by Xinhua writers Liu Yanan and Luo Jingjing
NEW YORK, Feb. 12 (Xinhua) -- The suppliers of distilled spirits products in the United States posted 5.3 percent rise in gross revenues and 3.3 percent increase in sales volume in 2019 despite double-digit drop of export amount in the same period, according to the data released by Distilled Spirits Council of the United States (DSCUS) on Wednesday.
U.S. suppliers of distilled spirits recorded 29 billion U.S. dollars of sales revenues in 2019, up 5.3 percent or 1.5 billion U.S. dollars from the previous year, according to DSCUS.
Meanwhile, the sales volume of distilled spirits in the United States totaled 239 million cases, 3.3 percent or 7.6 million cases higher from that in 2018. The expansion rate of sales volume in 2019 is the highest since 2007.
The strongest revenues growth in the U.S. spirits markets in 2019 continued to come from high-end premium and super high-end premium products, said David Ozgo, senior vice president and chief economist with DSCUS.
Strong U.S. economy and employment, Federal excise tax cut, growth of spirits tourism and experiential distillery tours, innovation in spirits products, marketplace modernization and other factors contributed to expansion of U.S. distilled spirits industry in 2019, said Ozgo.
What's more, the devastating impact of the retaliatory tariffs on distilled spirits products is accelerating, threating to upend the decade of industrial growth in the United States, according to DSCUS.
The punitive tariffs imposed by the European Union on imported U.S. spirits products are causing a significant slump of U.S. whisky exports by chipping away brand equity in their top export markets, said Chris Swonger, president and chief executive officer of DSCUS.
In 2019, U.S. exports of spirits products sank 14.3 percent year on year to 1.5 billion U.S. dollars, said Christine LoCascio, chief of public policy with DSCUS. In particular, the exports of U.S. whiskey products dropped 16 percent year on year to 996 million U.S. dollars in 2019 as the European Union imposed 25 percent of tariffs on U.S. whiskey products in June, 2018.
The United States exported 514 million U.S. dollars worth of whiskey products to the European Union in 2019, which accounted for 52 percent of its total whiskey exports and 34.26 of U.S. total spirits exports in the year, according to DSCUS.
U.S. exports of whiskey products to the European Union in 2019 fell 27 percent year on year, with exports to the Britain, France, Germany and Spain down 32.7 percent, 19.9 percent, 18.2 percent and 43.8 percent year on year, respectively.
The United States also has imposed 25 percent tariffs on some whiskeys from Northern Ireland as well as liqueurs and cordials from Germany, Ireland, Italy, Spain and Britain in October 2019 as part of a 7.5 billion U.S. dollars compensation package awarded to the United States by the World Trade Organization regarding controversial subsidies to European airplane maker Airbus.
"We're now gravely concerned that the U.S. tariffs on EU spirits imports will have the same deleterious effect in the United States," Swonger said.
The longer the U.S. tariffs stay, the more likely the United States would see drop of imports from the European Union as what happened with U.S. exports to the European Union, said LoCascio. She added that it is too early to tell the full impacts of U.S. tariffs on imports as the retaliatory tariffs were introduced just a few month ago.
If the United States does impose 100 percent retaliatory tariffs on more EU products like Irish and Scotch whiskies and Cognac, it would be devastating and what's most worrying is the long-term impacts of tariffs and how to get lost overseas market back, said Swonger.
"At this point, we're frozen to some extent. If you're not in the market, you're gonna be forgotten. My fear is that every year these tariffs go on, American products are disadvantaged and it's a lost opportunity, obviously, for my company," said Tom Potter, president of New York Distilling Company, which was founded in 2010 with 15 employees now.
"So for a year and half now, we've lost that momentum" in expanding overseas sales with European Union and China as primary export markets, said Potter, adding his exports sank as much as 40 percent in 2019 and it's going to be worse in 2020.
American whisky has gained reputation and started to find sophisticated buyers in overseas markets, Potter said.
The office of the United States Trade Representative unveiled a provisional list in December 2019 and is soliciting comments on as much as 100 percent of proposed tariffs targeting some EU spirits products and others by Jan. 13, 2020.
It is expected that the recent trade agreements between the United States and other countries would create new momentum for negotiations with the European Union, which would result in the immediate removal of retaliatory tariffs on American spirits exports and U.S. tariffs on certain EU spirits, added LoCascio.
However, U.S. spirits industry is expected to maintain expansion in 2020 as U.S. Federal excise tax cut for craft distillers were extended for the year and restrictions on spirits consumption were lifted or eased in multiple states in 2019.
U.S. spirits market would see an increase in spirits tourism, emphasis on sustainability in the cocktail craft, expanded cocktail menus and creation of less-sweat cocktails in 2020, according to Ozgo, who declined to make forecasts for 2020, citing policy of DSCUS.
