By Emma Rumney, Elisa Anzolin, Sybille de La Hamaide
LONDON/MILAN/PARIS (Reuters) -U.S. drinkers will pay more for cocktails, champagne and foreign beers, brands will disappear from bar menus and jobs will be lost on both sides of the Atlantic as a result of U.S. President Donald Trump’s reciprocal tariffs, drinks industry bodies and analysts said on Thursday.
Trump’s latest round of global and country-specific tariffs was set to hit everything from the popular negroni cocktail, based on Italy’s Campari liqueur, to Guinness stout, made by the world’s top spirits producer Diageo.
He also introduced a 25% levy on all beer imports and added beer cans to existing aluminium tariffs, hitting labels such as Mexican-made Corona and Dutch Heineken.
Shares of some spirits companies such as Diageo and Campari however gained as threats of 25% tariffs affecting Mexican tequila and Canadian whisky did not materialise. A threatened 200% tariff on European alcohol also remained outstanding for now.
However, industry bodies said the levies laid out on Wednesday were already high enough to hurt sectors that rely heavily on U.S. drinkers for sales.
European spirits exports alone to the U.S. stood at 2.9 billion euros ($3.18 billion) in 2024, according to trade body spiritsEurope, which said many U.S.-based jobs also relied on this trade.
French groups and officials warned of a 20% slide in sales and mass layoffs in regions like Cognac, where French brandy is produced for export, largely to the U.S. and China. The Spanish Wine Association warned no market could offset lost sales in the United States.
WINNERS AND LOSERS
“Many labels, which cannot be replaced by local production, will disappear from the tables of U.S. consumers, while a serious production and employment crisis is looming in Italy and Europe,” Micaela Pallini, president of Italian trade association Federvini, said in a statement.
Japanese drinks maker Suntory said it will focus on selling spirits in countries where they are made as a result of tariffs.
Other major spirits and beer producers either declined to comment, did not immediately respond to requests for comment or said they were assessing the impact.
Analysts at UBS estimated that large listed spirits makers would have to hike prices by between 2% and 5% to cover the tariffs, or absorb the cost themselves and take a similar hit to operating profit.
Serious discussions about prices were underway now that tariff rates are known, said Tammy Curtis, senior vice president of commercial finance at Republic National Distributing Company, a top U.S. spirits distributor.
“There will be winners and losers,” she said, adding products where more of the tariff can be absorbed throughout the supply chain will fare better.
Sales of products like wine and cognac are already falling in the United States. French and Spanish wine producers told Reuters U.S. drinkers would have to pay some of the cost of tariffs.
This would hurt U.S. wine businesses more than foreign counterparts, the U.S. Wine Trade Alliance added.
NOWHERE TO GO
Strategies used to mitigate tariffs during Trump’s first term, such as shipping wine in bulk, would not help with these blanket levies, Allan Sichel, chairman of Bordeaux wine lobby CIVB, said.
Some producers may be able to shift manufacturing or parts of it, such as bottling. Other products like French champagne or Scotch whisky have to be made in specific countries or designated regions and cannot move production.
The Irish whiskey sector exports 40% of its production to the U.S., which drives growth and helps fund expansion in other markets, said Eoin O Cathain, head of the Irish Whiskey Association.
Companies may now shift their focus elsewhere, he continued, especially given ongoing uncertainty.
While Europe was spared the 200% tariff Trump has threatened to impose, it could still come if Europe’s retaliation hits U.S. spirits, such as bourbon whiskey.
“If it goes up to 200%, that’ll be game over. The U.S. market will be finished,” said Frederic Zeimett, CEO of Champagne Leclerc Briant which exports to the United States.
($1 = 0.9116 euros)
(Reporting by Emma Rumney in London, Elisa Anzolin in Milan, Sybille de La Hamaide, Dominique Patton, Tassilo Hummel in Paris and Corina Pons and Emma Pinedo in Madrid; Additional reporting by Diana Mandia Alvarez in Gdansk and Lucien Libert in Paris; Writing by Emma Rumney; Editing by Barbara Lewis and Tomasz Janowski)
