Tariff threat causes decline in American whiskey sales

In 2024, American whiskey sales in the United States experienced a decline amid rising inflation and consumer spending challenges. Inflation, compounded by high interest rates, led consumers to cut back on purchasing what they considered luxury items, such as distilled spirits. The Distilled Spirits Council reported that domestic sales for American whiskeys, which encompass popular varieties such as bourbon and rye, fell by 1.8%, resulting in a total revenue of $5.2 billion. Alongside this domestic downturn, heavy tariff threats loom on the horizon, further complicating the already struggling industry. Tariffs on American whiskey exports to the European Union are scheduled to resume on April 1, 2025, at double their previous rate. This comes as part of an ongoing conflict over steel and aluminum trade practices, which has historically put U.S. spirits at risk of retaliation. Before a 25% tariff on American whiskey was suspended, exports to the EU had seen a steep decline of 20%. However, once suspended, these exports rebounded by 60%. A new 50% tax would threaten Boundary Oak Distillery's attempts to penetrate the EU market, impacting its operational stability. The decline in domestic sales for whiskey is notable as younger consumers seem to be drinking less alcohol overall. The market has shifted away from traditional whiskey consumption, with an uptick in gusto for premixed cocktails and ready-to-drink spirits, indicating changing preferences among the demographic. In fact, sales of premixed cocktails surged by 16.5% in the same period, further challenging American whiskey's position in the market. With the impending tariff changes and evolving consumer behavior, many in the whiskey industry face uncertainty about their future sales and export capabilities. The situation has raised concerns, with the Distilled Spirits Council stating that the return of tariffs would severely impact one of the nation’s most significant export categories. Consequently, the potential combination of rising prices for American whiskey in international markets and decreasing domestic enjoyment could mean tough times ahead for distillers across the country.