What Potential US Tariffs Mean for Your Wine and Whiskey Portfolio

Government intervention in the wine and spirits markets is almost as old as those markets themselves. The Roman emperor Domitian upended the Mediterranean wine trade in AD 92 when he banned the planting of new vineyards (and ordered the destruction of some already planted), while (as we highlighted in our most recent quarterly report), King George IV of England’s Excise Act of 1823 directly led to the founding of some of the most legendary Scotch distilleries we know today.

Like many (if not most) of you, we’ve been following the US presidential race for months. Though the wine and whiskey markets are by nature global, the United States and its trade policies play a significant role in shaping opportunities, and now that the election is over, we know you may have questions about what the results might mean for your fine wine and whiskey portfolio.

Accordingly, we wanted to share our insights on what to watch for, as well as how we’ve prepared and optimized your holdings for success.

We can anticipate the likely effects on trade.

Whatever the specifics of timing and details, the administration’s upcoming policies are not known unknowns. There’s every reason to believe that any new tariffs on whiskey imports will resemble the previous round of tariffs that kicked off in 2018, when the EU and US each levied 25% on imports of American whiskey and single malt Scotch respectively. (American whiskey tariffs into the EU may go as high as 50% this time, but that represents a relatively small market segment regardless.) This gives the industry a blueprint for what’s to come: increased prices to the consumer, slower trade volume. But also puts a damper on uncertainty, which can be a major driver of volatility in and of itself.

Any new tariffs may not directly affect your holdings at all.

If you’re an American drinker of Scotch, you will rightly recall that the cost of your favorite bottles did go up as a result of those 2018 tariffs. However, as an investor with Vinovest, your whiskey portfolio will be largely insulated: the majority of our highest-end Scotch barrels are destined for buyers in the booming Asian market, and will be shipped and bottled there, while most of our American barrels are traded within the US, making tariffs a nonissue.

Optimal hold times extend longer than the four-year political cycle.

As long-term assets, wine and whiskey are optimized for hold times longer than the four years of a given presidential administration. (This is built into many of our offerings: if you have barrels with five- or eight-year hold times in your portfolio, for example, you won’t be selling them until well after the next presidential election.) This naturally limits the impact that any single presidential administration’s trade policies can have (and is one of the reasons wine and whiskey enjoy low correlation with traditional assets).

A strong dollar advantages US buyers.

If markets turn bullish on the USD and the dollar gains strength in the months to come, especially compared to the Great British Pound (GBP), this is further good news for US-based investors. When the dollar gains in value, US-based investors are able to acquire more wine for the same price, almost like a built-in discount every time you invest.

One of the things that makes fine wine and whiskey investing so distinctive is that exposure to these markets broadens and enriches your perspective. From French vineyards to Scottish distilleries to Asia’s booming consumer class and beyond, these are markets that exist beyond any single nation’s borders. While the results of the US election were always going to be headline-making news, regardless of outcome, the asset classes you invest in with Vinovest are and always have been traded on the global stage.

Moreover, fine wine and whiskey aren’t just age-old, but resilient. The wine and spirits trade has weathered everything from the decimation of vineyards at Pompeii to the passage (and repeal) of Prohibition in the US. Regardless of the political or physical climate, humans have persisted in producing, trading, and consuming these assets, and that’s as true now as it ever has been.
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