US spirits exports slump as tariffs and consumer shifts bite

American-made spirits exports plunged 9% in Q2, with major declines in key markets such as Canada, the EU and Japan. Industry leaders warn that both trade tensions and a growing global move toward local brands may signal a deeper, structural change.

The debate about whether the swing away from alcohol consumption is temporary or structural has received a further corpus of evidence from the Distilled Spirits Council of the US (Discus), which showed exports of American-made spirits falling by 9% in the second quarter of this year.

The trade body sought to lay most of the blame on the trade tensions triggered by President Donald Trump’s programme of tariffs because the shipments’ downturn echoes anti-American buying patterns being felt by companies as diverse as Levi Strauss and McDonald’s.

Sharp declines across key markets

The sales slump in key markets was in contrast to the strong export performance last year.

There were steep drops in shipments to key export markets, which make up 70% of America’s overseas trade in spirits. They incorporate the European Union, Canada, Britain and Japan.

Exports to the EU, the largest market, dropped by 12% to US$290.3m, while shipments to Britain fell 29% to US$26.9m. Those to Japan were 23% lower at US$21.4 million.

The biggest fall, however, was to Canada with US spirits exports plummeting 85% in the quarter to under US$10m.

That was due to Canadian provinces removing American spirits from their state-controlled stores in response to Trump’s tariffs targeting Canada and his idea that it should become the 51st state.

Although the national government in Ottawa lifted its retaliatory tariffs last month, many provinces still retain them in protest.

Industry warns of deeper consumer shift

“There’s a growing concern that our international consumers are increasingly opting for domestically produced spirits or imports from countries other than the US, signalling a shift away from our great American spirits brands,” said Discus president Chris Swonger.
The export slump comes as American whisky producers contend with slowing domestic sales and record levels of stocks, Discus said.

Diageo row adds to pressure

And worse may be to come.

In the ongoing row about Diageo’s planned closure of its Amerhurstburg bottling plant in Ontario, Doug Ford, the province’s premier, has threatened to pull not only Crown Royal (a Canadian whiskey) from the Liquor Control Board of Ontario’s stores but also to sweep all of Diageo’s products from them.

That would hit the availability of US lines such as Smirnoff vodka. Ford and the unions are seeking to pressure Diageo into retaining the plant.

Related news

Indian tariffs cause major barrier to entry for Australian wine producers

Loss of US fine wine buyers following Trump tariffs akin to the 'exodus' of Asian buyers in 2010

EPR having 'as much impact' economically as Trump tariffs, Concha y Toro warns