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‘Harmful’ tariffs curtail American whiskey exports

Retaliatory tariffs curtailed American whiskey exports in 2018, according to the Distilled Spirits Council, which has called for a swift resolution to the “harmful” taxes.

American whiskey exports have been affected by retaliatory tariffs

Trade body the Distilled Spirits Council said during its annual economic briefing that retaliatory tariffs, sparked by US president Donald Trump’s 10% and 25% tariffs on aluminium and steel respectively, have had a “negative impact” on American whiskey exports – particularly to the EU.

American whiskey exports to the EU were buoyant during the first half of 2018, growing at 33%. However, exports dropped by 8.7% after retaliatory tariffs were put in place, compared to the same July-November period in 2017.

Globally, during the first six months of 2018, American whiskey exports were growing at 28% (US$595 million). Following the introduction of retaliatory tariffs, value exports declined by 8.2% to US$526m between July and November, compared to the same period in 2017.

Chris Swonger, Distilled Spirits Council president and CEO, said: “We strongly encourage the administration and our trading partners in the EU, Canada and Mexico to quickly resolve these harmful tariffs that are undercutting economic growth in this sector and adversely affecting American workers.”

Record sales

Overall, spirits sales in the US delivered record results for the ninth consecutive year in 2018. Supplier sales grew by US$1.3 billion (5.1%) to reach US$27.5bn last year, while volume rose 2.2% to 231m cases – a 5m increase on the previous year.

“These robust results show adult consumers are continuing to favour spirits over beer and wine, particularly among millennials,” said Swonger.

“The spirits sector is benefiting from millennials who demand diverse and authentic experiences, and desire innovative and higher-end products.”

Looking across the majority of spirit categories, the strongest growth came from the high-end premium and super-premium products, with revenue for these price points up 8.9% and 10.5% respectively. Volume was up 8% and 7.5% respectively.

American whiskey was noted to be a “key driver”, up 6.6% to US$3.6bn; Tequila rose 10.2% to US$3bn; Cognac grew 14.2% to US$1.8bn; and Irish whiskey increased 12% to US$1bn.

Single malt Scotch also returned to growth, increasing 9.4% to US$843m. Super-premium gin grew 15.6%, and super-premium rum rose 28.5%.

Vodka, which accounts for a third of all volume, saw volume sales rise by 1.6%, while value grew 2.9% to US$6.4bn.

David Ozgo, Distilled Spirits Council chief economist, said: “Growth was concentrated in the higher priced categories, allowing the industry to enjoy significant revenue growth while also picking up drinking occasions from other beverages.

“The continued excitement surrounding super-premium American whiskeys is creating a halo effect for the entire whiskey category.”

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