Overview: Newfoundland and Labrador producers of boozy beverages are bracing for significant fallout from new U.S. tariffs implemented on Aug. 22. Managing partners at Crystal Head Vodka and Signal Hill Whisky warn that a 50 per cent tariff rate effectively shuts out N.L.-bottled spirits from the U.S. market.
The Full Story
Jonathan Hemi, managing partner for Crystal Head Vodka and Signal Hill Whisky, stated the implementation of the new tariffs will have a significant impact on business operations. While Crystal Head Vodka operates in about 70 countries, the United States remains their largest market by a wide margin, accounting for approximately 50 per cent of its profits. Conversely, Signal Hill Whisky does not currently conduct much business in the U.S., though future expansion plans are now disrupted.
Steve Ciccolini, president of Iceberg Brands Corporation which produces Iceberg Vodka, noted that trade tensions have been brewing for the last year and a half. He stated that the 50 per cent tax would pretty much take the company out of the U.S. game. Producers are hesitant to move production operations to the United States if trade tensions persist long term, though they request government help developing other markets.
Brand & Industry History
Crystal Head Vodka was co-founded by actor Dan Aykroyd. Iceberg Brands Corporation produces Iceberg Vodka. Signal Hill Whisky is managed by Jonathan Hemi who noted growth in the largest market is paused until tariff issues are resolved. Spirits Canada stated it was disappointed a trade deal hadn’t been reached to bring U.S. alcohol back to Canadian shelves and stop the 50 per cent tariffs from being brought into effect.
What This Means
The situation places producers in a difficult position regarding inventory and market viability. Hemi noted they got some time to produce and ship more product before the tariffs came into effect, but not much. Ciccolini stated his company is really in between a rock and a hard place right now when it comes to the United States. There is nobody in the chain that is going to eat that 50 per cent cost, including the importer, wholesaler, or consumer.
Consumer Takeaway
This news indicates that availability of N.L.-bottled spirits in the U.S. market faces immediate disruption until trade issues are resolved. Consumers should expect products from Newfoundland and Labrador to remain off shelves down south unless a deal is reached for Canada to thrive like it has been.
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