Clear as Glass: Wine Bottle Importers Are Being Investigated by the Feds

The wine business in the middle of yet another trade dispute, this time concerning bottle prices.

Sometime early next year, the federal government should conclude its investigation into whether some imported glass wine bottles are being sold at unfairly low prices in the United States. And then, almost certainly, the price of glass wine bottles — imported, and maybe even domestic — will go up, as duties and tariffs are added to the cost of the imports. Of course, that’s if those prices haven’t already increased, some by as much as 200%.

All of which has put the wine business in the middle of yet another trade dispute, following the airplane parts imbroglio with the European Union that resulted in the 2020 Trump wine tariff. 

This time, the Biden Administration, following a complaint from a bottle manufacturing group, launched inquiries into whether imports from China, Mexico and Chile are being sold “in the United States at less than fair value and subsidized by the government of China.” Two agencies, by law, are investigating the complaint: the Commerce Department and the International Trade Commission, a quasi-judicial federal agency that can levy duties and make recommendations to the Commerce Department.

Sound confusing and complicated? That’s because it is.

Political posturing

“This sort of thing goes on all the time,” says attorney Camille Edwards, an associate with Torres Trade Law in Dallas, Texas, an international trade and national security law firm. “There are always various trade disputes going on, with various products that no one ever hears about until there are tariffs. It’s very bureaucratic and not super sexy.”

Indeed, a glance at the trade commission’s website shows a preliminary glass report, as well as many others, including ones dealing with paper plates from several countries in southeast Asia, paper shopping bags from Turkey and ceramic tile from India.

In the glass case, the U.S. Glass Producers Coalition, which includes Ardagh Glass in Indianapolis and a union representing glass workers, claimed that the Chinese were selling glass bottles directly to the U.S. below what international trade law calls fair pricing. In addition, the complaint alleged that Chinese were routing glass wine bottles through third parties in Mexico and Chile, also at unfair prices, in an attempt to get around the system by hiding where the bottles were made.

Secret subsidies?

The definition of fair pricing can be complicated, taking into account direct government subsidies to the manufacturers, subsidized labor and even lax enforcement of environmental regulations.  

“This is profoundly a problem,” says Scott DeFife, the president of the Glass Packaging Institute, a trade group whose members include Ardagh, Anchor Glass and Gallo Glass Company, among others. “We want domestic producers to be able to compete on a level playing field. It’s baffling that Chinese companies can sell bottles at these prices unless they’re being subsidized by their government.”

The preliminary trade commission report cited several instances of U.S. glass manufacturers losing sales to Chinese imports, as well as being forced to delay or cancel price increases in the face of Chinese competition. And it’s also worth noting at least one other country, India, has launched a similar investigation into glass bottle imports from China and Vietnam.

Domestic price increases

On the other hand, one U.S. wine bottle wholesaler, which asked not to be identified because it does business with various domestic manufacturers, said the unfair pricing complaints were more about “boosting profits.” 

The wholesaler wrote in an email to Wine Industry Advisor that “seven years ago, a case of 12 standard glass wine bottles sold for around $5. The raw material costs of creating that case of bottles have increased a modest 25% from 2017 to now. Today, that same case of bottles sells for over double what it did in 2017.”

Wrote the wholesaler, “The truth is, domestic manufacturers have never had sufficient capacity to provide enough bottles for the domestic market. All of the largest glass bottle wholesale companies import from many countries throughout the world (including the largest domestic manufacturer, which imports some of its glass from Mexico). And certain bottle styles that customers require are only made in certain countries.”

Tariffs and duties

And what about pricing? Again, confusing and complicated. There are two types of duties involved — anti-dumping penalties, akin to a traditional tariff, that are the province of the Commerce  Department, and what are called “countervailing duties,” levied by the trade commission. Currently, the latter has imposed countervailing duties ranging from 21.4% to 202.7% on various Chinese producers; the amount of the duty apparently depends on how the Chinese company worked the marketplace to sell its bottles at less than fair value. Further duties could be added by the Commerce Department after it concludes its investigation. 

The upshot of all this? Edwards, the attorney, says, “I  can’t speak specifically as to why this particular dispute is happening, but it’s fair to say that it’s part of a broader context in which the United States is being more protectionist for domestic producers when it comes to China. It’s one of the tools that the government has to protect U.S. manufacturers — especially in an election year.”

Jeff Siegel

Jeff Siegel is an award-winning wine writer, as well as the co-founder and former president of Drink Local Wine, the first locavore wine movement. He has taught wine, beer, spirits, and beverage management at El Centro College and the Cordon Bleu in Dallas. He has written seven books, including “The Wine Curmudgeon’s Guide to Cheap Wine.”