Page 45 - The Summit of the Americas 2021

INSIDER

Tariffs impact spirits sales in both the U.S. and Europe

Tariffs imposed on both U.S. spirits
and Scotch whiskey as a result of unrelated
trade disputes have had a significant impact
on spirit sales on both sides of the pond,
according to industry figures.
As a result of these tariffs, exports of
Kentucky Bourbon fell 35% in 2020, with
shipments to the European Union tumbling
by nearly 50%, the Kentucky Distillers’
Association announced in February.
Total exports of Kentucky Bourbon
and other whiskies were valued at $455
million in 2018. That number plunged to
$319 million in 2020, a 35% decrease.
Export values to the EU have nose-
dived 48% since the tariffs took effect,
from $257 million in 2018 to $135 million
last year.
The United Kingdom had historically
been the largest market within the EU for
Kentucky whiskey, making up a quarter to
a third of exports. Sales have plummeted
from $67 million in 2018 to just $33 mil-
lion last year, a 50% drop. The largest EU
export country now is Spain at $49 million. on exports of Single Malt Scotch Whisky imposed in retaliation over subsidies to the
The situation could deteriorate further to the United States that has caused the aircraft maker Airbus.
in June, when the EU expects to double most significant losses, says the SWA. The The duties will be suspended for four
tariffs on American Whiskey to 50%. The United States is Scotch Whisky’s most months while the two sides seek a long-
EU had traditionally been Kentucky’s larg- valuable market, valued at over £1 billion term settlement. Tariffs will also be lifted
est global market for Bourbon and whiskey, in 2019 when it accounted for a fifth of on UK cheese, cashmere and machinery.
making up 56% of all exports in 2017. It’s global exports. In 2020, exports of Scotch Commenting on the four-month sus-
now about 40%. Whisky to the U.S. fell by 32% to £729 pension of U.S. tariffs on Scotch Whisky
million, a loss of £340 million compared to and other products relating to the ongoing
Scotch exports 2019, and accounting for around one third Airbus-Boeing trade dispute, Karen Betts
Global exports of Scotch Whisky fell of total global export losses. said:
by more than £1.1 billion during 2020, “These figures are a grim reminder “This is fabulous news, and our indus-
according to figures released in February of the challenges faced by distillers over try is delighted. The tariff on Single Malt
by the Scotch Whisky Association (SWA). the past year, as exports stalled in the face Scotch Whisky exports to the U.S. has been
The export figures are the lowest they have of the coronavirus pandemic and U.S. doing real damage to Scotch Whisky in the
been in a decade, as the combined impact tariffs. In effect, the industry lost 10 years sixteen months it has been in place, with
of COVID-19 and the 25% tariff in the of growth in 2020 and it’s going to take exports to the U.S. falling by 35%, costing
United States hit distillers hard. some time to build back to a position of companies over half a billion pounds.”
In 2020, the export value of Scotch strength,” says Karen Betts, Chief Execu- While the action has no immediate
Whisky exports fell 23% by value to tive of the Scotch Whisky Association. impact on exports of Kentucky Bourbon
£3.8 billion. The number of 70cl bottles “In these challenging times, what’s so and other American whiskies, the Kentucky
exported fell by 13% to the equivalent of disappointing is the damage being caused Distillers’ Association is encouraged that
1.14 billion. by U.S. tariffs. The U.S. has been, for the United States and the United Kingdom
The value and volume of exports to decades, our strongest and most valuable have agreed to briefly suspend some tariffs
most of Scotch Whisky’s top 10 markets market, but Scotch Whisky is now losing involved in the long-running Boeing-
fell as countries went into lockdown to considerable ground there.” Airbus dispute.
combat the spread of COVID-19 during “This is a good first step and a hopeful
2020. The closure of hospitality and travel U.S. suspends tariffs on single malt signal that the administration is committed
restrictions impacting airport retail globally Scotch whisky to resolving trade wars that have inflicted
saw export values fall in 70% of Scotch In a huge dose of good news for the so much collateral damage on global
Whisky’s global markets compared to travel retail industry, the U.S. has agreed markets, including Kentucky’s signature
2019. Exports to the EU 27, the industry’s to suspend tariffs on UK goods including Bourbon industry and our broader Ameri-
largest regional export market, fell by 15%. single malt whiskies, it was announced in can Whiskey family,” KDA President Eric
But it is the continued impact of tariffs the beginning of March. The tariffs were Gregory said.

45 April 2021 The Virtual Summit of the Americas Issue