U.S. Seeks Domestic Products As Prices on Imported Foods Skyrocket

LOS ANGELES – Americans face sharply higher prices on their favorite Italian wines and French cheeses this holiday season, as the U.S. dollar's steep drop against the euro has sent the cost of imported goods soaring.

In light of such sticker shock, consumers are increasingly seeking out U.S.-made alternatives to gourmet food and wine from euro-zone countries, and importers of such goods face a tough holiday season, experts said.

As the euro's value rises, the dollar's purchasing power is reduced. Unless producers or importers of European goods make up some of the difference, U.S. consumers end up picking up the tab.

One New York-based importer of French wines said his costs have risen 50 percent since the dollar began its decline against the euro two-and-a-half years ago.

As a result, bottles of Macon Village (search) wines from France's Maconnais region, which cost about $12.99 three years ago, now sell for around $16.99, a rise of roughly 35 percent.

"This is going to impact sales tremendously," said Joe Dressner, co-owner of Louis/Dressner Selections. "I am making less money than I used to."

To help preserve profit margins, Dressner has asked some suppliers to lower prices on their wines, though those efforts have not always been successful.

Another wine importer, Larry Challacombe of Berkeley, California-based Global Vineyard Importers (search), said higher prices on French wines are helping sales of wine from regions like California and South America.

"A lot of people will look at the wine from somewhere else, like the wine from California or Chile or Argentina," Challacombe said.

The euro this week soared to an all-time high against the dollar of $1.3047 on concerns about the wide U.S. current account deficit and global foreign exchange policy.

That represents a nearly 20 percent rise from a year ago, when importers were already feeling the brunt of a run-up in the single currency's value against the greenback.

Since the start of 2002, when the euro was trading around $0.8750, the euro has appreciated by around 50 percent against the dollar.

According to market research publisher Packaged Facts (search), the rise in prices on imported goods helps support a growing trend toward consumption of U.S.-made fine foods, its editor, Don Montuori, said in an interview.

Sales of gourmet foods are expected to rise 23 percent by 2007 to $43.4 billion, Montuori said, and he expects much of that increase to come from goods produced domestically.

"The price pressures on imported goods will have people looking domestically," Montuori said. "There are more options now from the domestic side."

Marky's Caviar (search), a Miami-based importer of gourmet foods like French cheeses and Russian caviar, has increased the number of U.S.-made products he sells so he can provide cheaper alternatives for customers.

The company has also started farming its own Russian sturgeon for beluga and sevruga caviar at a farm in Florida.

"We are looking for different sources and we buy some domestic cheeses. In general we buy more domestic products now," said Mark Zaslavsky, president of Marky's Caviar.

Zaslavsky added that he had doubts about whether his business, which relies on French goods for over 30 percent of its sales, would be profitable this holiday season.