USA: Value of beer imported surpasses value for wine for the first time

For the first time ever, the value of beer imported into the United States was greater in 2020 than the value for wine, Forbes reported on March 30.

Covid-19 story? Actually, no.

One-year anomaly or longer-lasting development? It just might be the latter.

There’s irony to the story, since the company largely responsible for those beer imports is a Chicago company, though not one whose name you are likely to have ever heard.

And there’s a bit of mystery, since the decline in 2020 wine imports suggests a relationship with Covid-19 that doesn’t hold up.

To be sure, there are a few other factors at work, including a domestic wine industry that has matured greatly over the last generation and a legacy domestic beer industry that hasn’t, allowing it to get squeezed by imports (as well as craft beers).

One thing is for sure, in less than a decade, wine imports have slipped from being 40% greater in value than beer imports to being 3% less.

Let’s start with beer, which is a little simpler to understand.

Beer used to come from a variety of countries. In 2020, Mexico accounted for a record 72.27% of all U.S. beer imports during a record year for all beer imports, which totaled $5.75 billion.

It marked the ninth consecutive year for record U.S. beer imports and the 12th consecutive year that Mexico increased market share.

Most of that beer comes a massive brewing operation outside Piedras Negras, Mexico, across the Rio Grande from Eagle Pass, Texas, which is responsible for 56% of all U.S. beer imports.

So, access to market is a real driving factor here, literally and figuratively.

Brewed there are brands such as Corona, Pacifico, Victoria and various Modelo-branded beers. Ironically, today those beers are brewed there and distributed in the United States by a Chicago-based multinational, Continental Brands.

The Mexican multinational, the Modelo Group, was acquired by Anheuser-Busch InBev in 2013 after spinning off its U.S. operations to Continental to satisfy anti-trust concerns raised by the U.S. Justice Department.

Mexico’s market share of U.S. imports has been increasing steadily, however, from well before the change in ownership. The market share first topped 30% in 1998, 40% in 2004, 50% in 2013, 60% in 2016 and 70% in 2019.

This has come at the expense of the Netherlands, which was the top source until surpassed by Mexico in 1999. The European transshipment hub still accounted for more than 30% of the market until 2006. Today, its market share has shrunk to half that, to 14.06%.

Germany and Canada, which nearly three decades ago accounted for better than 10% each, today account for less than 2% each.

All signs point to cost in getting the product to the consumer.

Then there’s wine.

Unlike beer, wine initially looks like it might be about Covid-19. After former President Donald Trump and European counterparts restricted transpacific passenger travel to thwart the spread of Covid-19 in the spring of 2020, imports of wine plummeted more than 24% for four consecutive months — in April, May, June and July.

One problem with that. Wine sails. It doesn’t fly.

So, it wasn’t Covid-19. It must have been the tariffs. And here’s how you can tell.

After former President Donald Trump placed tariffs on wines from France but not Italy in October of the previous year, 2019, wines from France fell sharply while those from Italy remained constant.

In fact, for the first time since 2016, the value of Italian wines entering the country surpassed the value of those entering from France.

Italian wine imports in 2020 fell slightly, down 1.5%, while those from France fell a more robust 20.03%. Those from Spain, also caught up in the tariffs, saw its wine imports into the United States fall 11.45%.

In the end it offers additional support for the notion that being close to your ultimate market matters (beer) and that U.S. tariffs on imports limit American choice (wine).

31 March, 2021