UK booze suppliers warn over US tariff impact

UK booze suppliers are grappling with the fallout from import tariffs introduced by US president Donald Trump last week.

With UK exports to the US now subject to a 10% levy, suppliers have warned they could now lose out to domestically produced beers, wines and spirits.

Gary Read, CEO of UK-based non-alcoholic wine supplier Bolle Drinks, said his business was facing tariffs of 20% as its wines were produced in Germany.

“We foresaw some of the tariffs coming a while back and shipped a lot of wine to the US that will not have tariffs on it,” he said. “But that will change. We have a next shipment due later this month.

“We will most likely suck it up ourselves,” he continued. “With the uncertainty of how long and how much the tariffs will be, we cannot be changing our pricing to our customers.”

US wine importers were pressing pause on European wine orders as they waited to analyse the full impact of tariffs, Read said. “We have multiple big deals that are on hold, waiting for the US companies to be confident again that the tariffs are not going to change.”

Despite this, Bolle had no plans to reconsider exporting wine to the US, Read said.

“The US is such a strong market for non-alcoholic wine, with over 40% of the volume globally,” he said. “We are selling over 70% of our wine in the US at this point. Our plan is that we will eventually make our wine in the US for the US market.”

SMEs ‘disproportionally impacted’

Jack Orr-Ewing, CEO of UK rum brand The Duppy Share, said tariffs would have a disproportional impact on smaller companies such as his.

“Any regulatory change, taxes, tariffs, additional paperwork or compliance has an outsized impact on smaller independent brands,” he said. “Our multinational competitors can produce in market at scale, so we’ll be at a further price disadvantage.”

The 10% tariffs The Duppy Share was facing on its US exports were “not existential” but could undermine future growth, Orr-Ewing said.

“Perhaps tariffs will mean US importers and distributors focus on local brands, and delay ordering their next container in the hope that tariffs will fall,” he said. “Uncertainty reduces commerce and breaks down trust and partnership building.”

Silver linings for suppliers

One possible positive impact, he postulated, was that higher tariffs on rums from other countries such as the Philippines and Venezuela could “cause the US to fall in love with rums from the UK, Jamaica and Barbados”.

The backlash against US products resulting from tariffs could open up new export opportunities for UK and EU suppliers in countries such as Canada, James Hayman, co-founder of Hayman’s Gin, predicted.

“The other side to tariffs is there will probably be other opportunities in other markets that will materialise over time,” said Hayman. “In Canada they’ve taken a pretty hard stance and some stores have stopped selling American spirits.

“Even if tariffs are reversed and things go back to normal, there is probably a bit of damage that has been done there.”

Bourbon exempted from EU tariffs

Meanwhile, suppliers of products including French cognac and champagne, Spanish wine and Irish whiskey are breathing a sigh of relief after bourbon was exempted from a list of US products subject to retaliatory tariffs announced by the EU today (8 April).

The EU will hit the US with 25% tariffs on a range of goods in response to its duties on aluminium and steel, but has exempted bourbon after successful lobbying by the booze industry.

As well as whiskey, wine and dairy products have also been removed from the proposal, according to a list seen by The Financial Times.

EU booze suppliers had feared being caught in an escalating trade war after Trump last month threatened a 200% tariff on all European alcohol in response to EU threats to impose levies on bourbon.

A 200% tariff on European booze would mean the US market was “pretty much shut off” for EU wine, beer and spirits suppliers, Laurence Whyatt, head of European beverages research at Barclays, told The Grocer.

This could have in turn led EU suppliers to turn to the UK and slash prices – to avoid a glut similar to that experienced by Australian wine after Chinese tariffs were imposed in 2020, he postulated.

“We might see price cuts within UK and European markets simply because there’s just so much supply of these products,” he said. “Companies will be very cognisant of their brand equity and the consequence of lowering prices in order to drive volume growth.

“But if you’re an EU supplier selling most of your product in the US and you lose that and it’s a case of either selling at a 50% discount in your local market or going bust, you’re probably selling at the discount.”