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Kentucky governor shrugs off EU tariffs on bourbon

BOTTOMS UP:Europeans would drink more bourbon this year, the governor said, but a business association said the tariffs would affect the US$8.5 billion industry


A barman pours a glass of bourbon at the World’s End pub in London on Friday.
Warning: Excessive consumption of alcohol can damage your health

Photo: Reuters

In comments at odds with his home state’s whiskey distillers, Kentucky’s Republican governor has downplayed fears that the EU’s retaliatory tariffs could disrupt the booming market for the Bluegrass state’s iconic bourbon industry.

“There’s always the potential for some type of impact, but I don’t think it will be a tremendous impact,” Kentucky Governor Matt Bevin said when asked about tariffs during a TV interview this week with Bloomberg.

Bevin, a regular at bourbon industry events celebrating new or expanded facilities, called the tariffs that took effect on Friday a “money grab” by the EU, but sounded confident that Kentucky bourbon will expand its share of the vast European whiskey market.

“Europeans are still going to drink more bourbon this year than they did last year; they’re just going to pay more for it, because their government is going to take some of it,” he said this week during an interview on CNBC’s Squawk Box.

Bevin referred to Europe as a “small portion” of the bourbon market, but the Kentucky Distillers’ Association said EU countries accounted for nearly US$200 million of the more than US$450 million in total exports of Kentucky bourbon and other distilled spirits last year.

Kentucky whiskey exports to EU countries have grown more than 10 percent annually in the past five years, said the association, which represents dozens of distillers, large and small.

Kentucky whiskey exports overall rose by 23 percent last year, it said.

The governor’s comments stood in stark contrast to the association’s, which said that duties on US whiskey would have a “significant impact” on investment and employment in the state’s US$8.5 billion bourbon sector.

“As we have said for the past few months, there are no winners in a trade war, only casualties and consequences,” the association said in a statement, which was released shortly after Bevin’s comments, but did not directly refer to the governor.

Tariffs will drive up the price of Kentucky whiskey in EU markets, where customers have plenty of spirits to choose from.

If a trade war breaks out, bourbon would not be the state’s biggest casualty, University of Kentucky economics professor Ken Troske said.

Kentucky’s auto parts sector could be hit hard, since many of its products are shipped to auto assembly plants in Canada and Mexico, he said.

Many of those vehicles are sent to the US for sale.

“Kentucky is a big, big player in that,” Troske said.

As for the bourbon sector, he said: “I don’t think tariffs are going to slow the growth down that much.”

The EU’s tariff action came in response to US President Donald Trump’s decision to slap tariffs on European steel and aluminum.

Its retaliatory move targets other US goods including Harley-Davidson bikes, cranberries, peanut butter and playing cards.

Kentucky produces about 95 percent of the world’s bourbon, with such brands as Jim Beam, Evan Williams, Wild Turkey, Maker’s Mark, Woodford Reserve and Four Roses.

The industry supplies about 17,500 jobs in the state, the association said.

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