Jack Daniels Maker Confident Company Can Maintain Growth If Tariffs Introduced

By Steve Wynne-Jones
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Jack Daniels Maker Confident Company Can Maintain Growth If Tariffs Introduced

Brown-Forman chief executive Paul Varga has said that he believes that the company is "well-schooled" in navigating through trade conflicts, however he admits that should the EU impose tariffs on American whiskey, it would be a "negative" for the Jack Daniels maker.

His comments follow a week of discussions at EU level over the potential introduction of trade tariffs on American goods entering the European Union, should President Trump introduce a proposed 25% tariff on steel imports and a 10% tariff on aluminium entering the US.

Nothing New

"It's not new to Brown-Forman to periodically have things in the macro environment arise that we have to deal with," Varga told an analyst conference call, noting a period in the recent past when the US and Russia were having "some spats" back and forth.

"I remember our Jack Daniel’s Tennessee Honey brand got caught up for a short period of time in Russia over that topic. So we are fairly well schooled at knowing how to deal with this, but [...] if this were to come to fruition, it would obviously be kind of a negative thing for our particular company."

Varga added that the company sells its American whiskey brands in around 165 countries worldwide, and should Trump's policy come to fruition, Brown-Forman "could be an unfortunate and unintended victim of a policy which in part is aimed at promoting something which Brown-Forman is a stellar example of. You know, a committed, long-term American manufacturing company."


He said that the company was "monitoring and observing" current discussions on the matter.

At the same time, he also said that the company is benefiting from an "improving global economy, which is not getting as much of a headline today", adding that the whiskey category in particular is proving more attractive to consumers around the world.

"All of these things I hope also come into focus while people digest the possibility of these retaliatory tariffs," Varga added.

Good Performance

Yesterday, Brown-Forman said that its net sales increased by 9% in the third quarter, to $878 million, with operating income rising 11% to $304 million.


On the back of these results, the group's total sales for the year now total $2.51 billion, which is 9% higher than at the same period last year.

The Jack Daniels family of brands in particular performed strongly during the period, with sales up 7%.

Commenting on the tariff impasse, yesterday, European Commission vice president Valdis Dombrovskis warned, “We hope that eventually this initiative from the U.S. side will not be followed through.

"But it’s also clear that the EU is going to react if these one-sided tariffs are going to be imposed by the US."

© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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