On this episode of the “VinePair Podcast,” hosts Adam Teeter, Joanna Sciarrino, and Zach Geballe debate whether or not they might see friendly prices on European wines and spirits as the U.S. dollar reaches parity with the euro. Additionally, Adam, Joanna, and Zach chat about Adam and Joanna’s time at Wine2Wine in Verona, Italy, and discuss why now is the best time to plan a trip to Europe, if you can. Tune in for more.
Or Check Out the Conversation Here
Adam Teeter: From VinePair’s New York City headquarters, I’m Adam Teeter.
Joanna Sciarrino: And I’m Joanna Sciarrino.
Zach Geballe: And in Seattle, Washington, I’m Zach Geballe.
A: And this is the VinePair Podcast. Ooh, I feel like just a whirlwind, man. Just a whirlwind.
J: What do you feel like, Adam?
A: Just that I’ve been beaten down. Three nights in Italy is not enough nights in Italy.
J: Well, now I need to pack in all the drinking in those nights.
A: All of it. Yeah, it’s a lot. Just, wow, man. Wow.
Z: Okay, I need the highlights. Adam, what were the highlights for you? And then Joanna, I want to hear from you.
A: Yes. For those who are not familiar, we were in Italy these last three days, for the Wine2Wine conference in Verona, in fair Verona. The conference was good, thanks for asking. In terms of the highlights, I always like Archivio, Bar Archivio, in the center of the old city. It was really cool, and they actually have a vermouth that is now all the rage in New York City, which is funny.
J: It’s called Volume Primo.
A: Yeah, and it’s like all these cocktail bars now have it, which is kind of nuts. And I think a lot of the cocktail bars in New York don’t even have any idea that it’s connected to a cocktail bar in Italy, which is also really funny to me.
A: So that was a highlight. Look, we had a lot of really good wine at two dinners that were pretty special. Some really cool Barolos. We had a Pecorino from Emidio Pepe. So I think probably the coolest wine we had, Zach, was — we were looking at this list. We went to this restaurant the last night, and I don’t have my notes in front of me, so the restaurant’s name escapes me, but-
J: Il Desco.
A: Il Desco.
A: And both myself and Dave Foss, who was at dinner with us, and owns the wine bar LaLou, here in Brooklyn, was like, “We need to try this.” This is very weird. And also it was one of those wines where because it was so weird and wasn’t made for very long, it was at a very fair price. And so, we called the somm over, and he was like, “Oh yeah, I think they only made this wine for a short time.” He’s like, “I know the last time they made this wine was in 1996.” And it was so cool.
J: Yeah. It was really good.
A: And just really delicious. Really delicious. Just such a really cool experience. And obviously, going around town to these most famous as being one of the founding wineries of Brunello. Kind of put it on the map. So this was cool to have, I guess what we would say could have been their super Tuscan.
Z: Kind of. Yeah, sure.
A: Kind of? Like, right? Weird. But yeah, just such a super-cool wine, and that was definitely the highlight for me besides all the other delicious wines. But that one was just one that I’m not going to forget.
A: What about you, Joanna?
J: Yeah, I don’t know. I was going to say the Emidio Pepe was also really amazing, and I’ve never had a wine like that before. Some of the cocktails at Archivio are really delicious. The Fig Sour and the Coconut Negroni were two that stand out to me. We also checked out their new spot called Amaro, from the same guys behind Archivio. We checked out the Soda Jerk. Right, Adam? That’s what it’s called.
J: Another cocktail bar that people really rave about. Very, very different vibe there.
A: Very different.
J: Like more of a club vibe?
A: Definitely more of a club vibe.
J: I think that bar stays open until 4 a.m.
A: Yeah. It doesn’t open until 10 p.m.
J: It doesn’t open until 10 p.m Yeah.
Z: Oh, okay.
J: But even just going, this was my first time at Wine2Wine, so that was a really cool experience for me, getting to see all the different sessions, meet people there. So it was a really cool conference.
Z: And it seems like it was a good-sized VinePair contingent, was it not?
A: Oh, yeah man, we held it down.
Z: Awesome. And Adam, wait, did you get to make a Martini on an airplane?
A: Yes, I did.
Z: Did Instagram lie to me?
A: No. Yes I did.
Z: Come on. How did you not lead with that?
A: So that was pretty cool. That sounds a little braggy. I don’t know.
Z: Oh, come on dude. Spare me. Or don’t spare me, I guess, actually.
A: So Josh and I flew back together, and we had used points to get our tickets initially, and Josh is really good at the whole points game. And so he’d been doing research about what happens the day of? There are still first class seats on Emirates available.
A: And basically, they can quote you. They usually quote you an amount of points that’s relatively low, actually.
A: And if you have the points you can upgrade.
A: And so, we got to the airport and basically, Emirates wants all those seats filled because it’s…
A: Josh, who does a lot more research than me about airlines, it’s marketing for them. So they just want people in the seats. And so, we got to the airport, and they were like, “Yeah, we have these seats available.” And we happened to have the points, and so we upgraded and there is a bar. And you actually can access the bar if you’re flying business class too.
A: And so, you go back to the bar, and there’s a bartender, and they’re making cocktails. But then the way that Josh and I wound up behind the bar making Martinis was the bartender. Right? It’s Emirates. So it is an airline from a Muslim country, and most Muslims don’t drink alcohol.
A: So the bartender, who is also from the U.A.E., only knows how to make the cocktails that are on the menu.
A: And we asked for Martinis, and he didn’t know how to make a Martini. He was like, “I’m really sorry, I’m embarrassed. I don’t know how to make a Martini. Can you teach me?”
A: And so we went back behind the bar, and taught him how to make a Martini, and it was really fun. And then he was like, “Thank you so much for teaching me how to make this drink.” He wrote it down.
A: It was pretty awesome. And then we made Martinis and hung out at the bar. And you can stand there, like you’re at a bar. It’s crazy.
A: It’s weird.
Z: My dad has told me a few times about, he went for work to Kenya a number of years ago, he got to fly, I guess it was maybe business class or first class. But it was a 747 and there was a bar and he was like, “Yeah, we could just hang out at the bar for a couple hours.” And me, who has spent my life flying mostly economy, crammed into a seat, it always struck me as, I don’t know that… The lie-down seats would be nice. The ability to take a shower would be nice. But honestly, give me the ability to sit at a bar and drink a cocktail at 35,000 feet, and I don’t know, I’d be like, this is as good as it’s going to get for me in this life.
J: Yeah. The height of luxury.
A: Yeah. That’s the highlight. Because yes, they do have all those other things, but the highlight truly is the bar. It’s just like holy. And you started thinking, man, we should have more of these. I wish there were other airlines that had bars.
A: Because it’s just yeah, it’s very fun. It’s very, very fun.
A: So what about you Zach? What have you been drinking while we’ve been in Italy?
Z: Well I haven’t gone anywhere very far away, but I have actually been to a couple of events recently, which is nice. Somehow it’s worked out on my calendar, and there have been some things in Seattle or nearby that I’ve gone to. So I went to a fun wine dinner the previous week at Chateau Ste. Michelle, celebrating the 50th anniversary of one of their signatures. Kind of their first real vineyard they planted, called Cold Creek Vineyard, and that was fun. Tried some bottles from the vineyard and some older Riesling that was kind of cool.
Z: And then, did a dinner actually just the last night as we’re recording this, put on by Schilling Cider, local cidery here. A pretty good sized cidery in Washington State. And that was really fun, because I had a chance to talk to the owner and a couple of people who work under him, on both the production side and the sales and marketing side. Interesting conversation about where they see the direction of cider. They’ve seen a real sales spike in the last year and a half, two years, which is kind of cool. And Joanna and I talked cider a while back, when you were gone, because I think you have no interest in it, which is cool.
A: Thanks. Thanks, Zach. Thanks for sharing.
Z: Well, I think your cider feelings are well known. The archives are there, people can go back and listen. And it was just interesting to get the perspective of a company that is doing a lot of different things in the cider space. They’re making some that are large-ish production, meant to be pretty accessible to people. Then some more small production, or just kind of esoteric stuff. So those were both pretty cool. They also made a pommeau, which is basically apple brandy blended with fresh apple juice, which is super tasty and interesting, and not something you see a lot of in the states. You see it in the Calvados region in France, is basically where you see it traditionally, because they do everything with apples there, because that’s what they can grow. So it was nice. Had a fun dinner, and it was just a nice opportunity for me to get out and talk to some people in person, not just through the computer.
A: Very cool.
J: I have a pommeau from a place upstate, and I don’t know what to do with it. I’ve had it for a while now.
Z: Interesting. Drink it?
J: Is it just like you drink it straight?
Z: I mean, they served it just chilled, a little chilled, but not ice cold. I think you could probably use it in a lot of ways. You could probably use it as a cocktail ingredient, if you don’t know what else to do. It’s interesting stuff, because it’s usually barrel aged for a number of years, but it’s got some sweetness to it because it has unfermented juice in it. Yeah, I don’t know. I would think of it as a, I don’t know. The one I had I think is 16 percent alcohol. So it’s kind of like a strong wine, vermouth kind of territory for an ingredient. I don’t know, maybe you can make a Martini with it. Appletini, if you will.
J: Oh yeah.
A: Oh, the new Appletini.
J: Oh, I tried it.
Z: Let me know. Report back.
A: Interesting. So Zach, you want to introduce our topic?
Z: I do, yeah. So it’s very fitting that you both have returned from Italy, from Europe abroad, because I think this topic has been kicking around the industry for a while. Because at the same time as we talked this last Monday about what we think may or may not be happening as regards a recession. It must be said that, at the same time as all of these concerns are going on, the dollar is as strong as it’s ever been essentially, relative to the euro, relative to the British pound, et cetera. I mean I think it’s currently one to one with the euro, which has certainly never been the case when I’ve been in Europe.
Z: And I think the question on my mind, and maybe on all of our minds, is sort of well, okay, what does this mean for… I mean, it means something for people who are traveling from the U.S. to Europe or wherever. That’s cool. It’s nice to have a friendly exchange rate. But I don’t think we’re really interested in talking about that, because that’s pretty straightforward in my eyes. What I’m interested in is, who does this benefit here in the U.S., and who does it maybe hurt? And I have a couple of thoughts on that, but I want to start with each of you. Do you guys have some sort of categories, industries, maybe individual companies, who might be looking at this either with real excitement, or, potentially, a little bit of trepidation?
J: Well, we’re talking about importing and exporting. Right?
Z: I think that’s kind of the idea, right? Because that’s where you’re going to see it at the industry-wide level, not so much the individual level.
A: Yeah, I mean, so economically when this happens, if you look at just how the economy works, it actually is never a great thing for — it’s a great thing for us. It’s never been cheaper to go over and exchange our dollars into duros, and have our money go further. The problem is, it’s not such a great thing for these businesses who are trying to import into the U.S. Because now, the gains they saw by having their dollars, selling in dollars and converting into euros, and making more money, is now at an even cost. They could even be losing money. So it becomes not great for them. Also, you tend to see American companies do okay. So if the majority of your business is in the U.S., then when the dollar is at parity, it’s good for the U.S. But it’s overall going to be difficult, I think. Because we are able to go over and buy more, but it actually winds up, we are buying with our dollars, and then our dollars are converting into less euros, basically. So it’s a situation where I think you’re going to see the prices rise. Right? That’s what’s going to wind up happening is, people are going to try to sell their wine. When they import into the U.S. compared to European wines, they’re going to raise prices. And you sort of see importers already kind of doing this, they’re raising prices. So it’s — the only benefit that you have when the dollar is like this is doing what we did, which is actually traveling over and buying ourselves.
A: So being a consumer in the market is a really good thing. So going to London — not London, actually — but the pound is actually getting pretty low as well now. But going to Rome and buying fashion made in Italy, you can benefit as a consumer, because you’re buying at the source. But then once that fashion comes over here, and the prices have to be raised in a way so that that company still makes money, and so the prices sometimes come over and are actually higher, because of all the other costs they have to eat. It’s really, it’s a hard thing understanding economics. But doing the research, my general understanding of how it works, and why actually, the dollar being at parity with the euro is not a great thing for most people including us, which is weird.
J: So does that mean then, that American wines and spirits will be a better value for people to be buying here in the United States?
A: Well yeah, because they’re still pricing, except for inflation, they’re still pricing room.
A: They do the majority of their business in dollars, and so therefore, the value of that dollar to them hasn’t really changed besides its inflationary levels. Whereas, if you do the majority of your business in euros, but now you have to sell, and your euro is worth less, then that’s not great for you.
Z: Well, and it’s certainly the case, I can imagine that at the higher-end level, whether you’re talking about Bordeaux or Premier, Grand Cru Burgundy, or things like that, especially where there’s also a lot of demand, there’s probably more room to raise prices. So that, even if the dollar is strong relative to the euro, these are whether… Or other items like you mentioned, high-end fashion, stuff like that, where there’s a lot of demand, you probably can raise prices, and even if it’s just returning you the same value in euros that you were expecting a couple of years ago. I do think that you’ll see more affordable low-end products, because I think there’s less flex in that marketplace. I’d be curious to see in early 2023 what the import market for rosé looks like, because there’s a lot of it, it’s a somewhat seasonal product, especially for the less expensive stuff. And obviously, there’s always a negotiation, there’s always a back and forth. And of course, something to keep in mind here, when we’re talking about the movement of products from Europe to the United States is, I think some of the supply chain issues have lessened, but they’re not gone. And there are a lot of challenges with shipping, and costs associated with that. And so much of that stuff gets rolled in along with inflation, that the final price on a restaurant list or a shelf, may not be affected that much by the relative strength or weakness of the dollar. I do wonder, though, Joanna, you mentioned domestic product here being not necessarily a better value, but a more stable value, or something like that. Or just despite what people, like me I guess, might have thought where it’s like, oh, the dollar is strong, so imported wine will be cheaper, which appears to not be the case, sadly. I do wonder if it does create even further challenges for producers in the U.S. who are looking to export, particularly to Europe. We’ve talked a lot about bourbon, and we’ve talked a lot about, just on the Friday episode, about Campari’s purchase of Wilderness Trail, and how presumably, a lot of that is a play to be in the American market even more firmly with bourbon. But I think they’re a multinational, they have to be looking at, to some extent, the global growth potential for stuff like that.
Z: There’s undeniably going to be more obstacles when you’re talking about a product that is being made in the United States with a relatively strong currency, and you’re looking to import it into Europe, with a comparable to how it’s been in the past, a weaker currency. So that would be a place where I’d be very curious to hear from, again, from either of you, or from other people listening, who might have more expertise in this field than I do, certainly.
Z: If those shifts do really make a difference. Because it may be harder to convince the European trade, whether it’s on-premise of off, obviously Europe has very different liquor laws, but taking on a more expensive product that also… an expensive product from the United States that now is carrying perhaps an additional cost because of the relative strength of the dollar. I don’t know.
J: Well, we actually have a really good article about this from Evan Rail, from I think a couple of months back, about bourbon, American whiskey, specifically in Europe, and how there have been a number of challenges that have prevented it from taking off in the same way that we see it here. And I think that this can probably only be an additional challenge to its success abroad.
A: Yeah. Because to clarify what I was trying to explain and I’m like, I’m realizing that it’s confusing. So basically what this means is, if you do the majority of your business in dollars, the dollar being stronger means that we are able to buy the wines of Europe, the spirits of Europe for cheaper and bring them over here. But if you have to do any of your business in dollars and you’re European, meaning you have to convert your euros to dollars, you now get less dollars when you convert. So let’s say you buy your glass from somewhere else that normally takes dollars, or you like to import American wine, well, that’s going to make it much more difficult for you to sell American wine, or for American wineries to sell in Europe. So it’s basically, it’s this idea that if you’re an American business that buys goods and services from Europe, you’re going to get things cheaper right now, whether you’re a tourist or whether you’re an importer. So importers-
J: Oh, I thought you were saying that the importers will, they’ll jack up the price for importers to make back.
A: Right. So logistically, you would think the wine would get cheaper. The problem is, if the wineries in Europe get any of their goods from outside of Europe, then they’re going to ultimately raise their prices anyways.
A: So it’s this idea that it’s not always good because it’s upsetting in the total flow of goods and services. So theoretically, yes, we should be able to go over, and now it’s at parity, and so therefore it should be cheaper for us. Because it used to take, let’s say two dollars to every one euro to buy a wine, or to buy a piece of fashion. But now, if that winery gets their glass, or their corks, or anything from anywhere that they have to buy with dollars, then it’s more expensive for them. So they will ultimately raise their price, and then it will still come over here, and a little bit more than maybe it had in the past. But look, it also could mean that some of these importers and distributors, having lots of buying power, say, “Screw it, I used to take 1,000 cases, I don’t know, from these few producers, I’m going to take 3,000 because I can get more for my money.” And then who knows if they’re going to pass the savings on? And what’s also making this very confusing is that inflation is just occurring across the board. So we, as American consumers, aren’t actually seeing the benefit of having a strong dollar right now, that we should see. So because there’s overall inflation, we’re not seeing a cheaper bottle of European red wine, and technically if there wasn’t inflation, we should.
A: But inflation is why the euro has been weakened. Did that make sense?
Z: I think it-
A: It’s confusing.
Z: Yeah. Well, and I think like you said, there’s a lot of moving parts here, so there’s not necessarily, it’s not as simple as just saying, well the dollar is strong relative to the euro, so therefore, the cost of anything we buy from Europe, or that’s imported from Europe, will be less. It’s just, like you said, there are too many facets to this to make it that simple. But I am curious because of this, since you guys were just in Italy. Did you notice the difference? Is it something that you were aware of? I don’t know how much. Maybe everything just went on that VinePair corporate card anyhow, and so it all turned into Emirates upgrades, but was it a noticeable difference?
J: We look at the prices.
A: Yeah, I mean I think for me, for having gone to Europe this summer, and now also for work, I notice it in terms of being like, okay, cool, I don’t have to multiply this in the same way. Right?
Z: That’s true. One to one is very easy math.
A: This is the price. And so yes, it did make things feel cheaper, because then, for example, that wine that does get marked up here, for whatever reason, in Italy, hasn’t been marked up to the same extent, because it didn’t take a lot for that wine to get from that winery to this town, maybe 100, 200 miles away. And so therefore, their markup’s not crazy. Then they also don’t do as much of a markup as we do at restaurants. So it sort of felt like you were getting a deal, whereas in years past, and okay, well, yeah the wine here is 55 euros or something, but actually I’m paying 1.6 or 1.7. So this actually is around what I would wind up paying for it in the U.S.
A: So in that regard, it is very beneficial.
J: Yeah. And most of the cocktails were also eight euro.
J: So that’s an eight dollar cocktail.
A: Which was amazing.
A: So for example, Emidio Pepe, in the U.S., very popular wine, very popular in Seattle as well, right, Zach?
Z: Oh yeah.
A: Right. And gets marked up because of what it is. I still don’t think that even though it felt to me that Emidio Pepe was more affordable, in terms of what we were paying for it at dinner, I think that the bottle of Pecorino was like, I want to say, like 85 euros or something. I still move it in the U.S.
J: I was looking it up, and I think it’s like 130 or more.
A: Yeah. I think still in the U.S., it’s going to get marked up even higher, and they’re not going to pass on the savings. Even though the dollar is stronger and allows them to potentially buy more, the importer is not going to pass those savings on. They’re going to take the price, which is what it’s called when you allow for inflation to continue to allow you to have more money.
A: So they’re going to take the price here, and they’re going to continue to reap the benefit. So I guess ultimately, I don’t think the consumer’s going to see much of a benefit, unless you actually travel to Europe yourself.
Z: Yeah. And I think you’re right, that also, as you’re talking about before, certainly on recognizable products, like famous wines and things like that, you’re not going to see a sudden price drop. Prices don’t generally go down on those kinds of products in any case. They might stay level for longer, if the cost to the importer and to the distributor is lower. But people use those. And this isn’t meant as a criticism, it is just a reality. Those are benchmark items, and they’re important to the overall health of those companies. And so, they’re not going to lower the price of them, even if they’re perhaps getting a slight deal on them as it turns out.
Z: I think the last thing I was going to ask the two of you, because I think it’s even more pertinent maybe for the two of you in New York is, are you seeing, it doesn’t even have to be drinks related, just generally, is this state of affairs leading to more people you know, or yourselves, looking to go to Europe more? I would love to, but there are children and stuff that make that a little more complicated for me. But I’m wondering if this state of affairs is prompting more European vacationing and travel from people in the U.S?
J: I think it’s definitely a draw, but not something that I’ve acted on specifically.
Z: I mean, you went to the Azores.
J: We did go to the Azores, but I think that happens to be a more affordable place generally outside of — I think I believe Portugal is as well, but the Azores, we were expecting it to be along the same lines as, I don’t know, anywhere in Spain or Paris. But yeah, we were surprised at how affordable it was. So yeah, going to Italy felt surprisingly affordable just to have that one-to-one exchange.
A: Yeah, I think you mean if you look at the reporting on this, a lot of people are choosing to go to Europe now. Because it’s more affordable than lots of other vacations, and it kind of makes it as affordable as going somewhere in the U.S. Especially when you look at what some of the airline fares are around certain times of year. Sometimes they’re going to be really expensive, but other times they’re going to be on par with other places you might fly. Maybe you go to the West Coast, maybe I would fly to Seattle from here, or something.
A: Well, if it’s $600 for me to fly to Seattle, and $650 for me to fly to Dublin, maybe I will go to Dublin.
A: And I can buy a lot of Irish whiskey. So I think you’re definitely seeing this, and people are starting to talk about, well, how long is this going to last for? And if this does last for longer than a few months, if this is going to be the state of play for the next year or so, is it within Americans’ best interest, plan their weddings in Europe, as opposed to the wedding venues here in the U.S., or other life events, right? Because the venues now are affordable. The alcohol is affordable, travel is affordable, the hotels are more affordable. So that’s really where the economists that I’ve listened to and read have said, that’s where an American is going to notice the most amount of benefit to themselves, is actually traveling to and spending money in Europe.
A: You’re not going to feel it as much here, because of all of the other externalities that go into the pricing of the wine when it hits the shelf. But, where this could benefit Europe and the wine regions is, that if more Americans are coming and the wineries are open to Americans, and hosting them, et cetera, that Americans could discover a new region, fall in love with something. Become a large devotee to one of those styles of wine. I think that’s something that is only beneficial to Europe. And I do think we will see, at least for the foreseeable future, that the majority of tourists in European countries will be American, because the dollar just goes so much further. I mean, there’s all these stories you used to hear about people who lived in London and Paris, who I think it was in the early 2000s, late ’90s, when the euro was just so strong. I think it was like two to one. Do you guys remember that one? It was two to one.
A: That Europeans would come to New York for the weekend just to shop.
A: Because you could buy luxury goods at a much cheaper price, you almost were getting 50 percent off, when you think about how far your euro went. And so that you’re going to see a very similar thing on the American side, of Americans that are more willing to go to, let’s say, Paris for four to five nights, or take a quick little wine trip or whatever, and feel like it’s not as great of an expense as it had been in the past. Because I mean, right now as we are recording this, it is 1.02 United States dollar to one euro. That is crazy.
A: And earlier, what was it? Only earlier this month, the dollar was actually stronger. It was 97 cents to a euro.
A: So it’s just going to continue and as long as there’s a war in Ukraine, unfortunately, it’s going to stay like this.
Z: Yeah. And I think you’re right. It makes me mildly disappointed that I probably won’t reap the benefits to the same extent. But you know, who knows? Maybe we’ll just pack the family up and decamp to Europe for a little while. Who knows?
A: Just go for a while, who knows?
J: Paul’s 5th birthday.
Z: There you go. Yeah, we’ll see.
A: Exactly. Exactly. Well, it has been an interesting conversation. Again, none of us are economists, just trying to understand the economics, so don’t take our words for it, but it is really interesting.
J: Yes. Let us know what you think.
Z: Yeah, tell us firstname.lastname@example.org. Tell us we’re wrong, or right. That’s also nice. Yeah.
A: And I’ll talk to you both on Friday.
Z: Sounds great.
Thanks so much for listening to the “VinePair Podcast.” If you love this show as much as we love making it, please leave us a rating or review on iTunes, Spotify, Stitcher or wherever it is you get your podcasts. It really helps everyone else discover the show.
Now for the credits. VinePair is produced and recorded in New York City and Seattle, Washington, by myself and Zach Geballe, who does all the editing and loves to get the credit. Also, I would love to give a special shout-out to my VinePair co-founder, Josh Malin, for helping make all of this possible, and also to Keith Beavers, VinePair’s tastings director, who is additionally a producer on the show. I also want to, of course, thank every other member of the VinePair team, who are instrumental in all of the ideas that go into making the show every week. Thanks so much for listening, and we’ll see you again.
Ed. note: This episode has been edited for length and clarity.