At first glance, Europe looks like a great export destination for bourbon and other American whiskeys. The U.S. is one of the top exporters of goods to the European Union. France, the region’s second-largest economy, is the world’s largest consumer of whiskey per capita, while neighboring Spain comes in fifth — ahead of Canada, Japan, Ireland, and even the U.K. in terms of sips per person. And it can’t hurt that some well-known bourbon brands, including Wild Turkey and Bulleit, are now owned by European conglomerates.
But despite that seemingly great matchup, bourbon and other American whiskeys haven’t really found their footing in the Old World, especially when compared to the bourbon boom back home. Thanks to a retaliatory trade war, the pandemic, rising economic pressures, and plain old bad luck, the value of American whiskey exported to the 27 EU countries in 2021 was 20 percent less than the amount sold to those same countries in 2018, according to the Distilled Spirits Council (DISCUS), a trade group based in Washington, D.C.
Industry leaders list multiple reasons why bourbon and other American spirits will probably continue to have trouble in Europe over the near term. But interestingly, they also see clear ways for American distillers to succeed there.
A Tough Road
The first headwind facing American exports in the European market? A much stronger dollar, says Johan Kersten, European area director for Lucie Drinks, a Netherlands-based importer of Balcones, Catoctin Creek, and other brands. While the euro is currently just about equal to the dollar, the European currency was much stronger a few years ago, which kept American spirits at an affordable price point.
“The rate is pretty shit,” Kersten says. “The product is now 15 percent more expensive than it was last year, only because of the exchange rate.”
That relatively higher price due to currency fluctuations is compounded by greater costs in other areas, including packaging and transportation.
“I had a container coming from the U.S., and it was supposed to be around 4,000 euros, which is already double from the normal price,” Kersten says. As if that weren’t enough, extra fees for a spot customs inspection and additional local transportation costs brought the price for that container of American spirits up even further. “In the end, I had to pay 7,200 euros,” Kersten says. “Normally, shipping for a container would be 2,000 euros.”
Those higher prices come as Europeans are facing stress and inflationary factors stemming from Russia’s invasion of Ukraine, he says. “Now we have a war, and people are more insecure,” he adds. “This fall and winter, the energy prices are going through the roof, so people now might have to end up paying 600 or 800 euros a month for electricity and gas. So you will not buy luxury goods like whiskey.”
Despite the gloom and doom, things are looking up in some ways: Exports of American whiskey to the EU might be 20 percent below their 2018 value, but the situation has improved significantly from 2020, when exports of American whiskeys to the EU were off by 48 percent, according to a report by the Kentucky Cabinet for Economic Development.
“Last year, 2021, was a party year for everybody,” Kersten says. “Business was really good — after corona, everyone was partying.”
While that “party year” might have helped exports of American whiskey to the EU reach $440 million in 2021, that number is still just a fraction of the amount the EU spent on imported whiskeys from Scotland in the same period: a whopping $1.55 billion, according to the Scotch Whisky Association.
Those big numbers make the European market very attractive for American producers. But it’s not easy to make a bourbon fan out of a Scotch drinker, Kersten says.
“If you look at the whiskey market in France, that really big number, would bourbon steal volume from Scotch whisky? I don’t think so,” he says. “I don’t think the typical Scotch drinker, either the single malt drinker or the blend drinker, is very prone to step over to bourbon, because the flavor profile is very different. I don’t see bourbon taking volume away from the Famous Grouse.”
The Way Forward
Despite the challenges, American distillers are keeping their eyes on Europe — and they can see a number of encouraging signs. Soon after taking office, the Biden Administration worked to put the spiraling alcohol trade war on ice, reaching an agreement with the EU in October 2021 to pause its tariff on American whiskeys starting on Jan. 1, 2022, and cooperating with the U.K. to put its retaliatory tariff on hold as of June 1, 2022. Since those tariffs were suspended, exports of American whiskeys to the EU are up 20 percent compared to the same period in 2021, while exports to the U.K. are up nearly 10 percent, according to an upcoming report by DISCUS.
So what might inspire that nascent interest in bourbon and other American whiskeys to grow even further? For Damian McKinney, CEO of Stoli Group, there’s a real need for consumer education in Europe, where many drinkers simply think of American whiskey as Jack and Coke.
“Nobody actually really understands what bourbon really is,” he says. “What we’ve done is taken it there and we’ve educated them and we’ve shown them what great, high-end bourbon looks like and tastes like. You take Kentucky to people.”
The flip side of that, he says, is inviting new converts to return the favor. To that end, Stoli Group is building Kentucky Owl Park, the $150 million distillery and visitor center for its new bourbon brand in Bardstown, Ky.
“You’ve then got to say, why don’t you come to Kentucky?” McKinney says. “We’re building a big distillery. A big part of it is about experience.”
Smaller brands obviously can’t invite European consumers to come to a giant visitor center. But craft producers like Chicago’s Koval Distillery have seen success in Europe using other tactics. For Koval president Sonat Birnecker Hart, it really helps to put in the time in person. “I think that going to a number of trade shows is incredibly important,” she says. “It’s something that a lot of brands don’t do — they sort of rely on their distributor. We’ve learned that it’s great to have a wonderful distributor, but at the end of the day, it’s also on you to make sure that you are promoting your brand the right way, that you are engaging in marketing, and that you are doing it all the time.”
It can also help smaller brands to look for less obvious destinations. Before Brexit, Birnecker Hart says, many American distillers tried to launch their EU exports through the U.K., thinking that the lack of a language barrier would make things easy. However, the British market is highly saturated and very competitive, especially compared to many countries on the continent. “Believe me, people drink everywhere in Europe,” she says.
While big brands might have access to big piles of money, smaller brands can benefit from a number of government assistance programs, both at the federal level and locally.
“There are many resources for American companies to export to Europe — but not just Europe — in their own backyard that don’t always get taken advantage of,” she says. “Every state has a department to help companies export their products. We have the EXIM Bank, which is a department of the U.S. government that is there to provide resources and financial resources to incentivize trade. There are programs in states that help brands gain money back when they go to a trade show abroad, or when they send people to do business abroad, or even promotional activations. There’s even money available for translating websites. These are all resources out there that we’re paying for with our taxes that can help craft brands focus on seeing what other channels are out there for trade. And Europe is a great one.”
In the Old World, Birnecker Hart notes, smaller producers also benefit from consumer education and other investments by major players like Campari Group, the owner of Wild Turkey.
“Big American brands coming into the market, spending money, and trying to promote themselves, that helps all of the ships rise,” she says. “When you have big American brands spending money in a particular country to talk about, you know, how great American whiskey is, that opens up the category. It makes people interested. There’s a buzz around it.”
While bourbon is obviously the category leader, brands like Koval have also seen success with different mash bills and other types of whiskey. For Kersten, one of the newest types of American whiskey might be a way for U.S. distillers to gain more market share in Europe.
“American single malt is eating into Scotch single malt, just like Japanese single malt is doing,” he says. “So that part of American whiskey … I foresee a really good future.”
With that category still awaiting its final formalization, America will have a long way to go before it catches up with Scotch’s preeminence among EU drinkers: Ask for a whiskey in France or Spain, and nine times out of 10 you’ll get Scotch. But as Birnecker Hart notes, in some settings, a personal touch can really change things.
“I can give you the name of a number of top-rated French restaurants that when you order whiskey, you get Koval,” she says.