EU alcohol suppliers are facing an anxious wait to discover if they will be exempted from 15% tariffs on exports from the bloc to the United States.
Following the announcement of a trade agreement between The EU and the US yesterday (27 July), EU Commission president Ursula von der Leyen said “zero-for-zero” tariffs would be applied to several types of goods, including “all aircraft and component parts, certain chemicals, certain generics, semiconductor equipment, certain agricultural products, natural resources and critical raw materials”.
However, asked whether EU beer, spirits and wine exports would be included in the agreement, von der Leyen said “no decision” had been made.
“This is something which has to be sorted out in the next days,” she added.
With the deal framework imposing no tariffs on US exports to the EU, American whiskey brands such as Jack Daniel’s and Maker’s Mark look to have been spared from retaliatory tariffs, however.
Von der Leyen’s comments offered hope negotiations could result “in a no-tariff situation for both EU and US spirits”, Bernstein analysts wrote in a note to clients.
“Yesterday’s news fell short of announcing that spirits were exempt from tariffs, which some were hoping for,” they said. “However, the framework did not rule this possibility out, with European Commission president Ursula von der Leyen calling out a potential decision in the coming days. This offers hope that we could well end-up in a no-tariff situation for both EU and US spirits, though time will tell.”
Heineken CEO welcomes trade deal
Speaking after the release of the brewer’s half-year results on Monday (28 July), Heineken CEO Dolf van den Brink welcomed the certainty brought by the EU-US trade agreement.
“What’s important is that there is a deal and that there is clarity and further escalation has been avoided,” he told Bloomberg. “It is a new reality that European companies and economies will have to adapt to.
“This is something that we can absorb and will absorb and is explicitly implied in our profit outlook for the rest of the year.”
Van den Brink said Heineken was considering all options – including manufacturing in the US – in order to offset the threat posed by tariffs.
However, any move to shift production would be “a big decision with long-term ramifications”, he cautioned.
For EU wine and spirits suppliers, tariffs pose an even greater threat as many products are geographically protected and cannot be made elsewhere.
Of the major EU spirits suppliers, Rémy Cointreau is the most exposed, with 29% of group net sales being EU spirits sold in the US according to Bernstein analysis of IWSR data and company accounts. This is followed by Campari (11% of group sales), and Pernod Ricard (10% of group sales).
Meanwhile, the Scotch Whisky Association has welcomed a commitment by US president Donald Trump to look at exempting scotch from 10% tariffs on UK exports.
“The president’s commitment… to look at the tariffs on scotch whisky ahead of his meeting with the prime minister is very welcome,” said the SWA in a joint-statement alongside US trade organisation the Distilled Spirits Council of the United States. “The scotch whisky and US whiskey industries are close partners and we stand shoulder to shoulder on the issue of tariffs, calling for a permanent return to zero for zero trade which has driven the success of our industries.
“We look forward to the delivery of a deal which secures zero tariff trade for our products on both sides of the Atlantic.”
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