Pour one out for U.S. liquor industry.
Trade tariffs are undermining what was one of the largest booms for American bourbon exporters. An industry executive told Yahoo Finance that the dispute between the U.S. and its trading partners is hammering the business.
“We represent about 60% of all the whiskey that’s exported from the United States,” Campbell Brown, Old Forester President and fifth generation Brown family member, said. “So we look at it as a tariff on Brown-Forman.”
Old Forester, manufactured by the Brown-Forman Corporation (BF-B), is the longest running Bourbon currently on the market.
Brown-Forman has done well over the last year, reporting strong fiscal 2019 results, but European Union (EU) tariffs are impacting Old Forester’s bottom line, Brown told Yahoo Finance. The company is taking a hit of roughly $10-$11 million a month, he added.
Kentucky bourbon production reached its highest level of 1.7 million barrels in 2018, since 1972, according to Kentucky Distillers Association.
But despite a surge in the global demand for traditionally made spirits and cocktails, exporters are struggling to recoup lost sales after the EU imposed 25% tariffs on American whiskey back in 2018.
U.S. whiskey shipments to Europe plummeted 21% between June 2018 and 2019, according to data from the Distilled Spirits Council.
While tariffs are hitting the whiskey business overall, craft spirits are on the rise. The U.S. craft spirits industry is seeing continued growth year-over-year. Active craft producers in the U.S, saw a nearly 30% jump in sales, according to American Craft Spirits Association (ACSA) 2018 Craft Spirits Data Project report.
The competition craft bourbon has brought to the U.S. whiskey industry is “great for everybody,” Brown told Yahoo Finance.
“The cocktail culture has been elevated as a result of the craft bourbon boom, and we’ve certainly benefited from that as well,” he said.
As it prepares to celebrate the 150th anniversary in 2020, Brown said the way the brand navigates the market is based on the whiskey itself.
“The product you’re drinking today is the same product you were drinking 50 years ago,” said Brown. “It’s uniquely American, from start to finish.”
Sarah Smith is a Segment Producer/Booker at Yahoo Finance. Follow her on Twitter @sarahasmith