During an earnings call on Wednesday, Lawson Whiting noted the “very disproportionate response” to the 25% tariffs imposed this week, saying, “That’s worse than a tariff because it’s taking your sales away.”
Canadian provinces have removed American-made wine, beer, and spirits off their shelves. According to a statement from the Liquor Control Board of Ontario, it is encouraging consumers to look for Canadian-made substitutes and will keep US items off the market until it is “directed by the government to resume normal business.”
However, Lawson pointed out that the corporation can “withstand” the losses because Canada only makes up 1% of its overall sales. Since Mexico accounts for 7% of Brown-Forman’s overall sales, he is also awaiting a reaction from the country, which was also hit with a 25% all-inclusive tariff, to determine how the decision will impact business there.
A trade association that advocates for spirits producers, the Distilled Spirits Council of the United States (DISCUS), has also expressed strong opposition to the levies.
“Fair and reciprocal trade with Canada and Mexico has benefited American wines and spirits,” DISCUS said in a statement on Tuesday. “US businesses and workers across the wine and spirits supply chain will suffer greatly as a result of these US tariffs on Mexico and Canada.”
Due to a decrease in consumer demand, tariffs are just one more issue for Brown-Forman. The business closed a cooperage in Kentucky, where wooden barrels are made to ery whiskey and bourbon, and lay off about 700 workers in January.
Spirit manufacturers have been struggling with declining sales since a pandemic peak in 2020–2022. When Brown-Forman announced in 2023 that whiskey sales were down, a sharp contrast to the previous year when they were rising by double-digit percentage points, the company raised the alarm for the first time.
Because tariffs had previously been factored into the company’s expectations, Brown-Forman’s (BF.B) stock closed 10% higher on Wednesday.
