Washington Trade Policy News Round-up: Starbucks & Ste. Michelle

It’s time once again for a regular feature here on the State of Trade blog: the Washington Trade Policy News Round-Up. Or “here’s a bunch of stuff about trade that I noticed and wanted to point out.” It’s a totally unscientific look at stories in the news that I happened to see, and how they impact trade policy in our state.

Of course, on this lovely summer Friday afternoon, what better trade policy topics could there be than coffee and wine?

Let’s begin with yesterday’s Seattle Times’ story about Starbucks in China. Everyone’s favorite latte maker just signed a deal with Ai Ni Group to create a joint venture that would buy coffee from Yunnan Province. Which is a step toward eventually owning farms and roasting coffee in China. Which is a step toward being able “to almost double its 800 stores in China, Taiwan and Hong Kong over the next four years.”

This effort by Starbucks reminds me a lot of Boeing’s approach to selling airplanes. A big part of their strategy is to work with suppliers in those countries that they want to sell planes to, under the theory that countries are more likely to buy Boeing planes if they get part of the business from building them. Of course, Starbucks also needs to enter this joint venture with a Chinese company because, well, that’s the law in China for foreign companies who want to do business there. We saw this in the last Trade Policy Round-up with NBBJ who pointed out that “Chinese law requires that we work with a local design institute in China.” And, as I said then, it’s a great example of how we need to think about policies that ensure that international business can happen as easily and directly as possible.

The other feature article today is this May article from the Puget Sound Business Journal on Ste. Michelle wine company. “What?” you say. “Isn’t this supposed to be current news?” No, I didn’t say that…I said that it’s news that I happen to see. And, to be perfectly honest, I just happened across this May hard copy issue of the PSBJ today. But that’s beside the point. The point is that Ste. Michelle CEO Ted Baseler sees “growing offshore market opportunities for Ste. Michelle, even though international sales represent only 5 percent of his company’s total business.” In particular:

“Germany is a strong market (and) … we’re doing well in Denmark and Japan,” he said. “China is still not large, but growing.” Baseler expects more market visibility and sales in China when former Washington Gov. Gary Locke is confirmed as U.S. ambassador to China…Baseler noted that while California produces and sells huge amounts of wine on the world market, Washington wine sales are growing at a faster pace than its competitor. Growing market share for Ste. Michelle is part of a bigger plan “to build Washington as a very important brand on the global wine scene,” Baseler said. “We’re doing that in cooperation with other wineries here.”

I think this is notable not only because it’s an exciting market opportunity for our state, but also because it points out two important things about our trade economy. First, I think that folks know that agriculture is a big part of what we export (about $11 billion or 14% of total state exports), but what we don’t necessarily think about is the manufactured foods that we have a growing opportunity in. That is, it’s not just bags of cherries and apples, but bottles full of grapes to which wonderful things have been done (however it is that one makes wine). And that means there’s a market opportunity for the wide variety of specialty foods that we produce in this state from alcoholic beverages to soda (Dry, Jones) to fancy snacks (like Sahale). And these products have different export issues than crops. Second, it shows that there are opportunities for industries to work together on their trade policy issues, even when they’re competitors. The fact that multiple Washington wine companies are working together to grow the global brand means they can also collaborate to address export control issues or tariffs or anything else.

And that’s the news of the day (or the day and two months ago). I suggest you now go out immediately and buy as much Washington wine as you possibly can, and then enjoy it while thinking more about important international trade policy issues.

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