Brown-Forman to raise cost of Jack Daniel’s in EU

27th June, 2018 by Melita Kiely

The price of Jack Daniel’s is set to rise by around 10% in the European Union over the coming months after the bloc implemented a 25% tariff on American whiskey.

Jack-Daniel's

The cost of Jack Daniel’s is set to increase due to the EU-US trade war

Brown-Forman, which also makes the Woodford Reserve and Old Forester whiskeys, confirmed prices of its American whiskey and Bourbon brands will be raised as a direct result of the tariffs – up 10% in EU markets where the company owns distribution.

In markets where the drinks group does not own distribution of its brands, the decision to increase the price of its American whiskey and Bourbon brands will be down to the local distributor.

A 25% import tariff on Bourbon and American whiskey came into effect last Friday (22 June) in response to US president Donald Trump’s 25% tariff on steel and 10% tariff on aluminium.

The EU estimates the tariffs will affect exports of steel and aluminium by €6.4 billion. As such, the European Commission applied tax hikes to €2.8bn worth of American exports, and intends to rebalance the remaining €3.6bn in three years’ time or “after a positive finding in WTO dispute settlement if that should come sooner”.

Phil Lynch, vice president, director of corporate communications and public relations, Brown-Forman, said: “In order to protect brand profit and continue to invest behind the growth of American whiskey in the EU, Brown-Forman will implement price increases on its American whiskey brands exported to the EU in its owned-distribution markets to offset the tariffs placed on the whiskey by the EU.

“It is important to note that because of the complexity of the pricing in the multi-tier distilled spirits industry, consumers should not expect to see a 25% increase in a bottle of American whiskey they purchase.

“Rather, consumers can expect an increase of about 10% in a bottle of 700ml American whiskey as a result of the tariffs being applied by the EU.”

Potential impact

Bulleit Bourbon producer Diageo has also said it is monitoring the situation and will “continue to assess the potential impact” the EU’s retaliatory tariffs could have on American whiskey and Bourbon.

A spokesperson for the group said: “We hope that decision-makers will work towards a sensible outcome that will maintain an open and transparent global trading system, as the current level playing field for spirits has boosted trade on both sides of the Atlantic, enhancing consumer choice and stimulating investment and job creation.”

China has also been caught up in a feud with the US, after the White House announced additional tariffs of 25% on US$50bn worth of Chinese imports – which will be followed by anotherl set of tariffs on US$34bn worth of Chinese imports from 6 July.

As such, China responded with a 25% tariff on US imports, including Bourbon, which will come into effect from 6 July.

For an in-depth look at the US/EU/China trade war, see the July issue of The Spirits Business – out soon.

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