Jack Daniel’s braces for Mexico levies on whiskey
Mexico’s tariffs of 25 per cent on Tennessee whiskey, in retaliation for President Donald Trump’s levies on its steel and aluminum, could spell bad news for the distiller of Jack Daniel’s in one of its biggest growth markets.
Brown-Forman Corp. said it’s hard to accurately forecast future sales growth with so much uncertainty surrounding the proposed tariffs. Canada and the European Union have also threatened to add duties to U.S. whiskey.
The Louisville, Ky.-based company referred to “concerns over potential retaliatory tariffs on American spirits” in its earnings report released Wednesday. If nothing major changes, Brown Forman said it expects underlying net sales growth globally of between six per cent and seven per cent in the next fiscal year.
Only about five per cent of the company ’s total sales are in Mexico currently, but that’s been growing rapidly, with the country logging a 15-per-cent bump in reported net sales last quarter. By comparison, demand in Brown-Forman’s much larger home market grew just seven per cent.
Tennessee whiskey isn’t the company ’s only popular product in Mexico, with its tequila brands like Herradura also driving growth.
Brown-Forman’s B shares fell as much as 6.9 per cent — the most intraday in a year — to US$52 on Wednesday.
It is seeking to blunt the impact of tariffs by building up inventories in markets outside of the U.S. “While it’s premature to comment on the potential impact on our business, we ... have undertaken measures over the last few months to mitigate risk,” chief financial officer Jane Morreau told analysts.