Welcome to BevNET’s spirits newsletter! This week we’re peering into the crystal ball at what the next few years may look like for the industry, and how you should prepare over the next weeks.

What insiders are reading: Check out new spirits and a chat with Boisson’s founder on what lead to bankruptcy.

Thanks for reading.

-BevNET spirits editor, Ferron Salniker

Ah the days of yestermonth, when our speculative article on Trump tariffs was, well, a little more hypothetical. 

With President-elect Trump headed to the oval, the spirits industry, along with everyone else is bracing for change. Here’s what we’ll be watching and how suppliers can get ahead:

Trump has threatened tariffs on most foreign goods in numbers ranging up to 2,000%, which is like when my 5-year-old niece expands her hands and says she has to go to the bathroom “infinity-much” – none of us really understand what that means. But as we’ve reported, the European Union’s tariffs previously imposed on American whiskeys are already scheduled to snap back to 50% if there is no agreement on the ongoing steel and aluminum tariff dispute by the end of March. Since the dispute began in 2018, overall whiskey has bounced back but the craft spirits export market was grievously wounded. During Trump’s first round, other American spirits were caught up in trade disputes as well. 

Brian Rosen, founder and general partner of InvestBev argues there’s a silver lining to tariffs: “For me as a private equity person that owns all these American brands and all this distillate, I know that I've got a super busy seven or eight weeks before the inauguration to sell as much as I can overseas before a tariff comes into play,” he said, arguing that there’s going to be a flurry of bulk sales of American products to big European players.

He also argues that with an automatic defense around the borders of the U.S. American brands can prepare “to sell stateside at full margin without discounting, because your competition from overseas is 25% higher.” 

Of course, we don’t know yet if distributors will raise prices on American brands to make up for loss of profits on foreign goods, or if despite higher prices, consumers are willing to swap their tequila for something else. 

Another factor high on the Trump agenda is the supposed deportation of 11 million undocumented immigrants, many of whom help power the food system in the U.S. Nearly 1.7 million undocumented workers labor in some part of the U.S. food supply chain, according to the Center for American Progress, and that includes in restaurants as well as on the fields. Spirits and wine are agricultural products at the end of the day, and with farms – who are already undergoing a labor shortage – absorbing higher labor costs or shortages, that may mean higher prices for spirit brands and wine. On-premise accounts are likely to struggle as well.

What are your concerns or hopes for the upcoming administration? Let me know.

The people of Pennsylvania likely need a drink after this election cycle, and now they can head to their local convenience store or restaurant for a fresh cold ready-to-drink cocktail. Starting in mid-September, the Pennsylvania Liquor Control Board (PLCB) allowed restaurants, bars, beer distributors, grocery stores, convenience stores, and other outlets to sell alcoholic RTDs with ABVs not exceeding 12.5%. But the new rules cost private retailers a pretty penny, and there are some product limitations. We checked in with retailers and local RTD producers, who are now allowed to distribute directly to outlets, about how the evolved law is benefiting them.

We chatted with Morgan McLachlan, co-founder of AMASS and Katy Perry’s DeSoi, on how she aims to address one of the biggest challenges of flavor innovation in the ANA category: creating flavors that are recognizable alcohol proxies, but also novel and nuanced. NA cocktail and spirits brands in particular are faced with the expectations of full-proof versions as well as the potential to put off a younger audience that doesn’t even enjoy the taste of alcohol to begin with. Read the interview here.

CNN reports on the de-premiumization trends, and how “inflation-weary customers have shifted their shopping habits to unexpected places,” in particular to cheaper private labels.