Importers, Wholesalers, Retailers Warn Against Potential Tariffs On Tequila

President-elect Donald Trump’s plan to enact tariffs on Mexico and Canada could have a significant impact on the beverage alcohol industry in the U.S., with a 25% tariff on Mexican goods potentially costing American 14,000 jobs and $2.5 billion in economic activity, according to an estimate from John Dunham and Associates commissioned by the Wine & Spirits Wholesalers of America (WSWA).

“These measures are intended to address broader trade disputes and deliver on campaign promises to build up American businesses,” said Dina Opici, WSWA chairwoman and president of Opici Family Distributing, speaking on a WSWA-convened panel of retailers, wholesalers, and importers discussing the proposed tariffs. “That said, they have unintended consequences due to the uniqueness of both wine and spirits.”

According to Impact Databank, Diageo’s top three brands in the U.S. in retail value terms are Crown Royal at well over $2 billion, Don Julio at $1.9 billion, and Casamigos at $1.5 billion—all of which would be impacted by the proposed tariffs. Likewise, Patrón is Bacardi’s largest label in retail sales value at $1.5 billion. And the Proximo Spirits portfolio is anchored by two leading Tequila brands, Jose Cuervo and 1800, with retail value of $1.1 billion and $668 million respectively. Campari (Espolòn), William Grant (Milagro), and Mast-Jägermeister (Teremana) also count Tequilas as their top U.S. brands by retail value.

“Tequila is a huge portion of the imports that we bring in from Mexico, and it’s the only category over the last 12 months that’s showing a positive growth trend within the spirits category,” said Dawson Hobbs, executive vice president, WSWA. “So if Tequila were to then face this 25% tariff, we would really be faced with a significant headwind on the only area that’s been a bright spot for wine and spirits wholesalers and retailers in the United States.”

Speaking from the perspective of both an importer and wholesaler, Winebow’s executive vice president of portfolio management, Theo Koebel, pointed out that the overall industry is better prepared for tariffs than in Trump’s first term. “We really are going to be focused on mitigating the risk to help support our retail partners, our restaurant partners as much as possible to help bridge in a transition period,” he said. “Those are short-term strategies that will only buy us a few months, max a year potentially, and then we’re going to have to deal with what we know is eventually coming, which is going to be price increases on the long-term.”

Michael Correra, a Brooklyn retailer and executive director of the Metropolitan Package Store Association, echoed Koebel’s concerns about rising price, noting that bars, restaurants, and retailers are unlikely to stock up well in advance to mitigate the effects of the tariffs. Correra added that rising prices are pushing consumers into different categories already, with many reaching for more affordable options.

Tariffs would only exacerbate that trend. “I’m seeing consumers just trading into other categories,” he said. “They’re going from Napa to Paso Robles because it’s more reasonable. They’re definitely much more discerning when it comes to cost, and I see that at the restaurant level as well.”—Shane English

Tagged : Metropolitan Package Store Association, Opici, Winebow, WSWA

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