Will Tariffs Hurt the Bourbon Boom?

[photo courtesy Tom's Foolery]
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Today is “National Bourbon Day.” While fans of this uniquely American whiskey are sure to celebrate with a glass of their favorite brand, a dark cloud is gathering over the industry.

Bourbon, which can only be made in the United States under very specific rules, has skyrocketed in popularity in particular abroad. However, bourbon now finds itself entangled with politics surrounding international trade.

In retaliation to President Trump’s decision to impose tariffs on steel and aluminum, both Mexico and the European Union have retaliated by imposing tariffs on a number of US goods, including bourbon. Canada is also planning similar measures.

Fred Minnick, the author of “Bourbon: The Rise, Fall and Rebirth of an American Whiskey,” (Voyageur Press) is among those concerned about how these tariffs could affect the nation’s bourbon producers.

 

“There’s a billion dollars of renovation being spent in Kentucky and the majority of that is because of the foreign interest in bourbon. Small distillers are making inroads in those markets. You have people who have built business models entirely on the demand of bourbon overseas. If that bourbon becomes twice as much as it was a year ago, that would effectively give consumers a choice in those particular markets and the importers a choice to make on their own business and spending habits. Nine times out of ten they are going to go for something less expensive,” said Minnick.

“The tariffs that have already come in are in the 20 to 25 percent range in Europe and Mexico. Those will be painful for distillers, but I think they can survive them. The question is if those tariffs continue to increase will other foreign markets join in on the tariffs against bourbon?” Minnick said.

Minnick, who describes bourbon “as more American than apple pie,” contends that the harm that tariffs might cause producers extends beyond just lost sales.

“Bourbon is a unique product to the United States. You have a kind of American protectionism around it. This is symbolic to us, it’s very ingrained into our culture. If we see countries start pulling out of free trade agreements, there’s the concern that if we get into trade disputes, people will not respect our unique identities of American products. If you go to Vietnam or Malaysia where counterfeit is very high, you could start seeing people come out with bourbon in those particular markets and it would definitely not be bourbon.”

Locally, two bourbon producers say they would be affected to different degrees by increased tariffs.

For Tom Herbruck, owner of “Tom’s Foolery’ Distillery located in Burton, the impact would indirect.

“We have only have enough product to sell it in the United States, but it would certainly affect our industry and other brands and companies we work with,” Herbruck said

 

Tom Lix, the founder and CEO of "Cleveland Whiskey," which is housed on the edge of downtown Cleveland, says that not just the imposition of tariffs, but the very threat of them is already to starting to make its presence felt in his business.

“We were about to launch a new product in Europe this year which has now been put on hold. I have part of a warehouse filled with 700 milliliter bottles, which is how I have to sell them in Europe, so I can’t use those bottles in the US. I also have product I could be shipping. This is happening around the world. Nobody wants to order something, and it turns out the purchase price you thought you had when it left the docks in Cleveland is going to be something else when they get it in Hong Kong, Germany or Britain. It has really slowed down our business,” Lix said.

The Cleveland Bourbon Club hosts a book-signing event for Fred Minnick Saturday at 4 p.m. at Lizardville in Lakewood.

Hear the two Tom’s discuss their very different approaches to bourbon making, as well as Minnick talk about some of the things to look for when sampling bourbon.

 

 

 

 

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