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A package of twelve Budweiser is on a shelf for sale in a convenience store in New York City.
Drew Angerer | Getty images
The threat of the president of the United States, Donald Trump, to impose 200% tariffs on the alcohol of Europe, would give a great blow to the creators of drinks in the continent, but could have an unlikely beneficiary: the beer industry.
President Trump said Thursday that he can point Wine, champagne and other alcoholic beverages of France and other European nations after the European Union moved to restore an import tax to American whiskey in response to Trump’s previous rates.
Such tax, if promulgated, could “literally eliminate” all world gains for some European Beverage producers, Trevor Stirling, managing director and European drink analyst in Bernstein, on Friday.
“If you take it to the letter, for some of the producers, you could literally eliminate all its world profits,” Stirling told “CNBC Europe” Squawk Box “.
French spirits manufacturer Rémy Cointreau -What derives around a third of their global sales from the USA.
Wine and liquor signatures Pernod Ricard, Rémy Cointreau and Davide Campari All fell more than 3% on Thursday, after Trump’s comments, and the last two slide again during Friday’s session. LVMH, owner of Moët & Chandon and Hennessy, among others, became positive on Friday before falling back into red after nine negative sessions.
“Investors are perhaps being a bit too blackery about the potential that there is a real risk that it can be a 200%tariff,” said Stirling, recognizing that the rate was unusually high in relation to those that were leveled against other countries and sectors. “One has ever learned to underestimate the Trump administration.”
A blessing for brewers
The taxes are part of Trump’s widest vision to relocate global production in the United States, a strategy that many analysts have questioned, particularly within the specific luxury drinks and sectors of production.
“The origin is important when premium spirits and wine are sold: the cognac must be cognac, champagne of champagne, etc. As a result, it is not a category with which the Trump administration will encourage the alert,” Chris Beckett, Chief of Equity Research in Quilter Cheviot, wrote in a note on Thursday.
However, the proposals could provide a blessing for the already highly located beer industry, which has been under pressure during the last quarters amid the decrease in sales and changing consumption habits.
“The beer is not in the sights of this. Beer looks like an island of stability at this time,” Stirling told “Europe Europe.”
AB INB.The largest brewer in the world, owner of brands, including Budweiser, Corona and Stella Artois, told CNBC last month he sees Limited impact of rates given its high levels of national production.
“We do not believe that we are going to have great issues to discuss during this year in terms of tariffs,” said CEO Michel Doukeris.
Heineken The Dolf Van den Brink, meanwhile, in February described the rates proposed by the United States, even in aluminum used in beer cans, to be “relatively manageable.”
“The beer industry is intensive in capital and is very local. Therefore, as such, it is an industry that is a little less susceptible to the interruption in international trade flows,” Europe Squawk Box Europe “told the European month.”
