Brown-Forman, the renowned American alcoholic beverage company behind Jack Daniel's, finds itself in a challenging situation as several Canadian provinces have removed U.S. liquor from their store shelves. Lawson Whiting, CEO of Brown-Forman, described this act as "worse than a tariff" and a disproportionate response to the ongoing trade tensions between Canada and the United States. This move is part of Canada's retaliatory measures against tariffs imposed by former President Donald Trump.
Despite these hurdles, Brown-Forman's shares rose by approximately 8% following the company's reaffirmation of its annual forecasts, which already considered the impact of tariffs. The company reported a 3% decline in net sales from a year ago, amounting to $1.04 billion, slightly below analysts' expectations of $1.07 billion. Despite the setback, Brown-Forman remains optimistic about its future, projecting net sales growth in the range of 2% to 4% for fiscal 2025.
The company is closely monitoring developments in Mexico, which accounted for 7% of its sales in 2024. The current slowdown in demand, particularly in the U.S., Canada, and Europe, has posed challenges this year. However, Whiting expressed confidence in weathering the storm, noting that Canada contributes only 1% to their total sales.
"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's imposition of a 25% tariff on goods imported from the U.S., including wine, spirits, and beer, underscores the ongoing trade tensions between the two nations. These measures have been seen as a direct response to U.S. tariffs on Canadian products. Brown-Forman's commitment to its long-term strategy reflects its resilience in navigating these complex trade dynamics.