A woman walks past a display of whiskey bottles at the James E.
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A woman walks past a display of whiskey bottles at the James E.
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Amir Peay had high hopes when she salvaged the abandoned 140-year-old James E. Pepper Distillery near downtown Lexington, Kentucky. After years of planning and renovations, it was finally ready for on-site whiskey production in 2017. But Peay’s hopes were dashed a few months later, as the European Union hit tariffs imposed about American whiskey.
“We thought we could really grow our business there,” says Peay. “That was of course, until June 2018 when, all of a sudden, American whiskey was dragged into a trade war.”
Amir Peay, owner of James E. Pepper Distillery.
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But now, Peay and whiskey distillers across America are raising their glasses and setting their sights, once again, on Europe. Last month, the US and the European Union announced a trade deal that would raise the 25% tariff on American whiskey in January.
The tariffs, which have been levied as part of a growing trade dispute between the Trump administration and the EU over steel and aluminum, also target US exports such as motorcycles and denim, and hinder international growth for America’s burgeoning whiskey industry.
James E pepper distillery.
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Master distiller Aaron Schorsch walks past the distillery.
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Europe is a major importer of US spirits, however distillers have seen a 53% drop in US whiskey exports to the UK and a 37% drop to the EU while tariffs was applied, resulting in lost revenue of more than $300 million. Distilled Alcohol Council.
Then, COVID-19 exacerbated the pain of small distilleries as they were forced to close tours and tastings and bars and restaurants closed.
“Initially, when the pandemic hit, you know, myself and we, as a company, we were really worried and scared,” Peay said. added that bars and restaurants accounted for almost half of his business at the time.
Master distiller Aaron Schorsch examines the blend.
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Master distiller Aaron Schorsch weighs casks of rye.
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The distillery turns to retail. And with more people drinking at home during the pandemic, the company sold a record number of whiskeys in 2020, Peay said.
“We’ve had very strong domestic growth,” says Peay. “But it changed the way we wanted to allocate stocks to Europe, and it changed our growth trajectory in Europe.”
The rye is transferred from the silo into the tanks.
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It may be difficult for smaller craft distillers to regain the space they lost on store shelves in Europe when the tariffs were imposed, as distributors have now adjusted their purchasing strategies. surname.
“Once you’re off the shelf, going back is like 300 times harder,” said Sonat Birnecker Hart, President of Koval Distillery in Chicago, Illinois.
Distillery employee Cody Giles, left, uses a forklift to retrieve a barrel of malt.
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Bottles are on the bottling line at the James E.
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Hart said Koval decided to keep prices stable, essentially eating off the excess cost of the tariffs, to maintain existing relationships.
“We had to show them that we were in it for the long term,” said Hart.
So when the Biden administration announced that it had reached an agreement with the EU to lift the tariffs, Hart saw reason to celebrate.
“We took the bourbon cocktails to toast that the tariffs were gone,” says Hart. “That being said, you know, there’s still a lot of work to be done.”
The boxes are stacked at the James E.
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Travis Kitchens takes a tasting flight at the James E.
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Especially when it comes to England. The UK is no longer part of the EU, thanks to Brexit, and has yet to lift tariffs on US whiskey.
However, Amir Peay of Lexington is optimistic that a deal will be signed and demand for American whiskey will increase.
“It’s not a light switch. We can’t just tap it and go, ‘Let’s go back to what we had,'” he said. I am confident that 2023 and beyond… It’s a very bright future for American whiskey in Europe.”
