LOUISVILLE, Ky. (WDRB) – Brown-Forman Corp. executives said Wednesday the company is taking steps to mitigate bourbon and whiskey tariffs as part of a trade battle prompted by President Trump’s duties on imported metals.
The Louisville-based spirits company, whose brands include Jack Daniel’s Tennessee whiskey and Woodford Reserve bourbon, has increased inventory in some overseas markets in recent months, chief financial officer Jane Morreau told analysts during a conference call held a day after Mexico enacted tariffs on some U.S. products, including bourbon.
The European Union on Wednesday also announced it would start imposing duties on U.S. goods in July. While the list is still being finalized, the trading group said in March that bourbon was among the items targeted for tariffs.
Morreau said it’s “premature” say what impact the levies could have on Brown-Forman’s business. The company released its financial results on Wednesday for the three months ending in April, and for the previous year, reporting an increase in overall sales for both periods.
The Louisville-based company’s net income from February through April dropped by 23 percent compared with the same period in 2017, a decline the company attributed to the creation of a $70 million charitable foundation and other operating expenses. For the full year, however, Brown-Forman saw net income climb seven percent, to $717 million.
The company expects sales to increase next year at roughly the same rate, but in a filing with federal regulators it cautioned that factors such as “concerns over potential retaliatory tariffs on American spirits” make future predictions difficult.
Incoming Brown-Forman CEO Lawson Whiting said the company would react to tariff pressures “market by market,” depending on its control of distribution channels. Foreign markets accounted for 53 percent of the company's net sales during the year ending April 30, with double-digit growth in Mexico, France and Germany, among other counties.
“This is going to be a bit surgical in the way that we respond, but know that we’ve lived through these dynamics before,” said Whiting, now the company’s executive vice president and chief brands and strategy officer. He was named last week to replace chief executive Paul Varga, who plans to retire at the end of the year.
Whiting said Brown-Forman has navigated previous challenges such as rapid excise taxes, and “we think we’ll fight through it again.”
Eric Gregory, president of the Kentucky Distillers’ Association, declined to comment Wednesday morning on the Mexico tariffs. According to the association, bourbon supports 17,500 jobs with an annual payroll of $800 million and generates $825 million in federal, state, and local tax revenue each year.
“We remain hopeful that continued negotiations will avoid a costly trade war and protect our allies and partnerships around the world, which will continue to benefit spirits producers and consumers for years to come,” Gregory said in a statement last week.
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