Brands Briefing: Specialty food brands grapple with tariff uncertainty

Graza co-founder Allen Dushi told Modern Retail that since launching in 2022, the olive oil startup has manufactured 100% of its products in Spain.

Graza is already paying the 10% baseline reciprocal tariff rate, which went into effect on the Trump Administration’s Liberation Day in April. Dushi said the expected rate on European olive oil is 15%, but that can change based on the next six months of negotiations between the U.S. and the European Union.

According to Dushi, the company is trying to find pockets of savings in its operations. “The tariffs are encouraging us to sharpen our costs and be a lot more proactive,” he explained. 

“We’re fortunate that this is happening during our scaling phase, so there is a ton of cost savings,” he said. Dushi said, as Graza becomes an important brand to its partners — including bottle, label and box suppliers — it’s able to better negotiate wholesale rates. Now, at almost four years old, Graza is sourcing and producing olive oil at a much higher volume, which is bringing its costs down compared to the first two years. “At this stage of the business, we can say, ‘We’ll buy 10 million bottles from you,’ and try to sharpen our costs that way,” Dushi said. 

Still, the olive oil itself accounts for its biggest overhead. 

“Oil is well over 80% of our total costs, and that’s a listed commodity price,” Dushi said. Due to this structure, moving manufacturing out of Spain and to the U.S. wouldn’t save the company much in production costs. “There is not enough oil in the United States to support our demand, so no matter what, the imported ingredient is the most expensive part,” he said.  

Along with the majority of its olive oil, Graza also sources its squeeze bottles and its new glass bottles from Spain.

“We work with a commodity, where there are constant price fluctuations we have to take into account,” Dushi said. Moreover, he said, it’s not just the incoming tariff duties themselves that make forecasting the coming year difficult. “The dollar and the euro have been fluctuating like crazy since this [tariff announcements] all started,” he said.

Other specialty food importers are facing a similar dilemma. Yelen Caputo is the co-owner of A. Priori, a Utah-based boutique importer and distributor of specialty foods that specializes in chocolates, cheeses, tinned fish and cocktail bitters. Some of its most popular brands include House of Angostura bitters, out of Trinidad and Tobago, and Luxardo, known for its jarred maraschino cherries from Italy. 

Similar to Graza, Caputo agreed that as an importer, constant variations in local currencies have been even more difficult to deal with than paying tariffs. 

“About half of our assortment comes from international markets,” Caputo explained, with Europe, South America and Asian countries like Vietnam making up the majority. “We do both the importing and distributing, so we’re on the front lines of this entire tariff conversation.” A. Priori’s customers include major retailers like Whole Foods, as well as specialty grocery shops and restaurants. 

Caputo said, for the past few months, much of her team’s time and labor has been spent navigating tariffs impacting its international partners. “It takes so much mind space and our literal physical labor around the clock working through pricing modules,” she said. Many of the overseas brands in A. Priori’s catalog have an exclusive partnership with the importer. “That means we are their single customer in the United States, so we treat that very seriously,” Caputo said.

Because A. Priori’s assortment is coming from different countries with various reciprocal tariffs imposed, Caputo said it has become difficult to price its wholesale rates for clients. 

For these specialty products, Caputo said, many are subjected to the 10% baseline tariff compounded on top of existing tariffs on their specific category. “For example, generally, chocolate is right around 6%,” she said. Depending on the eventual tariffs implemented on certain countries, this rate can increase or decrease in the coming months.

Caputo said that, so far, the company’s relationships with its international partners have remained strong. A. Priori has been around since 2006 and weathered the Great Recession and Covid, she added. However, the reciprocal tariffs will likely hurt U.S. importers in the long run by deterring new business. 

Historically, Caputo explained, the U.S. has been a friendly and important market to global specialty food producers. “This has definitely eroded [international brands’] faith, and we’ll start to see people pulling back and looking to other partners,” she said. “It’s really sad because we haven’t done anything wrong.” 

Now, “we have a plan for every scenario prepared,” Dushi said. This includes Graza potentially adjusting its pricing architecture. But, he said, that wouldn’t be ideal given Graza has positioned itself as an accessibly priced Spanish-produced product. Graza previously raised its retail prices by $1 in 2023, due to dry weather in Europe impacting extra virgin olive oil harvests. “The hardest part about it all is the unpredictability,” Dushi said. 

Caputo said that temporary solutions, like stocking up on shelf-stable products, can be helpful. However, that ties up a lot of cash flow and requires additional warehousing. 

As she put it, “You never know what’s going to happen tomorrow and what exemptions might be carved out for what products. That makes it impossible to logically plan for this.” –Gabriela Barkho

Ana Luisa goes into department stores

Jewelry brand Ana Luisa is adding 19 Von Maur locations across Illinois, Indiana and Ohio as it continues to push for a more omnichannel strategy. 

Founded in 2018, Ana Luisa has sold to 2.5 million customers and grown a reputation as an “accessible luxury” destination for popular pieces like huggie earrings, initial necklaces and stackable rings starting at under $100 price points. 

But its future growth relies on a strategy that goes beyond online direct-to-consumer origins. Brad Owings, Ana Luisa’s vp of retail, says this brings the company’s wholesale presence to nearly 100 doors, including about 40 Nordstrom stores and independent boutiques. “If you are familiar and you’re [on] the right algorithm for Ana Luisa and you’ve seen our massive growth over the last five years, you know who we are, and the consumer loves us. But to the wholesale trade, we have years of growth to do throughout the United States,” Owings said.

Beyond the wholesale push, the brand is growing its own footprint. It opened its first store in NYC’s Soho neighborhood in early 2024 and a second in the West Village this spring, and it plans to open five or six more in new markets next year. 

“Working directly with partners, we really understand which states our product is resonating in, and that has directly influenced where we’re going to open our next retail store,” said co-founder Adam Bohbot. –Melissa Daniels

By the numbers: DTC earnings

Some notable direct-to-consumer names recently reported quarterly earnings, giving updates on their sales numbers, pricing strategies and product rollouts as the industry deals with fallout from tariffs and other economic headwinds. Here are some stats to know:

23.1%: How much Allbirds’s revenue for the second quarter dropped year over year. The company attributed this dip to planned closures of underperforming stores, as well as its ongoing shift from a direct-selling model to a distributor model in certain countries. CEO Joe Vernachio acknowledged that the current macro environment “creates some uncertainty around consumer spending,” but also said that Allbirds will drop new products monthly to freshen up its offering.

$100 million: How much Under Armour expects to incur in additional costs in fiscal 2026, due to tariffs. Although based in the U.S., Under Armour manufactures across the world, in countries including China, Vietnam and Indonesia. The brand’s CFO, David Bergman, said the company is implementing countermeasures to deal with the tariffs, including sharing costs with partners and suppliers and revisiting prices.

298: How many stores Warby Parker operated, as of June. The company opened 11 new stores in the last quarter and is on track to open 45 new stores in 2025, including five shop-in-shops in Target locations. Warby Parker also announced it will end its try-at-home program by the end of the year, saying most of its customers live within 30 minutes of a store. –Julia Waldow

What we’re reading

• OpenStore’s demise marks endgame for once-booming e-commerce aggregator market. 
• Fourteen-year-old menswear brand Huckberry has opened its first store. 
• E.l.f Beauty sees the potential to “more than double our business” with Sephora expansion.

What we’ve covered

• Inside mattress brand Purple’s revamped store strategy. 
• How brands like That’s It and Miles are finding success with sampling during back-to-school season. 
• Why some brands are replacing customer service reps with AI chatbots as tariff costs climb.