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A twelve pack of Budweiser is available for purchase at a convenience store in New York City.
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U.S. President Donald Trump’s threats regarding a potential 200% tariff on alcoholic beverages imported from Europe could significantly impact producers on the continent. However, this move may unexpectedly benefit the domestic beer industry, which has been encountering challenges.
On Thursday, President Trump indicated that he may target French wines, champagne, and other alcoholic drinks following the European Union’s decision to reinstate import taxes on American whiskey in retaliation to previous tariffs imposed by Trump.
If implemented, these tariffs could have devastating effects on many European beverage manufacturers. Trevor Stirling, managing director and analyst for European beverages at Bernstein, remarked that such levies could “literally wipe out” the overall profits for some of these producers. “For certain companies, it could completely eliminate their global profits,” he commented on CNBC’s “Squawk Box Europe.”
Among the most adversely affected would be French distiller Rémy Cointreau, which relies on the U.S. for about a third of its global revenue. Stirling highlighted that the market has not yet fully assessed the implications of the proposed tariffs.
Following Trump’s announcement, stocks for wine and spirits companies like Pernod Ricard, Rémy Cointreau, and Davide Campari dropped over 3%. LVMH, parent company of luxury brands like Moët & Chandon and Hennessy, also saw fluctuations, briefly gaining before falling again after several consecutive days of losses.
Stirling noted, “Investors might be underestimating the risk of a 200% tariff actually being implemented,” pointing out that such a rate is quite steep compared to tariffs imposed on other countries and sectors. “One should never underestimate the unpredictability of the Trump administration.”
Positive Impact for Brewers
The proposed tariffs align with Trump’s larger goal of promoting domestic production, a strategy that has generated skepticism among analysts, particularly regarding sophisticated beverage and luxury products.
Chris Beckett, head of equity research at Quilter Cheviot, emphasized the importance of authenticity in the premium spirits and wine markets, remarking that products have to be sourced from their specific regions — for instance, cognac from Cognac and champagne from Champagne. This aspect of the industry is unlikely to gain support for shifting production to the U.S., he noted.
On the other hand, the impending tariffs could positively influence the U.S. beer sector, which has faced declines in sales and changing consumer preferences in recent times. Stirling referred to beer as “an island of stability,” noting that it doesn’t appear to be targeted by these tariffs.
CEO Michel Doukeris stated, “We don’t anticipate significant issues regarding tariffs this year.” Meanwhile, Heineken’s CEO Dolf van den Brink described proposed tariffs, including those on aluminum used for beer cans, as “relatively manageable,” indicating the industry’s resilience against the disruptions often associated with international trade.
“Given its capital-intensive and localized nature, the beer sector is somewhat insulated from the volatility in global trade flows,” he observed during his appearance on “Squawk Box Europe” last month.
Source
www.cnbc.com