A 15-year-old dispute between the U.S. and European Union over government subsidies given to airplane manufacturers is coming to a head. That spells bad news for Stateside Scotch whisky drinkers.
According to the BBC, the World Trade Organization recently gave the U.S. government approval to impose tariffs on $7.5 billion in goods from the EU. The U.S. supplied a list of products produced in a number of European nations that would be subject to the new 25 percent tariff. On it: all whisky produced in the UK, including Scotch whisky and Irish whiskey.
The tariff goes into action on October 18th. Here’s how that could affect your next trip to the liquor store.
Prices Could Rise Almost Immediately
“I don’t think there will be a lag time or delay with the tariff affecting price,” said Jonathan Goldstein, owner of New York City’s popular Scotch whisky store Park Avenue Liquor Shop. That’s because of the way the alcohol industry is structured — where producers may only sell to distributors, who may only sell to retailers, who may sell to consumers. Distributors will learn that their products have gone up in price and markups will be imposed to meet their own margins. Immediately.
Nima Ansari, head spirits buyer at Astor Wine & Spirits, said, based on the tariffs going into effect on October 18th, prices can technically go up as early as November 1, when the retailer’s wholesale price has spiked due to rising prices for the rest of the supply chain. “There’s no guarantee, but if I had to guess, I’d say some things will be effected that early and some things won’t,” Ansari said.
The Hikes Could Be Above 25 Percent
Scotch prices increasing by 25 percent would be troublesome but conservative; Goldstein says to expect larger price spikes: “Everyone has to take their margins into account when the price jumps for everybody — producers, distributors, importers and retailers. Let’s say my wholesale cost is just 25 percent more; well I also work on my own percentage, so my markup has to be that much more to get it on the shelf. I think it’s going to be a disaster. If people were struggling with the concept of a $50, non-age-statement whisky before, they’re going to be shocked in a few weeks.”
Ansari said there’s a chance larger single malt producers may take on some of the costs themselves in order to avoid sticker shock that could alienate long-time customers. “I think [single malt producers] are thinking longer term; this is not the world we’ll be living in permanently. It’s a pretty safe bet to say prices aren’t going down,” Ansari said.
Bottle Availability Is Up-in-the-Air
Beyond prepping for the price hike, buying a few extra bottles of your favorite whisky also ensures you won’t find yourself unable to find the good stuff. There’s a chance that, given the bump in price at every level of the supply chain and lessened consumer interest, fewer mid- to high-end bottles will make it Stateside. So not only will the stuff be more expensive, there’s a good chance there will be less of it. Ansari said this likely won’t have an effect on larger-scale producers and doesn’t foresee supply shortages from the single malt establishment, while Goldstein said we’ll have to wait and see. “Knowing you love a specific bottle of single malt scotch, you can’t hurt yourself by going out and buying a few extra bottles before this begins,” Ansari said.
There’s No End in Sight
The impending tariff is the result of a multi-decade dispute and, in part, a reaction to an identical tariff the EU levied on American-made whiskey sold in Europe. A spokesman for the UK’s Department for International Trade said representatives of the U.S. and EU are negotiating an end to the trade tussle, the BBC reports, but given the length of the spat and the lack of an end date provided by the U.S. government, it’s not possible to project the tariff’s duration. Ansari notes that it’s completely up-in-the-air at the moment, with events like an October 31 Brexit vote that would have the UK leave the EU (and therefore excluding itself from EU-targeted tariffs) holding the power to end the dispute almost immediately.
For now, you might want to consider a trip to your local liquor store.
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