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American Whiskey Targeted By EU, Mexico, And Canada Tariffs

June 7, 2018

Mexico, Canada, and the European Union are increasing tariffs on U.S. whiskey exports in retaliation to the new steel and aluminum tariffs (25% and 10%, respectively) enacted by the Trump administration. The EU and Mexico are tacking on a 25% tariff on American whiskies, while Canada is charging 10%. The Mexican tariff takes effect right away, and the Canadian and EU levies will go into effect in July.

The export market has become increasingly important for the top U.S. whiskey producers. In 2017, U.S. distillers exported 470,000 proof gallons of whiskey to Canada, 821,000 gallons to Mexico, and 3.6 million gallons to the U.K., according to the Department of Commerce.

According to Impact Databank, Brown-Forman’s Jack Daniel’s sells almost 2.7 million cases across the U.K., Germany, and France, with the U.K. being the biggest contributor at nearly 1.3 million cases. Beam Suntory’s Jim Beam sells roughly 2 million cases across the same three markets.

Overall, the EU nations, Canada, and Mexico account for nearly one-quarter of total sales for Brown-Forman, led by Jack Daniel’s. In a conference call yesterday, Brown-Forman CFO Jane Morreau said, “We’re on top of the situation and have taken measures over the last few months to mitigate risks such as increasing our inventory levels in non-U.S. markets where we own our own distribution.” But while distillers are taking what precautions they can to mitigate the impact, the tariffs threaten to stunt the growth of what has been an increasingly vibrant export market in recent years.—Shane English

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