Amir Peay had high hopes when he salvaged the abandoned 140-year-old James E. Pepper Distillery near the heart of Lexington, Kentucky. After years of planning and renovations, it was finally ready to produce whiskey on site in 2017. But Peay’s hopes were dashed a few months later, as the European Union imposed tariffs on American whiskey.
“We thought we could really grow our business over there,” says Peay. “That is, of course, until June of 2018 when, out of the blue, American whiskey got dragged into a trade war.”
Amir Peay, the owner of the James E. Pepper Distillery.
Jeff Dean /NPR
But now, Peay and whiskey distillers across the U.S. are raising their glasses and setting their sights, once again, on Europe. The U.S. and European Union announced a trade agreement last month that effectively lifts the 25-percent tariffs on American whiskey come January.
The tariffs, which had been levied as part of a growing trade dispute between the Trump administration and the E.U. over steel and aluminum, also targeted American exports such as motorcycles and denim, and stymied international growth for the burgeoning American whiskey industry.
The James E. Pepper Distillery.
Jeff Dean/NPR
Master distiller Aaron Schorsch walks through the distillery.
Jeff Dean/NPR
Europe is a major importer of American spirits, yet distillers saw a 53% decline in American whiskey exports to the U.K. and a 37% decline to the E.U. while the tariffs were in place, resulting in over $300 million in lost revenue, according to the Distilled Spirits Council.
Then COVID-19 exacerbated the pain of small distillers as they were forced to close their doors to tours and tastings, and bars and restaurants shut down.
“In the beginning, when the pandemic hit, you know, myself and us, as a company, we were really, really nervous and scared,” says Peay, adding that bars and restaurants made up nearly half of his business at the time.
The distillery pivoted to retail sales. And with more people drinking at home throughout the pandemic, the company sold a record number of cases of whiskey in 2020, Peay says.
“We had very strong domestic growth,” says Peay. “But it made us change how we wanted to allocate stock to Europe, and it altered what was going to be our growth trajectory in Europe.”
read the full article here: https://www.npr.org/2021/11/27/1054293073/whiskey-distilleries-europe-tariffs-lift