For craft distillers, tariffs make finding European customers tough

LOUISVILLE, KY (WAVE) - When holiday sales are elevating the bourbon world to seasonal retail heights, craft distillers are talking about tariffs and missed opportunities.

“Tariffs have been very bad for American whiskey, especially for the craft distillers,” Fred Minnick, Editor-in-Chief of Bourbon Plus Magazine, said. “In Europe, their distributors won’t even take phone calls from American craft distillers anymore because they can’t recoup the extra costs of 25 percent on that tariff. So they’re just completely ignoring the smaller distilleries. They’re still doing business with the larger ones like Brown Forman, Jim Beam and Heaven Hill -- but they’re choosing not to work with the smaller American distillers. So on the craft side, American whiskey is hurting overseas.”

A 25 percent European tariff was imposed on American whiskeys in retaliation for aluminum and steel tariffs imposed by the Trump Administration.

The impact is being felt at the Kentucky Peerless Distilling Company in downtown Louisville.

The craft distillery opened in 2015. It is still so new that the company’s first bourbon will not be ready for market until 2019. But in spite of critical success for the Peerless Rye, named a whisky of the year by Whisky Advocate Magazine, and Whiskey of the Year by Forbes magazine, the premium spirit cannot find room on European shelves.

“A distillery of 22 employees can’t spend exorbitant amounts of money with travel and with advertising to the European market to get a foothold there,” Cordell Lawrence, Peerless Global marketing and Strategy Director, said. “And when you add a 25 percent tariff on top of the price of our product, which is already on the upper echelon of the price point within the category, it’s very difficult for us to gain traction. And in most cases distributors over there we potentially work with would not be interested because it would be prohibitive -- price prohibitive."

In the meantime, retailers say the domestic market remains robust.

“The bourbon category in general just continues to grow, especially at holiday time,” Total Wine and More Manager Derick Wright said.

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