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Londonderry business owner faults tariffs for struggles

Union Leader Correspondent

July 19. 2018 7:49PM
Michael Fairbrother, owner of Moonlight Meadery in Londonderry, said Chinese retaliatory tariffs cost him $750,000 in annual sales. (Ryan Lessard/Union Leader Correspondent)

LONDONDERRY — Moonlight Meadery owner Michael Fairbrother says he is out $750,000 in potential sales per year and had to lay off his wife and a six-year veteran with the winery he founded in 2010. The reason? Retaliatory tariffs by the Chinese government.

“It all came to a crashing halt,” Fairbrother said.

Fairbrother said he’s spent most of the past year working with Robert Skaff, the owner of an intermediary export company called Ancient Traditions LLC in New Hampshire, to send 9,000 gallons of wine to China per year under a different label and market it to the country’s upper middle class, where there is a demand for high-quality products.

Skaff has done similar deals under different company names to export milk from Holland to China, for example.

But the day he was about the sign the contract was the very same day China raised its wine import tariffs from 37 percent to 54 percent, making it impossible for anyone involved to profit from the deal.

He said the meadery is making about $1.2 million in sales annually, and his product is in stores in 33 states. The added revenue would have brought him up to about $2 million without needing to invest in new equipment to scale up.

Fairbrother already exports to Australia, Japan and Canada, but he said none of them is as big as what the China market promised.

Skaff was planning to label Fairbrother’s mead “Bee & Stag,” put it in fancier packaging, and sell it for a premium to wealthy Chinese consumers.

The U.S. tariffs have also had an effect, increasing the price of aluminum cans it uses for hard cider and wine and glass bottles it imports from China.

“We’ve eaten a lot of it. We’ve absorbed the cost, but we can’t do that forever,” Fairbrother said.

The loss of the deal affects other New Hampshire companies too, such as McLure’s Honey and Maple Products in Littleton, where Fairbrother buys his honey to make the mead. Had the deal gone through, he would have doubled his order of honey from them.

He shared his story with a peer business group. One of the group’s members, Val Zanchuk, the president of Graphicast in Jaffrey, is on the executive board of the Business and Industry Association and took it upon himself to reach out to Sen. Jeanne Shaheen’s office, Fairbrother said.

Shaheen announced she’s planning to visit the meadery today at 10:30 a.m. to tour the facility and highlight the negative effects of the trade war initiated by the Trump administration.

Fairbrother said he laid off his production manager and his wife, who was the vice president of marketing at the company.

“Not a good day,” he said.

While the China deal might have prevented those layoffs, the company has been struggling to grow. Fairbrother said he sold his house a few months ago, and his 401(k) is leveraged to keep the company afloat. “I’m all in,” he said.

He describes a “recession” in the craft beer and wine industry that started before the tariffs were implemented that’s caused by market saturation and fierce competition. It’s especially hard to get new consumers to try the product for the first time, according to Fairbrother.

And he admits the company took a hit in early 2017 when it lost $100,000 in a canned cider recall because the 6.5 percent alcohol cider was re-fermenting in the can. He said the company didn’t have the right insurance to cover it.

While he’s hopeful the tariffs will get rolled back and he can try to reconstruct a deal, he said he’d be “shocked” if Ancient Traditions didn’t find another mead producer outside of the U.S. before that happens.

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