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Several Canadian provinces have taken a strong stance against American liquor brands by removing them from store shelves. This action is in response to tariffs imposed by the Trump administration. The move has drawn sharp criticism from Lawson Whiting, the CEO of Brown-Forman, the maker of Jack Daniel’s.
CEO Whiting Expresses Concern
On a post-earnings call, Whiting expressed his concerns about the situation, saying, “I mean, that’s worse than a tariff, because it’s literally taking your sales away, (and) completely removing our products from the shelves.” He described it as a “disproportionate response” to the U.S. tariffs.
While Canada accounts for only 1% of Brown-Forman’s total sales, meaning the company can manage the loss, Whiting acknowledged the broader impact of such trade disputes.
Canada Imposes 25% Tariffs on U.S. Alcohol
On Tuesday, Canada announced a 25% tariff on American imports, including wine, spirits, and beer. Whiting also mentioned that the company is closely monitoring the situation in Mexico, which contributes about 7% of Brown-Forman’s total sales.
Beyond tariffs, many Canadians are actively avoiding U.S. products in favor of supporting local businesses. This shift includes not only alcohol but also everyday grocery items and even entertainment choices. The growing sentiment reflects frustration over U.S. trade policies and a desire to strengthen the Canadian economy.
Impact on Brown-Forman and the Industry
Shares of Brown-Forman saw a slight dip in extended trading following these developments. Despite this, the company reaffirmed its annual forecasts, accounting for the expected impact of tariffs. Whiting acknowledged the challenges ahead, stating that there is “continued uncertainty and headwinds in the external environment,” but remained confident in the company’s long-term strategy.
Like many others in the spirits industry, Brown-Forman has been facing slower demand in key markets, including the U.S., Canada, and Europe. While emerging markets like Mexico and Poland have provided some relief, the overall slowdown has led to cost-cutting measures, including job reductions.
Financial Performance and Future Outlook
Brown-Forman reported a 3% drop in net sales, bringing the total to $1.04 billion, slightly below analysts’ expectations of $1.07 billion, according to LSEG data. Looking ahead to fiscal 2025, the company projects a net sales growth of 2% to 4%.
Despite the current trade challenges, Brown-Forman remains optimistic about its long-term trajectory. However, with increasing global trade tensions and shifting consumer preferences, the company, like many in the industry, will need to navigate an evolving market landscape carefully.
