Brown-Forman, the renowned producer of Jack Daniel's, is grappling with a slowdown in demand across key markets, including the United States, Canada, and Europe. This decline has overshadowed the company's robust sales growth in emerging markets such as Mexico and Poland. However, the situation has been exacerbated by actions taken by Canadian provinces, which have removed U.S. liquor from store shelves in response to tariffs imposed by former President Donald Trump.
Lawson Whiting, CEO of Brown-Forman, expressed his concerns regarding these measures, describing them as a "disproportionate response" and "worse than a tariff."
"I mean, that’s worse than a tariff, because it’s literally taking your sales away, [and] completely removing our products from the shelves." – Lawson Whiting
Canada has implemented 25% tariffs on U.S.-imported goods, including wine, spirits, and beer. These tariffs have had a tangible impact on Brown-Forman's sales in Canada, although the country only contributes to 1% of the company's total sales revenue. Despite these challenges, Brown-Forman remains optimistic about its future trajectory. The company has reaffirmed its annual forecasts, which take into account the impact of the tariffs.
The announcement was met positively by investors, with Brown-Forman's shares increasing by approximately 8%. The company attributes its resilience to its diversified market presence and continues to monitor the situation closely in Mexico, which accounted for 7% of its 2024 sales.
In addition to Canada, Brown-Forman is experiencing a decline in demand in both the U.S. and Europe. These regions have historically been strong markets for the company. Despite these headwinds, Brown-Forman is prepared to withstand the effects of the Canadian tariffs. The company remains committed to navigating these challenges while leveraging opportunities in emerging markets.