With cellars overflowing, wine makers in Spain's Rioja fret over US tariffs

FUENMAYOR, Spain (Reuters) - Stockpiles of wine in Spain's Rioja region have swelled since the pandemic, but producers' hopes of offloading tannic reds into the U.S. market were dimming ahead of what President Donald Trump is calling his "liberation day" tariffs announcement.

Adding to their worries, Trump's threat of slapping 200% tariffs on wine and champagne imports from Europe comes at a time that global demand for the alcoholic beverage is dipping.

"There's wine accumulated since COVID-19, there's quite a bit piled up, and in the end, that's a burden on the price ... It's bad for the farmer," winegrower Enrique Lopez de Alda, 39, told Reuters.

Sales of Rioja, one of the most prized Spanish wines both domestically and abroad, increased 0.6% in 2024 from the previous year.

Given that worldwide consumption of wine has fallen, that was a "rather significant" performance, said Amanda De La Santisima Trinidad, spokesperson for the Rioja regulator council.

The U.S. is the second export market for Rioja wines after Britain, with sales there representing 4% of overall production.

'NOT GOOD' FOR ANYONE

"The U.S. is also a wine producer, but it can't supply its entire market," said Jorge Rodriguez, co-owner of Petralanda winery and bodega. Tariffs are "not good for them, nor for us, of course. But globally, in the end, everyone depends on everyone."

European wine makers have already been caught in the crosshairs of prior transatlantic trade tensions: Washington and Brussels hiked tariffs on each other's agro-food exports in October 2019, during Trump's first term.

Rioja wines managed to keep their market share in the U.S. - although some operators saw thinner margins, De La Santisima Trinidad said. The 25% tariffs were lifted in 2021 by the new Biden administration.

Spain is the world's third-largest wine producer after Italy and France, but it leads in terms of exports and the total surface area covered by lush vineyards.

The northern region of La Rioja, with its diversity of terroir, microclimates and grape varieties, accounts for just 0.7% of Spain's population but makes 21% of its wine, including some lesser-known whites.

The area's nearly 600 wineries produce 362 million bottles annually, with some vintages valued at as much as 5,000 euros ($5,400) per bottle. The industry is worth around 1.5 billion euros a year, accounting for 20% of the region's economy.

($1 = 0.9258 euros)

(Reporting by Vincent West, writing by Inti Landauro and David Latona, editing by Aidan Lewis)