U.S. spirits market ends 2020 on a high; tariffs take off some sheen: trade body

10:16 am Thursday, January 28th, 2021

(Reuters) – Domestic consumption of distilled spirits in the United States rose sharply last year as people splurged on premium spirits, although American whiskey exports fell due to retaliatory tariffs from Europe, a U.S industry trade body said on Thursday.

U.S. distillers reported a 7.7% jump in sales in 2020 to $31.2 billion, while volumes rose 5.3% to 251 million 9-liter cases, the Distilled Spirits Council (DISCUS) said in a report.

With pandemic-related restrictions forcing closures of bars, restaurants and night clubs in many countries and curtailing travel, drinking occasions have shifted to homes.

Underscoring the trend was a surprise rise in sales of world’s largest spirits maker Diageo on Thursday that also pointed to U.S. shoppers splurging on premium tequilas, vodkas and bourbon.

DISCUS said spirits were gaining market share over beer and wine and that it now stood at 39.1% of the total U.S. beverage alcohol market, the highest ever in the last 40 years.

However, a sore point for the industry continued to be the retaliatory tariffs of 25% slapped by Europe on American whiskey in 2018, as part of a long-running row over state subsidies for aircraft manufacturers Airbus and Boeing.

Tariffs curbed exports by 53% to the UK and 38% to the EU since they were imposed in 2018, DISCUS said. In June 2021, EU tariffs on American Whiskey will be automatically raised to 50%.

“We are hopeful the Biden administration will clearly recognize the widespread damage caused by the escalation of these trade disputes,” said Christine LoCascio, chief of public policy at DISCUS.

Across the Atlantic, European policy makers have urged President Joe Biden to drop tariffs, while on Thursday Diageo’s chief sustainability officer asked both sides to get together and resolve this quickly.

“We obviously want this tariff removed … as it is not a scotch dispute,” Ewan Andrew said.

(Reporting by Siddharth Cavale and Praveen Paramasivam in Bengaluru; Editing by Anil D’Silva)