New Report: American Whiskey Exports to EU Drop by 33 Percent at Tariff Two-Year Mark
-Costs Producers $300 million; Small Distillers Hit Hardest-
WASHINGTON — American Whiskey exports to the EU, the U.S. spirits industry’s largest export market, have tumbled by 33 percent and cost $300 million since the EU’s 25 percent retaliatory tariff went into effect on June 22, 2018, according to a new report released today by the Distilled Spirits Council of the United States on the two-year anniversary. The EU levied the destructive tariff in response to U.S. tariffs on EU steel and aluminum.
“American distillers enjoyed two decades of unparalleled growth in the EU prior to the implementation of these retaliatory tariffs,” said Chris Swonger, President and CEO of the Distilled Spirits Council of the United States. “This report makes clear that these tariffs took the wind out of the sails for American Whiskey exports to our top export market, which has resulted in a loss of more than a quarter of a billion dollars of sales.”
Swonger added, “On the two-year anniversary of the EU tariffs, this report shows the tariffs have derailed a great American export success story. Our concern is not only the significant reduction in sales to the EU, it is also the loss of consumer mindshare for these uniquely American products.”
The report underscores how the retaliatory tariffs have upended decades of growth for the U.S. spirits sector in the EU market, which accounted for nearly 52 percent of total American Whiskey exports in 2019.
From January 1997 through June 2018, American Whiskey exports to the EU grew five-fold from $143 million to over $750 million. According to the analysis, had the tariffs not been implemented, American Whiskey exports today would be an estimated $300 million higher.
“With the destruction caused by the tariffs and the severe impact of COVID-19 on the hospitality industry, distillers have suffered enough,” added Swonger. “It’s time for the U.S. and EU to resolve the trade issues and remove all spirits tariffs, so U.S. and EU distillers can get back to building their businesses and supporting their local economies.”
Swonger stated that the EU is scheduled to increase its retaliatory tariff on American Whiskey to 50 percent in June 2021.
U.S. Craft Distillers Hit Hard by Tariffs
In 2019, distilleries in 35 states exported American Whiskey to the EU. Many small craft distillers, who made substantial investments to expand into international markets, have been particularly hit hard by the EU tariffs with cancelled orders and sales calls left unanswered.
“We were off to a great start with some EU partners but since the implementation of these retaliatory tariffs from the EU, our European exports have been flat, at best,” said Jeff Quint, Founder/CEO, Cedar Ridge Distillery in Swisher, Iowa. “At this point we are really only able to ‘tread water.’ We are trying hard to maintain our EU business, but can’t really grow it unless and until these tariffs go away.”
Added Amir Peay, owner of James E. Pepper distillery in Lexington, Kentucky, “Before the EU tariffs on American whiskey were imposed we had been growing our exports significantly and they accounted for 10 percent of our total business. We were planning on doubling our business in Europe and made significant effects to that end—and then we got hit with the trade war. Since then, we have lost 50 percent of our EU business and continue to face a very difficult and complex market to do business in.”
Sonat Birnecker Hart, president and owner of KOVAL Distillery in Chicago, Illinois stated, “Our international trade has been dramatically affected, not least because much of the European hospitality sector was closed for business for a number of months due to COVID-19. The tariffs have exacerbated this situation, as many distributors are trying to recoup losses by asking for lower prices. As a distillery that decided not to increase our prices abroad due to the tariffs, in hopes of remaining competitive, we are feeling the effects of them now, more than ever.”