Like a watered-down drink, domestic sales of American whiskeys in 2024 proved disappointing as inflation curbed consumer spending on distilled spirits. However, looming tariffs pose an even greater challenge, threatening sales in key foreign markets, an industry group warned Tuesday.
Trade tensions with Canada and Mexico could raise prices for U.S. spirits in those countries, but the biggest threat comes from the European Union. On April 1, tariffs on American whiskey are set to return at double the previous rate, tying distillers once again to a trade dispute over steel and aluminum. The Distilled Spirits Council warned that this tariff increase would undo the strong recovery American whiskey has seen in Europe since a 25% EU tariff was suspended.
"Reimposing these tariffs at a 50% rate would devastate this growth and cause irreparable harm to distillers large and small," said Chris Swonger, the council's CEO. "It would be a catastrophic blow that could push many distillers out of our largest export market."
The tariff concerns overshadowed the council's 2024 U.S. spirits sales report, which showed a decline in domestic American whiskey sales, including bourbon, Tennessee whiskey, and rye whiskey. While the council did not break down sales by type, the overall drop underscores the industry's struggles.
As President Donald Trump seeks to reshape global trade, U.S. spirits remain a prime target for retaliation. During his first term, American whiskey exports to the EU plunged 20% due to tariffs, only to surge 60% after their suspension.
Canada, another key export market, initially imposed tariffs on U.S. imports, including spirits, before granting a reprieve last week. Before the pause, some provincial governments planned to remove American liquor brands from store shelves. Trump has alternated between using tariffs as leverage on issues like immigration and touting them as revenue sources to reduce the federal deficit.
The renewed tariff threats have sparked anxiety among whiskey producers, particularly in states that strongly backed Trump’s reelection. Kentucky, home to 95% of the world’s bourbon supply, began 2024 with a record 14.3 million barrels aging, according to the Kentucky Distillers’ Association.
Boundary Oak Distillery in central Kentucky has been working to expand into the EU, supplementing its domestic sales in 12 to 15 U.S. states.
“We’re trying hard to establish a presence,” said Brent Goodin, the distillery’s owner. "Craft bourbons are appreciated worldwide."
Last fall, his distillery shipped about 200 cases of bourbon and lavender whiskey to Lithuania, with plans to expand to Poland and Hungary. But a 50% tariff could crush those efforts.
“That would wipe out the market,” Goodin said. “It would pretty much kill it.”
Spirit exports originate from 45 states, with American whiskeys making up 63% of all U.S. spirits exports, according to the council. The industry is hoping for trade agreements that prevent their products from getting caught in retaliatory tariffs.
Meanwhile, the domestic spirits market faces additional challenges. The industry maintained its lead in U.S. market share, but overall revenue declined in 2024. Spirits supplier sales in the U.S. dropped 1.1% to $37.2 billion, while volumes increased 1.1% to 312.2 million 9-liter cases.
Sales of super-premium spirits—typically the highest-priced products—fell as inflation-conscious consumers opted for slightly cheaper alternatives. High inflation and interest rates forced many to cut back on small luxuries, including distilled spirits, Swonger said.
The industry’s performance reflects a return to pre-pandemic consumption levels, with younger adults also drinking less.
Domestic American whiskey sales fell 1.8% in 2024, generating $5.2 billion in revenue. Vodka sales remained flat at $7.2 billion, while tequila and mezcal sales grew 2.9% to $6.7 billion. Premixed cocktail sales saw the most significant increase, surging 16.5% to $3.3 billion, the council reported.
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