Global uncertainty over alcohol tariffs has led Brown-Forman to describe the operating environment for the company as “increasingly volatile”. 

The US Government introduced a 25% tariff on products from Canada and Mexico on 4 February, then paused it until early 4 March, reinstituted the tariff, then almost immediately started rolling it back again.

When the tariffs were reinstituted on 4 March, many Canadian provinces banned the sale of American beer, wine and spirits.

There are also fears EU will reimpose retaliatory 50% tariffs on American whiskey from April 1, 2025. 

CEO Lawrence Whiting summed up the situation during an earnings call last week when he said “every day seems to unfold a different twist on the story”.

Whiting also said that Canada’s decision to remove American products off shelves completely was “disproportionate” amd more damaging than tariffs.

“I mean, that’s worse than a tariff because it’s literally taking your sales away completely removing these – our products on the shelves, we – that’s a very disproportionate response to a 25% tariff,” he explained.

“And it’s disappointing that some of our consumers are going to be able to get our bottles of Jack Daniel’s up there because it’s a big brand in Canada and popular.”

Sales of American alcohol had already taken a hit in Canada even before the bans, with both store owners and customers telling Global News that many people had already stopped buying them.

“Our customers have been telling us, they want alternatives,” said Andrew Ferguson, owner of the Kensington Wine Market in Calgary.   

“They’ve been coming in and telling us, help us pick out six or 12 wines, but nothing American.  So we are taking the lead from our customers.”

Whiting admitted during the earnings call that it was a “real possibility” that the European Union would also move to place tariffs on American goods.

During US President Trump’s first term he launched a trade war after enacting tariffs on steel and aluminum, with the EU counterattacking by imposing a 25% tariff on American whiskey.

The tariff led to a 20% decrease in exports to the EU and cost the American whiskey industry hundreds of millions of dollars.

In late 2021 the EU paused the tariff in late 2021, but the suspension is set to expire March 31 with the two sides yet to reach an agreement on the steel and aluminum dispute.

US President Donald Trump has also indicated he is planning to introduce tariffs of 25% on goods made in the European Union.

“The European Union was formed to screw the United States – that’s the purpose of it and they’ve done a good job of it,” Trump said. “But now I’m President.”

Whiting said: “We don’t know where this thing is going. We don’t know any more than you all know the 25%, it could be 0%, it could 25%, it could be 50%, and we actually don’t know yet.”

On 5 March, Brown-Forman reported financial results for its third quarter and nine months ended January 31, 2025. Third quarter reported net sales decreased 3% to $1 billion (+6% on an organic basis) compared to the same prior-year period. Third quarter reported operating income decreased 25% to $280 million (+23% on an organic basis) and diluted earnings per share decreased 5% to $0.57.

However, based on the currently known factors, Brown-Forman said it anticipates a return to organic net sales and organic operating income growth for fiscal 2025. The company has reaffirmed that it expects organic operating income growth in the 2% to 4% range and organic net sales growth in the 2% to 4% range.