Mexican Wine Tariff Jumps

Trade stand-off forces rate from 0 to 20% for U.S. imports, but market still beckons 
 
Ceja recently entered the Mexican market with 28 cases of high-end varietals. Mexico, D.F., Mexico -- Since 2006, U.S.-produced wine has entered Mexico without tariffs, but that changed today, when the fee was raised to 20%. Another 90-odd products faced import taxes of 10 to 45%. In 2008, the United States wine industry sold $23 million in Mexico, its 10th largest market, according to recent Wine Institute figures. About 90% of exports by volume came from California. According to Joseph Rollo, WI export director, about 100 California wineries have been exporting to Mexico.

Observers said the tariff hike is retaliation for the United States' 2009 budget, which eliminated a test program allowing Mexican trucks to deliver cargo beyond the U.S./Mexican border zone. Removing the tariff is an issue that can now only be resolved by Congress or negotiated by the new Secretary of Commerce, when he is approved, Rollo told Wines & Vines. Today, the Senate Commerce Committee voted unanimously to support the nomination of former Washington state Governor Gary Locke to that cabinet position.

Many major U.S. wine producers, including Washington's Chateau Ste. Michelle, export wine to Mexico, but our southern neighbor is still terra incognita to most smaller wineries. Although not notably a wine-drinking culture, Mexico's population of some 110 million includes a growing and increasingly worldly middle class. Its bustling and sophisticated capital, Mexico City (the Distrito Federal) has a measured population of 25 million, of which an estimated 5 million are certifiably wealthy, supporting a dazzling swath of restaurants, clubs and enotecas--wine bars. D.F.'s elite are accustomed to world travel, international cuisine and fine wines.

Ceja now exporting to Mexico

Ceja Vineyards, which produces about 10,000 cases of super-premium wines sourced from Napa and Sonoma vineyards each year, just broke into this potentially lucrative market, and tariff or no tariff, does not plan to back out. Owner/president Amelia Moran Ceja told Wines & Vines, "We are thrilled that, against all odds, we have our wines available there. We're so proud." Even though months of paperwork were required to export a mere 28 cases to D.F., she said, "We will continue to ship. Our distributor is in D.F., and to the people who buy our wines, an additional 20% will not make a difference." 

Ceja pointed out that the distributor, La Elite de Vino, pays the tariff and adds the mark-up. Ceja, herself a Mexican-American, first connected with La Elite during an October visit to the Mexican capital. Representatives from the distributor toured 16 North Coast premium wineries in November, meeting with owners and marketing people, and, Ceja reported, "Selected us as their first California winery." Although new to U.S. producers, La Elite has a long history importing European and South American wines to D.F.

Ceja got her paperwork in order, she thought, and then, she said, the fun began. The distributor hired a broker, who dealt with a customs agent. "It was so aggravating," she said. "The customs agent would see one change, we would make the change and resubmit. There were about nine documents," she recalled. They all were returned, one by one. "It took two months, when we could have done it right the first time."

Lab analysis required

Like most other export destinations, Mexico's alcohol rules are different from the U.S. "Alcohol is its own animal," Ceja said." "They require lab analysis of each varietal in Mexico, and also analysis of the alcohol content when it arrives there," pointing out that the AC may have varied slightly post-bottling. "What's great," she said, "is now I could actually teach a class in exporting to Mexico. I learned every detail."

Fortunately, Ceja's cases of Chardonnay, Merlot, Cabernet Sauvignon and Chardonnay, which retail for up to $75 per 750ml, were not actually shipped until their documents were completely in order. "When we finally shipped, it went through the next day," Ceja said. Ceja wines are now available at enotecas at the airport and in the trendy Polanco district, and at retailers including the upscale Palacio de Hierro department store chain.

Ceja's personal history should perhaps have prepared her for the dilatory pace of Mexican bureaucracy. But she is, obviously, a quick study. Her family made the rare transition from migratory farm work--her father in-law was a bracero who fell in love with St. Helena, bought land and raised 10 kids there--to winery ownership in a single generation.