Currency Hedging Protects Wineries
Bouchard Cooperage and other suppliers use Custom House to simplify international payments
Wines & Vines Publication
May 2010
Traditionally, businesses have retreated to the perceived safety of the US dollar in times of economic volatility, but Ganesh Rao, Vice President of U.S. Corporate for Custom House, a Western Union company that specializes in global payments, told Wines & Vines that that might not be the best bet in the current environment, in which currencies have been subject to sharp swings. “This market is moving. It’s not as predictable as you’ve probably seen in the past,” Rao said. “A lot of small importers want to make things easy for themselves, so they say, ‘Just bill me in U.S. dollars.’ That’s a dangerous game to play.”
Gary Chappell, international manager for Bouchard Cooperages in Napa, sees small wineries struggling in the current environment. “If a customer doesn’t want to pay in Euros, we say, ‘Call this 1-800 number, and you can pay in dollars,’” Chappell explained. “(Custom House) buys the Euros, and all the winery has to do is send Custom House a check in dollars.… It’s a cost savings, and it’s a real hassle savings that we can allow for our customers.”
The option is attractive enough that about 20% of Bouchard’s customers take advantage of it. Most don’t want to worry about exchange rates when they’re busy managing other aspects of their businesses. “For a lot of our smaller customers, they’re not necessarily sophisticated enough. They don’t have it in their capacity -- this whole idea of hedging,” Chappell said. “With the last couple of years and the pretty drastic fluctuation that we’ve seen with the dollar against the euro, it’s become more of an issue. The size of the winery that is recognizing the importance is going down all the time.”
