Brown-Forman CEO Laments Canadian Liquor Boycott as "Worse Than a Tariff"

Brown-Forman, the maker of iconic brands like Jack Daniel’s, is grappling with the fallout from trade tensions between the United States and Canada. CEO Lawson Whiting has voiced strong concerns over the retaliatory measures taken by several Canadian provinces, which involve removing American liquor products from store shelves. Whiting argues that this action is significantly more damaging than the imposition of tariffs, directly impacting the company’s sales and market access.

The dispute stems from tariffs imposed by the Trump administration, which have triggered reciprocal actions from Canada. These measures include tariffs on U.S. goods and a growing trend among Canadian consumers to boycott American products, including alcoholic beverages. The sentiment is fueled by a desire to support local businesses and a sense of national pride in the face of what many perceive as unfair trade practices.

Whiting emphasized the severity of the situation during a recent post-earnings call. "I mean, that’s worse than a tariff, because it’s literally taking your sales away, (and) completely removing our products from the shelves," he stated. He highlighted the direct and immediate impact of the boycott on Brown-Forman’s ability to reach Canadian consumers.

While Canada represents a relatively small portion (approximately 1%) of Brown-Forman’s overall sales, the CEO expressed concern about the precedent this sets and the potential for similar actions in other markets. Notably, Canada has also imposed a 25% tariff on imported U.S. goods, including wine, spirits, and beer, further complicating the situation.

The company is particularly vigilant about developments in Mexico, which accounts for a more significant 7% of its annual sales, according to its 2024 report. Brown-Forman is closely monitoring the political and economic climate in Mexico to anticipate and mitigate any potential risks associated with trade disputes.

The broader trend of Canadian consumers shunning U.S. products extends beyond the liquor industry. Reports indicate that Canadians are increasingly avoiding U.S. goods, sports events, and even travel, reflecting a growing sense of discontent and a desire to support local alternatives. This shift in consumer behavior poses a challenge for many U.S. businesses operating in the Canadian market.

Despite the challenges posed by the Canadian boycott and tariffs, Brown-Forman has reaffirmed its annual forecasts, factoring in the anticipated impact of these trade-related headwinds. The company remains confident in its overall trajectory, citing its diverse portfolio of brands and its presence in emerging markets as key drivers of future growth.

However, the company is not immune to the broader challenges facing the spirits industry. Brown-Forman has experienced a slowdown in demand in key markets such as the United States, Canada, and Europe, which has partially offset gains in emerging markets like Mexico and Poland. This slowdown has prompted the company to implement cost-cutting measures, including workforce reductions, as it navigates a more challenging economic environment.

The company’s recent financial results reflect these challenges. Net sales fell by 3% year-over-year to $1.04 billion, falling short of analysts’ estimates of $1.07 billion. For fiscal year 2025, Brown-Forman anticipates net sales growth in the range of 2% to 4%, indicating a cautious outlook given the current market conditions.

CEO Whiting acknowledged the "continued uncertainty and headwinds in the external environment," but reiterated his confidence in the company’s ability to navigate these challenges and deliver long-term value to shareholders. Brown-Forman is focused on innovation, brand building, and strategic investments in emerging markets to drive future growth.

The situation highlights the complex and often unpredictable nature of international trade relations. While tariffs are a common tool used by governments to protect domestic industries and exert economic pressure, they can also have unintended consequences, such as consumer boycotts and retaliatory measures that harm businesses on both sides of the border.

The case of Brown-Forman and the Canadian liquor boycott serves as a cautionary tale for companies operating in a globalized economy. It underscores the importance of understanding the political and economic landscape in each market, anticipating potential risks, and developing strategies to mitigate the impact of trade disputes.

In conclusion, Brown-Forman is facing significant challenges in the Canadian market due to retaliatory measures taken in response to U.S. tariffs. The CEO’s assertion that the Canadian liquor boycott is "worse than a tariff" underscores the direct and immediate impact of this action on the company’s sales and market access. While Brown-Forman remains confident in its overall trajectory, the situation highlights the broader challenges facing the spirits industry and the importance of navigating international trade relations effectively. The company is focused on adapting to the changing market conditions, managing costs, and pursuing growth opportunities in emerging markets to mitigate the impact of these headwinds. The situation in Canada also serves as a warning for other businesses reliant on cross-border trade, emphasizing the need for vigilance and proactive risk management in an increasingly complex global environment.