How One Tariff Upsets a Whiskey Supply Chain

We start today with two friends in Georgia and the whiskey business they began.

At the end though we see how tariffs constrained them.

Whiskey Entrepreneurs

Jim Chasteen and Charlie Thompson met at the University of Georgia. Having happily lived together as roommates, they thought that they could grow a business. The goal was to create their own little space in a big market. Calling it American Spirit Whiskey, or ASW, they made a clear form of whiskey that was not barrel aged. Lucky with timing, they benefited from a rye whiskey comeback.

Fiddler is one of their award-winning whiskeys:

So, they raised $2 million from friends, hired an expert distiller, and so far, have established distilleries at three locations. Ready to expand abroad, they’ve been in touch with the Georgia Department of Economic Development. After securing the necessary trademarks for products with names like Fiddler Bourbon, they explored opportunities in India and Japan, the EU and Singapore. Most crucially though, they knew that China had a taste for American Whiskey.

All set for a global take off, they were hit with retaliatory tariffs. Like other countries, Canada levied 25% tariffs on U.S. whiskey. In addition, certain Canadian provinces have refused to sell U.S. brands.

Our Bottom Line: The Whiskey Supply Chain

When a tariff targets whiskey makers, it creates cutbacks from corn farmers, barrel makers, and loggers. It requires belt-tightening at still manufacturers and copper distilling pot makers. Then, it gets even worse when a tariff on copper hits the copper distilling pot makers from two sides–fewer orders from distillers and pricier inputs. Brown-Forman tells us that layoffs at its barrel making facility will hit 12% of their work force.

So, instead of expansion, American Spirit Whiskey decreased projections. Tariffs reduced their global aspirations and added to their domestic expenses.

My sources and more: This New Yorker article whetted my taste for whiskey economics. From there, the NY Times was my next stop along the whiskey supply chain.