Barrels of bourbon are stacked in a barrel house at the Jim Beam Distillery Feb. 17, 2020 in Clermont, Ky. U.S. whiskey exports have fallen by 27% to the European Union, the product's largest export market, caused by retaliatory tariffs imposed by the 27-nation alliance, a trade group said last week. (Bryan Woolston/Getty Images)
Overseas distillers like Midleton in Ireland, which makes Jameson, and Highland Park in Scotland all reduced production recently because of a glut of bourbon, whiskey and Scotch on the market.
However, observers say tariffs and the trade war with Canada hit Jim Beam especially hard.
"Ten percent of Kentucky bourbon sales were going to Canada, and that has dropped to almost zero," said Prince. "In Canada, that has been taken on as a kind of a national mission for Canadians, saying, ‘Let's buy Canadian’ and push back against the politics they don't like coming from the U.S. And, so, you see stores just pulling all American products and banning them in some provinces. So, that's definitely a political response."
Democrats quickly latched onto the tariff argument.
"Thousands of Kentuckians power the bourbon industry. We will all feel the impact of this," declared Rep. Morgan McGarvey, D-Ky. "It’s hard to overstate just how devastating Trump’s tariffs are for America’s signature spirit."
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But one industry observer believes that tariffs are a single ingredient in a complex economic cocktail. Jessica Spector is a professor at Yale who studies the history and culture of liquor and spirits.
"Anybody that tells you that they have an explanation, ‘Oh, it's tariffs,’ or 'Oh, it's post-pandemic retraction,’ is giving you a too simplistic explanation," said Spector. "It's unclear what impact the tariffs are having and will have in the future. People have argued over tariffs for a long time. As long as there has been trade, there have been arguments over tariffs. It's unclear whether the tariffs are sort of the coup de gras to an industry that was already suffering."
Spector says yes, Generation Z drinks less and uses cannabis more. There are also health concerns. But the spirits industry has witnessed shifts before. She says people moved from brown liquor to vodka in the 1970s because it was seen as healthier.
"They also jogged more and did a lot more cocaine because that was seen as more health conscious. So, it gets really complicated when you break things down generationally," said Spector.
But the tariffs remain extraordinarily controversial. The Trump administration says tariffs are here to stay.
The Jim Beam Distillery Feb. 17, 2020, in Clermont, Ky. (Bryan Woolston/Getty Images)
The trend of using American bourbon barrels for Scotch began in the 1940s after the U.S. market came back online following the end of Prohibition. Distillers in Scotland began using sherry barrels to age their spirits prior to that (hence, the rich meaty flavors you get from Macallan). Sherry is still prevalent despite a decline in people consuming sherry these days. But fewer bourbon barrels from a big producer like Jim Beam now could alter the taste of Scotch in about 15 to 20 years.
That said, demand for Scotch is down like bourbon. So, some of these may even out.
It’s worth noting that Suntory Global Spirits owns Jim Beam. It was known as Beam Suntory until recently. Suntory also owns major Scotch labels like Bowmore, Admore, Laphroaig, Auchentoshan and Glen Garioch. The pipeline of barrels from Jim Beam was a good proposition for Suntory to age Scotch.
So, it’s possible that, down the road, Scotch distillers may age some of their expressions in barrels that once contained something else — other than Kentucky bourbon. And that’s where the flavor profile will evolve.
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It’s also impossible to know the market trends and what people will be interested in drinking in 15 to 20 years. And, so, whatever distillers put into a barrel now might not match market trends in the future.
In fact, perhaps people will revert to drinking bourbon and Scotch. And the market glut now may switch into a spirits famine where products consumers want are hard to find.
Chad Pergram currently serves as Chief Congressional Correspondent for FOX News Channel (FNC). He joined the network in September 2007 and is based out of Washington, D.C.
https://www.foxnews.com/politics/jim-beam-shuts-iconic-kentucky-distillery-least-year-market-downturn