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Monday, December 3, 2018

Tariffs Put Damper on Cleveland Whiskey's European Distribution Plans

Posted By on Mon, Dec 3, 2018 at 3:20 PM

  • Photo by Cleveland Whiskey

Four years after first opening up shop, Cleveland Whiskey was branching out from mainland distribution and entering the European market.

But Trump’s obsession with tariffs has pretty much killed the ability for Euros to drink whiskey from a bottle with “Cleveland” on it label. Cleveland Whiskey’s founder and CEO Tom Lix said they are putting their foreign invasion on hold. The tariffs started this year have put the kibosh on much of the foreign sales of American bourbon.

"I just don't understand it," Lix told Crain’s Cleveland Business. "It's irresponsible and impacting businesses. All it does is cause problems and increase costs, and it lines up on the backs of people least able to work around it, which is smaller businesses and consumers."

"Right now, we're the bad guys … the ones who started this whole problem," Lix said. "If you're in Canada or Europe or China, it's a reaction to the tariff war we started. There is no good will toward American products right now. And that's a problem."

The problem Lix speaks about is real simple. The European Union put a 25% tariff on American bourbons in retaliation for Trump slapping tariffs on steel and aluminum imports. That 25% tariff starts the price-hike wheel rolling, which, after distributors and retailers and tax stamp guys get in on it, could be a 50% increase by the time it gets to the consumer.

Getting some guy in London to take a chance on a bottle of whiskey he never heard of, especially one with “Cleveland” in title, is easier to do when the price is $50 and not $75.

In the end, this all seems rather stupid. Cleveland Whiskey has seen its revenue grow 61% from 2016 to 2017, but in the end, tariffs like this crush the little guy. Jack Daniel’s and Maker’s Mark can handle it because of their size. The Scots and the Irish whiskey makers don’t mind it too much. But the American whiskey problem that hurts Cleveland wasn’t started by them. It was started by us.

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