LEXINGTON, Ky. (WKYT) – For years, we’ve been reporting the explosion of Kentucky’s bourbon industry. This included European markets, where the demand for alcohol was increasing.
The Kentucky Distillers’ Association said that in the 10 years before tariffs went into effect, exports had increased 98%.
That growth ended in 2018, when a 25% tariff on bourbon came into effect in the EU and UK.
“Before tariffs these are bad numbers, before tariffs took place, so we were at $ 454 million in exports, around $ 500 million. This year, until August, we were barely at $ 200 million. So with 1/4 left in the year, we could do 250 by the end of the year. I would doubt it, “said Eric Gregory, president of Kentucky Distillers’ Association.
Bourbon makers had two choices: eat the cost, which meant less profit, or raise the price.
“You increase the price of your bottles by 25% and suddenly someone over there looks and sees that the bourbon they drank and it’s more expensive, they’re coming back to what they used to drink. And it’s probably scotch, ”said Gregory.
The tariffs were in retaliation for the steel and aluminum tariffs put in place by former President Donald Trump.
Representative Andy Barr’s office said it had organized a bipartisan letter with more than 40 members of Congress asking that the Biden administration work to remove the tariffs.
Gregory said Governor Andy Beshear’s friendship with Biden’s commerce secretary has helped.
“There were many, many days where he picked up the phone and called her and helped educate her about the damage that was being done and really urged them to do that,” Gregory said.
“These things were retaliation. They were hitting the bourbon harder than anywhere else because we can’t move production overseas like other companies were going to be able to do with other products. It’s an $ 8.6 billion industry for us, ”Governor Beshear said.
While the tariffs will be gone, it might be a few years before they know how much damage they’ve caused.
“Do we lose that consumer as a bourbon drinker for a year, two years?” Forever? Really has impacts, not just in the short term, but also potentially in the long term, ”said Gregory.
For now, he says they’re happy to start shipping with those tariffs removed.
These rates were in fact to double on December 1 to 50%. Now that will not happen. The new agreement comes into effect on the first of the new year.
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