Covid-19 and a trade war are a deadly mix for US liquor imports

US liquor imports have fallen off the table. In the second quarter of 2020, the US brought in about $1.8 billion in liquor from abroad, down from $2.5 billion in 2019, a fall of nearly 30%. The decline has been most acute for whiskey imports, which are down by almost 50%, with cognac and brandies seeing a similar dive.

The import reduction is due to three main factors, according to spirits industry veteran Adam Levy. One, bars and restaurants across the US are either closed or seeing fewer customers due to Covid-19. This reduces demand for all types of liquors, but particularly high-end liquors used for cocktails. In-store liquor sales are up, but that hasn’t made up for lost sales outside the home.

Two, the Trump administration slapped a 25% tariff on Scotch and Irish whiskeys and other European-made liquors in October 2019. These tariffs were retaliation for subsidies that the US government claims the European Union gives the airplane manufacturer Airbus, which the US government says disadvantage US-based manufacturer Boeing. The tariffs make importing these liquors more expensive, reducing demand.

Finally, Levy believes the rising quality and variety of US-made liquors, particularly bourbons, have made less Americans less likely to look to foreign liquor brands. Put together, these three factors are a perfect cocktail for imports falling off a cliff.

Vodka and gin imports may have been less impacted because they are used in drinks people know how to make at home. It’s easy to make a vodka soda or gin and tonic for a small party, but not that many people are going to serve their friends a manhattan, said Levy.

Alicia Vargo, a partner at liquor distributor Speakeasy Wine & Spirits based in Colorado, says that smaller brands are hurting the most. “Johnny Walker whiskey is still going to get sold in stores, and people will order Tito’s vodka online, but it’s harder to get people to try small craft liquors without bars open,” she said. Consumers need to try them in person first before buying at the store, explains Vargo. This is particularly true of foreign brands that will feel even unusual to US consumers.

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