Welcome back to the BevNET spirits newsletter! This week we’ve asked the pros what to do in case tariffs are, in fact, a real threat. 

What insiders are reading: Check out 3Tier Beverage’s January review of the data and how adult-non-alc brand Hiyo landed a $20M investment.

Thanks for reading!

-BevNET spirits editor, Ferron Salniker

2025 has been a wild ride, am I right? While there are certainly more vulnerable demographics in the crosshairs of President Trump’s temper tantrums – excuse me, policy decisions, many alcohol suppliers have been feeling like pawns this week. 

The industry took a sigh of relief when duties on goods imported from Mexico and Canada received a one-month reprieve on Monday following border security deals brokered by each country. Are the tariffs actually real threats or just negotiating tools and political theatre? It’s looking more like the latter. 

The exception is Trump’s 10% tariffs on imports from China, which went into effect on Tuesday, pushing Beijing to retaliate. Trump has said the European Union is next in line, putting Kentucky on edge as tariffs on American Whiskeys at 50% are already slated to return April 1 if there is no agreement on steel and aluminum or the EU does not extend the suspension of its tariff.

Whether imposed or not, being caught in a trade war isn’t making things more chill for the industry. 

“Together with inflation, market access challenges, neoprohibitionist policies and the rampant glorification of heavily biased science, our industry faces a grim future without further action,” said Margie A.S Lehrman, CEO of the American Craft Spirits Association.

Affected businesses face the question of passing on the costs to consumers and possibly limiting sales volumes, while larger companies who might be able to absorb the costs could attempt to grab some of that volume.

Now, businesses will likely again visit questions they asked themselves late last year, whether or not to "beat" the tariffs and bring excess inventory into the U.S., said John Wrenn, COO of importer and distributor MHW. But while dashing to avoid tariffs may result in paying less tax and duty on import, it could cost a business more total dollars, he said, for example, higher inventory carrying costs than would have otherwise been required.  

There’s no one-size-fits-all answer, but Adriana McKinnon, director of logistics at Park Street, appeared in a video published Monday offering a few suggestions including diversifying sourcing, storing goods in U.S. Free Trade Zones, as well as locking in favorable rates or renegotiating contracts with producers.

But in the end, the real cost could be the time and energy spent preparing for “the dumbest trade war in history,” rather than focusing on building more value for your business. 

Resealable packages, smaller sizes and non-carbonated beverages are among the hot bev-alc trends Total Wine & More’s senior leadership team are watching in 2025. As for the retailer’s ANA section, younger consumers expect their drinks to “do more for them.” Read more about what the retail giant is stocking up on.

The threat of tariffs are still to blame for pessimistic growth outlooks from the spirits industry’s biggest players. Diageo announced in its earnings results on Tuesday that despite taking steps to deal with the potential impact, the possibility of tariffs are weighing on the group’s recovery. Read about how Diageo is preparing and what the group had to say about sale rumors.

Absolut is going in on ready-to-drink and ready-to-serve, with new flavor additions, including an expansion of its co-branded partnership with cranberry giant Ocean Spray. Spirits-based RTDs grew 26.5% in dollar sales off-premise in 2024, according to NIQ, and Pernod-Ricard has primarily tackled getting into the segment by leveraging its own spirit brands with other side of the store partnerships. Get the skinny on the new RTDs.

After years of concern that cannabis and THC products could cut into bev-alc occasions, some of the bev-alc industry is starting to view THC-infused beverages as an opportunity. But not everyone is completely on board. Brewbound’s Zoe Licata dives into some of the recent public discourse on intoxicating hemp and how the category is impacting strategy across the three tiers.

In case you haven’t already heard the spiked tea, leading spirits brand Tito’s Handmade Vodka plans to leave Republic National Distributing Company (RNDC) for Reyes Beverage Group in California. The move illustrates how beer distributors are getting a leg up on the big spirits distributors as the industry evolves into total beverage. Read all about it.