Each week, we bring you the latest whisky news on WhiskyCast, but a lot can happen during the week. Now, you can keep up with whisky news as it happens here on WhiskyCast.com!
With the ongoing trade dispute between the US and Canada, it’s important to keep in mind that Canadian Whisky remains extremely popular in the US. Crown Royal has released the latest edition in its Noble Collection series – a 13-year-old “Blender’s Mash” using one of the five different styles of whisky Crown Royal makes at its distillery in Gimli, Manitoba. They call it a different name at the distillery, though…and when they tried to use that “Bourbon Mash” name in the US…let’s just say it didn’t go quite as planned.
Links: Crown Royal
July 4, 2018 – Twelve days after half of a maturation warehouse at Sazerac’s Barton 1792 Distillery in Bardstown, Kentucky collapsed, the remaining half of the structure has now come crashing down with another 9,000 barrels of whiskey inside. That half of the structure survived the initial June 22 collapse, but the potential for it to come down had structural engineers trying to find a way to shore up the structure and allow for workers to begin removing the estimated 9,000 barrels damaged or destroyed in the initial collapse. In a statement, Sazerac executives said there was no way to stabilize the remaining structure due to worker safety concerns. There were no injuries reported in the second collapse.
A response team from the Kentucky Department of Environmental Protection responded to the site. Energy and Environment Cabinet spokesman John Mura told WhiskyCast in an email that it appears all whiskey spilled during the second collapse was successfully captured in two containment ponds dug after the June 22 collapse. The Sazerac statement indicated that plans had been put in place after that collapse to have equipment on site in preparation for any additional spills, and that the distillery’s team was able to respond quickly to the second collapse. The state’s response team will be at the distillery on Thursday and has been monitoring the situation since the June 22 collapse, when spilled alcohol killed an estimated 1,000 fish in Withrow Creek and the Beech Fork River. Sazerac is already facing citations for the original alcohol spill and for not reporting it promptly to state officials.
Bardstown Fire Department Chief Billy Mattingly provided photos of the scene, which has been off limits to reporters since the initial collapse. According to WDRB-TV in Louisville, people living near the distillery were asked to not set off Independence Day fireworks because of the potential fire hazard.
The warehouse was constructed in the 1940s, and Sazerac indicates it will likely be several weeks before the cause of the collapse is determined. The company is developing plans for a new warehouse to store barrels recovered from the site. In addition, structural engineers have inspected all of the other warehouses at Barton 1792 since the original collapse. All of those warehouses passed inspection, as did the warehouses at Buffalo Trace Distillery in Frankfort and Glenmore Distillery in Owensboro, Kentucky.
This story will be updated with additional information as necessary, and listen to this weekend’s WhiskyCast for more coverage.
Editor’s note: This story was updated with additional information provided by Sazerac and the Kentucky Energy and Environment Cabinet.
July 3, 2018 – While the European Union’s new 25 percent import tariff on Bourbon, Tennessee, and other American whiskies has only been in effect for a couple of days, distillers are already facing the costs of the growing trade dispute between the United States and many of its key trading partners. Whiskey is just one of many American-made products being targeted by the EU, Canada, Mexico, China, and Turkey in response to the Trump Administration’s tariffs on imported steel and aluminum. China is the next country scheduled to impose tariffs, with its 25 percent tariff to take effect on Friday.
Sazerac-owned Buffalo Trace Distillery has decided to eat some of the increased costs of its export business – for now. In an email to WhiskyCast Tuesday, Buffalo Trace spokeswoman Amy Preske confirmed a Bloomberg News report that the company will reduce its wholesale prices. “For the near term we are adjusting our FOBs to offset any impact that the new tariffs would have on our current retail prices in affected global markets,” she said. Buffalo Trace only exports a fraction of its annual production, primarily to Canada and Europe.
Brown-Forman’s Jack Daniel’s Tennessee Whiskey is the most-exported American whiskey brand globally, and the company gets about half of its annual sales outside of the United States. The Louisville-based distiller announced last month that it had prepared for the potential of a trade conflict by increasing export shipments of Jack Daniel’s and its Woodford Reserve Bourbon to markets where it controls its own distribution. As those tariff-free stocks start to become depleted, the company now plans to pass along the cost of the tariffs to consumers in the form of a 10 percent price increase.
The European Union and Canada are the largest export markets for American-made whiskies, according to Commerce Department export statistics. Canada is the largest single market, while six European Union member nations individually rank among the top ten overall export markets for American spirits, of which whiskies account for almost 70 percent of total exports.
This story will be updated as necessary.
July 2, 2018 – After serving just one month of the 15-year prison sentence he received for his role in the thefts of tens of thousands of dollars worth of whiskey from Buffalo Trace and Wild Turkey distilleries, Gilbert “Toby” Curtsinger is out of prison. Friday, Franklin County Circuit Court Judge Thomas Wingate granted a motion filed by Curtsinger’s attorney for “shock probation” and ordered his release Sunday after serving 30 days.
Kentucky is one of the states that allows a first-time offender convicted of a non-violent felony to request “shock probation.” The idea is that those offenders are likely to be “shocked” into good behavior after serving just a short time in prison, and generally spend a significant portion of their original sentence under the supervision of probation officers.
According to the Associated Press, prosecutor Zachary Becker had no objections to Curtsinger’s release during a hearing Friday in Frankfort. Becker told the judge he thought Curtsinger had been “appropriately shocked by this experience, so as not to reoffend,” given the punishments he’s received “both in and out of this courtroom.” Kentucky’s prison system is buckling under the weight of the opioid epidemic, and could run out of available beds in less than a year. Given that, Becker noted that there are drug dealers and violent offenders “who deserve his cot in jail more than he does.” Becker has not been available for an interview since the hearing.
Curtsinger was fired from his warehouse job at Buffalo Trace immediately after his 2015 arrest, and was the only one of ten people indicted by a Franklin County grand jury in connection with the “PappyGate” thefts. The group was accused of stealing barrels and bottles of whiskey from both distilleries over several years and selling it on the black market, with many of the sales coming at recreational softball league games. The investigation began in 2013 when Buffalo Trace reported the theft of around 65 cases of that year’s Pappy Van Winkle whiskies, but reached a dead end until sheriff’s deputies received a tip in 2015 that led them to Curtsinger’s house and several barrels of stolen Wild Turkey whiskey.
Despite his plea agreement, in which he pleaded guilty to theft and receiving stolen property from both distilleries, Curtsinger continues to maintain he had no role in the 2013 Pappy Van Winkle theft. Curtsinger gave his first interview since his arrest to Bloomberg Businessweek, in which he claimed he started stealing whiskey from Buffalo Trace in 2003 after a supervisor gave him a pass to take barrels from a warehouse being used for whiskey that didn’t meet production standards. Buffalo Trace executives declined to comment on Curtsinger’s allegations or his release on shock probation.
The next – and possibly final – hearing in the case is scheduled for July 13, when Judge Wingate will rule on a motion to officially return the stolen whiskey seized as evidence to both distilleries. Both have indicated they plan to destroy the whiskey, since there is no way to guarantee its quality or safety after being out of their custody.
This story will be updated with additional information as necessary.
June 23, 2018 – An investigation is underway into the cause of Friday morning’s warehouse collapse at Sazerac’s Barton 1792 Distillery in Bardstown, Kentucky, where thousands of barrels of maturing whiskey flowed from their “ricks” and wiped out half of the seven-story building. No one was injured in the collapse, which the Nelson County Gazette reports was spotted by someone who saw the damaged “rickhouse” from a nearby road. The local newspaper quoted Bardstown’s fire chief as saying the distillery had been “having issues with one wall of the warehouse, and had been working on it.” Production at 1792 Barton had been shut down at the beginning of the week for the distillery’s annual summer maintenance projects.
Sazerac executives did not address those issues in a news release following the accident. According to the statement, Warehouse #30 was built in the 1940’s and held around 18,000 barrels of whiskey at the time of the collapse. Engineers spent Friday afternoon checking the stability of the other side of the warehouse, while distillery workers and officials from the state Department of Environmental Protection were building dams and dikes to prevent leaking whiskey from damaged barrels from reaching into a nearby creek. At last report, water samples from the creek showed no signs of contamination, according to the Louisville Courier-Journal.
Sazerac executives declined WhiskyCast’s request for an interview, and also declined to answer specific questions on when the warehouse had last been inspected or how often the company inspects its “rickhouses” for potential structural issues.
Sazerac has a total of 29 “rickhouses” at the 1792 Barton Distillery, and more at its other distilleries in Kentucky, Buffalo Trace in Frankfort and Glenmore in Owensboro. In its statement, Sazerac said it may be “several days or weeks” before a full damage assessment is complete or how many of the barrels can be recovered. The distillery produces Sazerac’s 1792 Bourbon, along with a number of other spirits, and the warehouse held a variety of distilled products.
Helicopter video from Louisville television station WLKY showed the collapsed timber framework known as “ricks” that held the barrels in stacks of three. The warehouse was one of 29 at the distillery, which was acquired by Sazerac in 2009 as part of a $334 million deal with Constellation Brands. It is located in a remote corner of the distillery’s 192-acre site, well away from the buildings housing distilling operations or 1792 Barton’s visitors center, which reopened to the public for tours on Saturday.
“Rickhouse” is the common term used for Kentucky’s whiskey maturation warehouses, with the timber frames resting on concrete pads and surrounded by the building’s exterior framework, an elevator shaft to move barrels from ground level to the upper floors, and the thin sheet metal exterior. Rickhouses are typically designed so that the exterior walls do not bear the load of the whiskey barrels in the ricks, and support only the weight of the building’s roof, electrical wiring, and any sprinklers. There have been numerous cases where tornadoes or other severe storms have ripped the sheet metal walls from fully-loaded rickhouses with no damage to the ricks or barrels inside.
Warehouse #30 at 1792 Barton is one of hundreds of older maturation “rickhouses” around Kentucky built in this style, and its 18,000 barrel capacity is in line with industry standards for those warehouses. Following the 1996 fire that destroyed Heaven Hill Distillery and several of its warehouses in Bardstown, the state of Kentucky imposed construction standards on new maturation warehouses that require earthen containment berms to keep spilled whiskey from reaching other warehouses or nearby streams. The standards also established maximum dimensions for warehouses, with the largest ones capable of holding around 50,000 barrels each.
WhiskyCast has contacted Nelson County officials for additional information on the investigation into the collapse. This story will be updated as necessary.
June 18, 2018 – The list of countries scheduled to impose import tariffs on Bourbon and other American-made whiskies has grown again, with China becoming the latest nation to challenge the Trump Administration’s hard-line stance on global trade. Over the weekend, Chinese officials announced plans to retaliate for new US tariffs on Chinese exports of electronics and other products announced Friday by US President Donald Trump. Beginning July 6, China will slap a 25 percent tariff on imports of American whiskies, along with automobiles and a range of agricultural products including beef, pork, and soybeans.
As with similar tariffs on whiskey and other exports previously announced by Canada, Mexico, and the European Union, the list of targets is designed to create political pain for the Trump Administration by hitting products from so-called “red states” led by Republicans. For instance, almost all of the American-made whiskey exported to China comes from Tennessee and Kentucky, the home state of Senate Majority Leader Mitch McConnell.
“I do worry about — and a lot of my members worry about — the impact on, let’s say, Kentucky bourbon, for example, or Kentucky farmers,” McConnell told the Washington Examiner last week. However, McConnell blocked an attempt by Tennessee Senator Bob Corker to restrict the president’s ability to impose tariffs on imports without Congressional approval. “I don’t think it makes sense to try to impair what President Trump’s doing.” McConnell said in an interview for the Examiner’s “Behind Closed Doors” podcast. “The best thing is to continue to engage with the administration, make our arguments, and hope that this doesn’t continue.”
While the whiskey tariffs could begin to take effect as early as Wednesday, when the European Union plans to start phasing in its list of targeted exports, most will not take effect until July 1. Brown-Forman executives confirmed earlier this month that they increased export shipments of Jack Daniel’s and their other whiskies earlier this year to countries likely to be affected by a trade dispute in anticipation of potential tariffs. Like many of the larger American whiskey distillers, Brown-Forman controls much of its global distribution and has warehouses available to stockpile several months worth of whiskey to minimize the impact of a trade dispute.
“We are just innocent little bystanders in a game being played way above our pay grade,” says FEW Spirits founder Paul Hletko. His distillery in Evanston, Illinois exports between 15 and 25 percent of its annual production overseas, and took a major hit two years ago when the UK’s Brexit vote sent the British pound plunging against the US dollar and other world currencies, raising the cost of his and other American-made whiskies significantly.
“FEW exports one-half of one percent of US spirits exports to China, and we expect that to evaporate,” Hletko said during an interview at the New York Independent Spirits Expo. Hletko is a former president of the American Craft Spirits Association, one of the trade groups lobbying Trump Administration leaders to explain the larger impact of the steel and aluminum tariffs. Those groups have been working for years to remove tariffs on distilled spirits, along with other barriers to trade, and the results of that work appears to be evaporating almost as quickly as whiskey evaporates from barrels in a hot Kentucky rickhouse. That evaporation is called the “angel’s share,” but for distillers, the devil is in the details of market access worldwide.
“Any time, and I mean any time, that we have constraints on market access is a big deal for us, and this is just one more instance of inability to move product because of yet another restraint of some sort,” said ACSA executive director Margie Lehrman. Her team has been meeting with members of Congress and their staffs, and has been trying to meet with administration trade officials “to make sure that they understand the overall impact on a burgeoning industry that is reliant on this market access.”
The industry cheered December’s tax reform legislation, which included a two-year cut in the federal excise tax on the first 100,000 proof gallons of spirit distillers produce each year. While distillers large and small benefit from that cut, the biggest impact was projected to be on small-scale distillers, and many had already started reinvesting their savings from the tax cut in expansion projects and hiring new workers. Adam Spiegel of California’s Sonoma County Distilling Company has already started expanding his facility from around 6,000 square feet to 21,000 square feet, with additional room for barrel storage and expand his annual production by up to five times current levels when the expansion is completed this fall.
For Spiegel, the trade war is a double whammy. Not only will his export sales be affected by tariffs in the European Union, where Spiegel exports around 25 percent of his annual production, but the US tariffs on imported steel and aluminum have blown up his construction budget.
“I have a bunch of new stainless steel tanks that are on their way here that I just so happened to purchase apparently at the wrong time, Spiegel said as he rolled his eyes during an interview. He estimates the tariffs could add as much as $60,000 to the cost of his expansion, but admits that he has no clear guidance from his suppliers. “Everybody’s just kind of on hold…they’re saying ‘listen, all of our pricing was good up until a certain point, we’re going to have to see what happens when it lands…we’ll know what tariffs are assessed the day it lands,” he said.
Spiegel’s tanks and other equipment are being fabricated in the US from imported stainless steel. “The welders are here in the States putting together all the bits and pieces for us, so they may have rolled it four or five thousand miles away, but we’re actually hurting American jobs by what they’re doing…as a small business trying to get some traction here, I think it’s really unfortunate,” he said. Spiegel estimates the money he will pay in higher costs for his steel could have covered the cost of hiring one or two new full-time employees.
FEW’s Hletko also points out the collateral damage from the escalating tariffs. “It hurts our farmers, it hurts our truck drivers that are moving the grain, it hurts our truck drivers that are moving the bottles, it hurts all of us, and it’s really, really unfortunate that small American businesses are being toyed with in this fashion,” he said.
June 8, 2018 – Independent Stave Company, the largest supplier of barrels to the American whiskey industry, is expanding its cooperage operations in Kentucky. The Missouri-based company will invest $66.5 million dollars to build a new cooperage in Morehead, Kentucky, with construction to begin in 2019. The new cooperage will be largely dedicated to Bourbon barrel production, and the move follows ISC’s opening of new stave mills in Morehead in 2015 and last year in Benton, Kentucky.
In a news release, CEO Brad Boswell praised the success of both new stave mills as setting the stage for the new cooperage. “The two new stave mills continue to outperform our expectations. Our ISCO engineering team, the incredible local work force and an increase in log supply has paved the way for cooperage expansion.” The project is being supported by economic development incentives from the Commonwealth of Kentucky.
The family-owned company is also investing $28 million to expand its existing cooperages in Lebanon, Kentucky and Lebanon, Missouri with new equipment and other improvements. The Kentucky cooperage supplies barrels to almost every major Kentucky distiller, with the exception of Brown-Forman, which owns its own cooperages in Louisville and Alabama. In addition, ISC supplies barrels for winemakers, brewers and craft distillers, and also operates cooperages in France, Australia, and Chile.
You can listen to our September 2017 interview with Independent Stave CEO Brad Boswell in Episode 660 of WhiskyCast.
Links: Independent Stave Company
June 6, 2018 – This weekend’s G7 Summit in Quebec with heads of state from the world’s largest industrialized nations is likely to be one of the most uncomfortable in recent memory, with US President Donald Trump facing his angry – and unified – counterparts from six of the nations facing his tariffs on their steel and aluminum exports. With the sole exception of Japan, every other G7 leader has now signed off on retaliatory tariffs targeting US exports to take effect in July. Those tariffs specifically target Bourbon and other American whiskies, along with other consumer goods and US-made steel products.
The European Commission formally endorsed its list of tariffs today, dashing the hopes of Irish Whiskey industry leaders who had been lobbying Brussels to keep whiskies out of the trade dispute. The move follows Mexico’s imposition Tuesday of a 25 percent tariff on Bourbon, Tennessee, and other American-made whiskies effective immediately, while Canada’s 10 percent tariff will take effect on July 1 along with the EU tariffs.
“This is a measured and proportionate response to the unilateral and illegal decision taken by the United States to impose tariffs on European steel and aluminium exports. What’s more, the EU’s reaction is fully in line with international trade law. We regret that the United States left us with no other option than to safeguard EU interests,” EU Trade Commissioner Cecilia Malmström said in a statement.
Executives of Brown-Forman, the maker of Jack Daniel’s Tennessee Whiskey and Woodford Reserve Bourbon, addressed the issue during a conference call with analysts following the release of the company’s annual earnings report today. Jack Daniel’s is the most-widely exported American whiskey brand, and overall export sales account for 53 percent of Brown-Forman’s annual sales.
“Look, it’s a tough, tricky situation that we’ve been watching for months,” said Lawson Whiting, Brown-Forman’s chief operating officer and the incoming successor to retiring CEO Paul Varga. “It seems like every day we wake up and the thing takes a little bit of a twist and turn including even last night…so it’s a dynamic situation, it’s one that we’re obviously watching closely. It’s one where it’s very dangerous, I think, to make sort of generalistic statements or broad statements across large quantities of markets,” he said.
The company has been preparing for possible tariffs by moving products into Europe and other regions where it controls its own “route-to-market” distribution networks, but admits that there may be an impact in countries where it relies on a third-party importer or distributor. “Know that we’ve lived through these sort of dynamics before, whether they’re rapid excise tax increases which have happened periodically, we’ve had supply shortages, maybe you get big FX (foreign currency exchange) swings, something like that. All these dynamics that can move pricing around in a pretty quick moment, we’ve experienced before and we think we’ll fight through it again,” he said. Chief Financial Officer Jane Morreau maintained the company’s current sales and profit forecasts for the current fiscal year, but noted that the tariff dispute and other economic factors “make it difficult to accurately predict future results.”
The Brown-Forman executives are among the few corporate executives within the U.S. whiskey industry to publicly address the potential impact of the tariffs. Other companies have either declined to comment on the issue or referred questions to either the Distilled Spirits Council or the Kentucky Distillers Association. Neither trade group has issued a statement since May 31, when the US sanctions were announced, and both groups expressed the hope that negotiators could reach a compromise on the steel and aluminum tariffs that would avoid the economic damage from tariffs on US-made whiskies.
The 28 EU member nations, Canada, and Mexico rank among the most important export markets for Bourbon, Tennessee, and other American-made whiskies, with nine of the top ten export markets now subject to 25 percent tariffs. While American whiskey sales have shown strong growth in those markets, adding the costs of those tariffs to the retail price of a bottle of Bourbon could put US-made whiskies at a competitive disadvantage to competing brands from other countries.
So far, the Trump Administration has not responded to the joint retaliation by the key US allies and trading partners, after previously pledging that any retaliation would be met with even tougher sanctions. Tariff-free trade in whiskies and other distilled spirits is included in the North American Free Trade Agreement, which the administration has been trying to renegotiate with Canada and Mexico or scrap altogether.
This story will be updated with additional information as necessary.
Editor’s note: This story was updated to reflect that the Canadian tariff on imported American whiskies will be set at 10 percent.
June 2, 2018 – Gilbert “Toby” Curtsinger, the admitted ringleader of Kentucky’s most infamous whiskey thefts since Prohibition, was sentenced Friday to 15 years in prison in Franklin County Circuit Court. Last September, Curtsinger pleaded guilty to charges stemming from the thefts of more than $100,000 worth of whiskey from Wild Turkey and Buffalo Trace, where he worked as a warehouse supervisor. He was one of ten people indicted by a grand jury in 2015 after sheriff’s deputies recovered stolen Wild Turkey barrels in his back yard following an anonymous tip, and detectives later linked the ring to the 2013 theft of approximately 65 cases of Pappy Van Winkle whiskies from a Buffalo Trace warehouse.
“I am very pleased to be seeing the end of this road,” Franklin County Assistant Commonwealth’s Attorney Zachary Becker told WhiskyCast in a telephone interview following the sentencing. Becker successfully prosecuted eight of the ten suspects indicted in the case, while charges were dropped against Curtsinger’s father-in-law in exchange for his cooperation and one case remains yet to go to trial. Former Wild Turkey truck driver Mark Sean Searcy still faces charges that he stole barrels he had been assigned to deliver from the distillery to a maturation warehouse and gave them to Curtsinger to sell in exchange for a cut of the profits. No date has been set for a trial in that case.
Curtsinger and his accomplices sold bottles of stolen whiskey out of their car trunks at area softball games, and also sold several full barrels of whiskey as well. Depending on the outcome of the Searcy case, Curtsinger is the only one who will serve time in prison as the other defendants all pleaded guilty and will receive probation for cooperating with the investigation. His attorney, Whitney True Lawson, told reporters after the hearing that she will consider filing a motion to have Curtsinger’s sentence reduced to “shock probation” at an appropriate time. According to Becker, that could allow Curtsinger to be released after serving as little as 30 days in prison, and under normal circumstances, Curtsinger would be eligible for parole after serving 20 percent of his sentence.
Listen to Mark Gillespie’s interview with Zachary Becker:
“Pappygate” received worldwide attention following the announcement of the 2013 theft at Buffalo Trace, in which cases of Pappy Van Winkle whiskey had been rearranged on pallets to hide the missing cases from view. The Van Winkle family and Buffalo Trace have declined comment on the thefts ever since then, except for a brief statement thanking authorities after the indictments were returned in April of 2015. Wild Turkey issued one brief comment on its Twitter feed at that same time.
In addition to the pending Searcy case, there remains one final question for Frankin County Circuit Court Judge Thomas Wingate to resolve: the fate of the stolen whiskies seized as evidence during the investigation – and held in a secured evidence locker until all of the cases have been tried. While a “Pardon My Pappy” campaign briefly went viral in 2015 seeking to have the whiskies auctioned for charity, the most likely outcome is that the whiskies will be destroyed, including:
- 21 wooden barrels of whiskey – according to Becker, “some full and a few empty”
- 1 stainless steel barrel of Eagle Rare 17
- the contents of three barrels that had been bottled by purchasers, and
- 28 bottles of various Van Winkle whiskies.
Zachary Becker indicated that he will eventually file a motion with Judge Wingate asking for a ruling on what should be done with the evidence “in a manner consistent with the wishes of the Van Winkles, Buffalo Trace Distillery and Wild Turkey Distillery.” However, he declined to disclose what those wishes were at the present time.
In an email, Buffalo Trace CEO Mark Brown declined to comment on the Curtsinger sentencing, but repeated the distillery’s previous position that the whiskies should be destroyed.
“Consistent with our past position on the stock we believe that from a food safety perspective (it could easily contain counterfeit liquid) the product should be destroyed, unfortunate, but since it has been out of our custody for so long destroying the stock is the only safe and prudent course of action.”
WhiskyCast has also asked Wild Turkey for its position on the fate of the stolen whiskies. This story will be updated with additional information as necessary.
Updated June 5, 2018 – Mexico has now joined the whiskey trade war of 2018, imposing new 25 percent import tariffs on Bourbon imported from the United States in retaliation for the Trump Administration’s new tariffs on imported steel and aluminum. Reuters reports the tariffs were announced in the government’s official gazette, and will take effect immediately along with new tariffs on a wide range of other agricultural products.
Mexico now joins Canada and the European Union in targeting Bourbon with new tariffs of 25 percent, while the EU will impose that tariff against all types of American whiskies. The EU’s tariffs could take effect as early as June 20, while the Canadian tariffs will take effect July 1 following a 15-day consultation period for its citizens to comment on potential changes to the list.
After weeks of posturing by all sides, the United States moved forward Thursday with its steel and aluminum tariffs on imports from the European Union, Canada, and Mexico. Thursday’s announcement in Washington both surprised and enraged leaders in Brussels, Ottawa, and Mexico City, and the tariffs are expected to be a point of contention when U.S. President Donald Trump attends the G-7 Summit this weekend in Quebec.
“The United States now leaves us with no choice but to proceed with a WTO dispute settlement case and with the imposition of additional duties on a number of imports from the United States,” European Commission President Jean-Claude Juncker said in a statement released after the U.S. announcement. The EU also intends to file a case against the U.S. at the World Trade Organization seeking to have the tariffs ruled a violation of international trade regulations.
While the Trump Administration’s sanctions are intended to help the struggling U.S. steel industry, the American whiskey industry stands to pay the price. Bourbon, Tennessee, and other American-made whiskies accounted for 68 percent of U.S. spirits exports during 2017, according to U.S. Commerce Department data compiled by the Distilled Spirits Council. 2017’s American whiskey exports added up to more than a billion dollars for the first time, but a look at the leading spirits export markets explains why American-made whiskies are being targeted for retaliation.
Canada is the largest single export market for U.S. spirits, while six of the top ten countries are EU member nations. Whiskey exports to Canada rose 7.3 percent during the first quarter of this year compared to the same period in 2017, according to Commerce Department export data supplied by the Distilled Spirits Council. According to the trade group, American-made whiskies accounted for 85 percent of 2017’s spirits exports to the 28 European Union member nations, with a value of $667 million. In a prepared statement, Council executives expressed hope for a quick resolution.
“We hope the United States and its trading partners can resolve their differences without subjecting U.S. whiskey exports to retaliatory tariffs. A trade war will harm consumers, the hospitality sector, small businesses and U.S. farmers that grow the grains used to produce iconic U.S. whiskeys that are enjoyed around the world.”
The retaliatory sanctions were designed to create political pressure on the Trump Administration, with products selected for their links to politically sensitive regions. Kentucky is the largest producer and exporter of Bourbon, and Senate Majority Leader Mitch McConnell addressed the dispute during a speech Friday in Louisville.
“I don’t think anything good will come out of a trade war, and I hope we pull back from the brink here,” he said. “These tariffs will not be good for the economy, and I worry that it will slow, or impede significantly, the progress we’re making economically,” McConnell said in a quote by Louisville Business First.
The state’s distillers have an $8.5 billion annual impact on Kentucky’s economy, and Kentucky Distillers Association president Eric Gregory called on politicians from all sides to reach a common-sense solution. “We remain hopeful that continued negotiations will avoid a costly trade war and protect our allies and partnerships around the world, which will continue to benefit spirits producers and consumers for years to come,” he said in a statement posted on the KDA’s web site.
The other shoe has yet to drop. President Trump has threatened to impose additional tariffs on imported products from Europe, Canada, and Mexico to return fire for their retaliatory tariffs, setting up the potential for even more damage to the global whisky industry. The United States is the largest export market for Canadian Whisky and Irish Whiskey, and is the largest export market for Scotch Whisky by value (France is the largest by volume). Should the Trump Administration choose to impose “like-for-like” tariffs in response to the Canadian and EU tariffs, whisky makers in those countries could face significant price increases in the U.S. market.
Irish Whiskey Association president William Lavelle told WhiskyCast that his group is urging the Irish government and EU officials in Brussels to consider the potential economic impact of its proposed tariffs before imposing them, while defending the need to respond to the US actions.
“Irish Whiskey is the fastest-growing spirits category in the world. We’re selling in 135 markets globally, but the US remains our biggest single market, so anything that threatens free trade with the United States is something we’re wary of, something we’re very cautious about and concerned about, and we are hoping we can avoid slipping into a trade war between the EU and the US on whiskey,” he said. The entire interview with William Lavelle can be heard in Episode 703 of WhiskyCast, available at WhiskyCast.com.
This story will be updated with additional information as necessary.
Editor’s note: This story has been updated with new details on Mexico’s tariffs and additional information.