Distilleries to bear brunt of U.S. ban on Canadian booze: experts

Distilleries and spirit producers in Canada are expected to suffer the most significant losses as the United States implements a sweeping ban on Canadian alcoholic beverages, starting September 29. Craig Johnston, chief economist at Farm Credit Canada, states that distilleries export more than half of their total product to the U.S. market.

Finding alternative markets domestically or internationally will prove challenging for many distilleries, according to Johnston. Canadian whiskey and liqueurs in bottles larger than four liters are exempt from the ban; however, there aren't many four-liter bottles sold, as per Cal Bricker of trade association Spirits Canada. Moving production south of the border is not a viable solution as legal agreements restrict distilleries from producing Canadian whiskey in the U.S., Bricker adds.

Canada's retaliatory duties earlier this week led U.S. President Donald Trump to ban most imports of Canadian alcohol, including a long list of other goods, starting September 29. Andrew Oland, CEO of Moosehead Breweries, expresses surprise but deep disappointment at alcohol being further entangled in the latest trade escalation.

Moosehead currently ships 15% of its beverages to the U.S., which are already burdened with steep duties after trade negotiations between the two countries broke down last month. The brewery is currently absorbing the cost of 50% tariffs and is focusing on shipping as much beer as possible over the next three weeks to maintain its shelf space and relationship with U.S. retailers.

Norman Beal, board chair of Ontario Craft Wineries, representing over 110 wineries in the province, says that the wine industry is not anticipating as dire a future as its alcohol counterparts, as wine sales to the U.S. account for only about one percent. Most of the wine products are sold within Canada.