Tariff Fights Are a Drag for Maker of Jack Daniels

By Jennifer Maloney

Tariffs keep squeezing the maker of Jack Daniels.

Brown-Forman Corp., whose brands include the popular whiskey as well as Old Forester bourbon and el Jimador tequila, said its sales in the latest quarter continued to be hurt by European tariffs enacted last year. And now the spirits maker could take a hit on its U.S. tequila sales, if President Trump makes good on his threat to impose escalating tariffs on all imports from Mexico.

The company's sales rose 1% in the quarter ended April 30, to $744 million. Excluding tariffs and currency swings, Brown-Forman said revenue rose 5% from a year earlier, less than expected by analysts.

The European Union a year ago imposed 25% tariffs on U.S. whiskey, Harley motorcycles and other goods in response to Mr. Trump's duties on steel and aluminum imports from the bloc. Roughly 60% of the American whiskey exported to Europe comes from Brown-Forman, the company's Chief Executive Lawson Whiting said.

"It's a tough situation," costing the company about $125 million a year, Mr. Whiting said on a conference call Wednesday. "We view these tariffs really from the EU as a targeted campaign right at Brown-Forman, an American business headquartered in Kentucky."

The company has been lowering the price of its products in Europe to help offset the impact to consumers. That has hurt Brown-Forman's profit margins in recent quarters, a trend the company said it expects to continue this year.

Brown-Forman's U.S. sales of Mexican tequilas, including the Herradura and Pepe Lopez brands, account for 3% of the company's total revenue. The proposed tariffs would increase pressure on tequila, a category already challenged by the short supply and high cost of agave in Mexico. Brown-Forman plans price increases on some of its tequila products in the U.S. because of those costs.

"We're just going to have to be a little more agile on our own pricing strategies and see how that plays out," Mr. Whiting said.

Write to Jennifer Maloney at jennifer.maloney@wsj.com

(END) Dow Jones Newswires

June 05, 2019 15:56 ET (19:56 GMT)

Brown Forman (NYSE:BFB)
過去株価チャート
から 6 2024 まで 7 2024