Jack Daniel’s parent company Brown-Forman fears a $125 million drop in its 2019 financial results due to retaliatory tariffs implemented on U.S. imports in response to Trump’s tariffs, the Spirits Business reports.
Last year, Trump implemented taxes on imported steel and aluminum, and retaliatory tariffs implemented in the E.U. and China, among other nations, included American whiskey.
Brown-Forman originally estimated the ongoing trade dispute would cause its net income to drop an equivalent of $50 million in 2018. After publishing 2019 third quarter and year-to-date fiscal results, the brand is expecting a much heftier loss this year, to the tune of $125 million.
“[T]he cost of tariffs hit not just our cost of sales and growth margins, but also our underlying net sales growth in the quarter and year to date,” Jane Morreau, Brown-Forman chief financial officer, said. To compensate for tariff costs incurred by its global distribution partners, Brown-Forman lowered net prices, she said. “We estimate that these price adjustments reduce our year-to-date underlying net sales growth by approximately one percentage point.”
Additionally, American whiskey exports dropped 8.7 percent between July and November 2018, according to the Distilled Spirits Council.