Fawn Weaver has never been able to run her business without worrying abouttariffs.
“We couldn’t pass on those tariffs to the consumer,” she says.
“We had to absorb them, and there was absolutely no way we could absorb them.”
When Europe suspended whiskey tariffs in 2021, Weaver wasn’t home-free, either.
She knew the suspension might not be permanent, especially if Trump landed back in the White House.
“Well, it’s not been over.”
And return thetrade warhas: The EU is threatening to implement a50% tariffon American whiskeys.
And now, there’s a new and surprising trade foe:Canada.
“They pulled us off the shelfright along with Jack Daniels,” Weaver says.
The reignition of the international brown liquor battle is another headache for an industry already reeling.
Globally, sales were flat in 2023 and are on track to decline in 2024.
(American whiskeys include bourbon, Tennessee, and rye.
The distinctions are key since all bourbons are whiskeys, but not all whiskeys are bourbon.
Its popularity started tapering off in the ’70s people tend not to want to drink what their parents drank.
“Those were sort of the glory days for Scotch whisky,” Lodewijks said.
And so they rose with the tide as well."
Over the past decade or so, bourbon has really taken off, too.
Much like Scotch, bourbon makers have focused on premiumization improving the quality and raising the price point.
Where it was once seen as a product for drunks, it’s now considered fancy.
“it’s possible for you to sort of take more chances,” Lodewijks said.
The COVID-19 pandemic put these trends on overdrive.
People were sitting at home bored with money to spend, andthey were spending more of it on alcohol.
Private investors got in on the action, pouring money into distilleries and upping production.
“They built the capacity to make a million new barrels a year,” Wiesel said.
The problem was, there wasn’t actually a sustainable place for that demand and growth.
“When bourbon was very scarce, that might’ve been a good investment.
Despite hopes for a new normal, bourbon has long been a cyclical industry.
On the one hand, demand is clearly decelerating.
Amid inflation and dwindling pandemic-driven savings, there’s also been a squeeze on consumers' wallets.
There are structural factors in play as well.Gen Zis drinking less.Cannabismay be taking some market share from booze.
GLP-1s such asOzempic appear to curb alcohol cravings.
It’s become increasingly clear that a lot of producers overshot their estimates.
While distillers can sit on barrels for a while, there are limits, depending on the product.
Most bourbon has about a 10-year age limit before it turns.
That may mean more flavored whiskeys or more whiskey-based ready-to-drink cocktails whatever gets it poured before it goes bad.
The tariffs, of course, are throwing a wrench in an already difficult situation.
But in spaces such as alcohol, it’s not so simple.
Tequila has to come from Mexico.
Scotch is always from Scotland.
“The big producers do recover.
Because they have massive amounts of money, they can splash back into the market.”
That means some small producers may go under if they cannot find a place to sell their products.
Given the industry’s competitiveness, they could alsotry to increase prices, though that may be tough.
Trump’s trade war has the potential to hit the industry in more tangential places, too.
“At some point, that’s going to have to get passed on,” he said.
Wiesel brought up the increased need for warehouse space as bourbon piles up that can’t be sold.
And then there’s Canada, which the president has picked a somewhat confusing fight with.
It’s sparked a sense of patriotism in Canada along with boycotts on American-made products, including bourbon.
“Canada is just pulling American products.
They’re angry,'” Harris said.
Fischer expressed similar concerns about the potential European tariffs.
“you’re free to’t just roll back a tariff and expect loyalty to return overnight.
This is long-term damage.”
Weaver, from Uncle Nearest, is still optimistic about the future.
She gets that the president is doing what he thinks he needs to do to negotiate trade agreements.
In the meantime, it might be nice if he gave the industry a bit of a PR boost.
Emily Stewartis a senior correspondent at Business Insider, writing about business and the economy.
