European wine and spirits makers urge 0% tariffs as EU-U.S. deal leaves sector in the dark

• A new trade deal imposing 15% tariffs on EU imports to the U.S. currently excludes the wine and spirits industry.
• Spirits stocks pared reversed early gains Monday as uncertainty around their tariff exposure seeped in.
• Wine and spirits rely on provenance and are less able than other sectors to relocate manufacturing.

European wine and spirit makers are viewing their exclusion from the newly-etched U.S.-EU trade deal with caution as industry bodies call for a sector specific carve-out.

European Commission President Ursula von der Leyen said Sunday that a framework deal imposing 15% tariffs on EU goods imported to the U.S. did not contain any decision regarding the wine and spirits industry, adding that an agreement for the sector would be examined in the coming weeks.

An industry-wide reprieve would provide much-needed relief for the spirits sector, which has been under pressure amid waning consumer spending and shifting consumption habits.

Spirits stocks Pernod Ricard, Remy Cointreau, Diageo and Davide Campari ticked moderately higher early Monday on hopes of a carve-out, before uncertainty seeped in, paring gains.

Brewers — which are typically less impacted by tariffs given their localized production — traded lower, after Heineken posted better-than-expected first half results but pointed to softening consumer sentiment in the U.S. and Europe.

The Comité Européen des Entreprises Vins (CEEV), which represents the European wine industry, called for the sector to be included in the final list of products covered in a proposed zero-for-zero tariff arrangement.

“[We] are watching with great anticipation the outcome of the upcoming negotiations regarding the list of products that will be included under the 0-for-0 tariff arrangement, among them some agricultural products” said Marzia Varvaglione, president of CEEV, in a Sunday statement.

“We truly believe the trade of wine is of great benefit for both EU and U.S. companies,” she added.

Under the new U.S.-EU trade deal, a mutual zero tariff rate has been agreed for certain strategic products, including “all aircraft and component parts, certain chemicals, certain generics [drugs], semiconductor equipment.” Discussions around other exclusions, meanwhile, remain underway.

Chris Swonger, CEO and president of the U.S.'s Distilled Spirits Council, similarly said that he was hopeful for an industry-wide reprieve.

“We are optimistic that in the days ahead this positive meeting and agreement will lead to a return to zero-for-zero tariffs for U.S. and EU spirits products,” Swonger said in a statement.

Tariffs hit margins

Alcohol is one of the EU's leading exports to the U.S., accounting for around 9 billion euros ($10.5 billion) in 2024, according to Eurostat data. The U.S., meanwhile, exported 1.2 billion worth of spirits alone to the 27-country bloc in 2024, Distilled Spirits Council data shows.

European spirit makers have posted several consecutive quarters of weak sales as the sector has been caught in the crosshairs of trade tensions, while a post-Covid slowdown has suppressed spending.

Verushka Shetty, equity analyst at Morningstar, said uncertainty around tariffs would weigh on drinks makers in the near-term, even as firms plan mitigating measures such as price hikes.

“We expect a negative impact on margins across our spirits coverage, however we expect the impact to be limited with pricing actions,” he wrote in a note.

CEEV, meanwhile, forecast that any move to impose tariffs would force European wine makers to increase prices and could “eject” some EU companies from the U.S. market entirely.

According to CEEV, the U.S.' previous 10% broad-based tariffs on EU imports, imposed during President Donald Trump's 90-day tariff pause, led to an approximate 12% decline in turnover for wine producers.

“While producers may absorb part of the increase to lessen the impact on consumers, this approach is not always feasible or effective,” CEEV Secretary General Dr Ignacio Sanchez Recarte told CNBC via email.