American Distillers Look To Rebuild Business in Europe
American whiskey producers are finally looking forward to a better year in 2022, and with good reason. A new trans-Atlantic agreement will end retaliatory tariffs that hurt the sales of American spirits in Europe. If U.S. whiskey producers can repair any loss of brand awareness and reductions in distribution, they could experience a big bounce back from the lengthy trade dispute.
Raise a Glass to 2022
The reason for optimism among American distillers largely stems from warmer trans-Atlantic attitudes. The U.S. and the European Union (EU) recently announced an agreement to settle a diplomatic rift over Trump-era steel and aluminum tariffs. During the conflict, American whiskey became collateral damage, as the EU imposed a retaliatory tariff on those spirits in 2018.
Producers of bourbon, Tennessee whiskey, and American rye whiskey now have a great opportunity to significantly increase sales in 2022. But as the trade restrictions that hurt them are now lifted, they have to find a way to re-compete in the highly competitive European market, as well as overcome much publicized problems in the global supply chain.
A Big Hole to Climb Out Of
There’s no question that things are looking up now, but there’s still lots of work to do. U.S. whiskey has taken a huge hit in its European distribution and won’t be able to climb out that hole at the snap of a finger. American whiskey exports to the EU dropped by 37% from 2018 to 2020, from $702 million to $440 million, according to the Distilled Spirits Council of the United States.
Kentucky bourbon sales to the EU dropped by nearly half in just 2020 alone. And the EU has been a huge market for Kentucky bourbon, accounting for 56% of all Kentucky whiskey exports in 2017. This number shrank to about 40% by 2020. The deal was so noteworthy in Kentucky that Governor Andy Beshear praised U.S. Commerce Secretary Gina Raimondo for going “to bat” for the state and settling the trade dispute that hit the Bluegrass State so hard.
A Full Rebound Could Take Years
The unfortunate thing, amid all the optimism, is that bourbon and other spirits cannot be mass produced easily. Distillers must decide how much of their limited whiskey supplies they will ship to Europe. Distillers can’t simply ramp up production; most bourbons typically age for four to eight years before reaching the market. Aging is an important process in the production of bourbon and other spirits. It’s during this process that bourbon gets its flavor and golden-brown color.
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