A hefty tariff could derail that progress and put Champagne at a significant disadvantage to other aspirational, luxury alcohol products that see the US as a key battleground. Cognac - which also sidestepped the earlier tariff - and other strong lifestyle spirits such as American whiskey, could well benefit from the import troubles, meaning more sleepless nights for the winemakers of Champagne.

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Sectors: Legislation, Wine

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