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Irish drinks firms face falling US sales despite EU tariff move

Pat Rigney said his company aimed to absorb some of the impact of US tariffs but it would ultimately have to increase prices there
Pat Rigney said his company aimed to absorb some of the impact of US tariffs but it would ultimately have to increase prices there

Irish drinks brands are facing falling sales in the US, according to a leading distiller, despite the sector likely dodging targetted tariffs.

Yesterday the European Union unveiled the list of US products it was planning to impose import tariffs on should attempts at reaching a compromise with the Trump administration fail.

The list includes almonds, soya beans and yachts but - despite previous indications from the commission - it does not include bourbon. That follows calls from member states including Ireland, France and Italy, which were worried that the US would retaliate with additional tariffs on European-made alcohols.

"It's certainly progress - it should never have been on the list," said Pat Rigney, founder of The Shed Distillery in Co Leitrim, which makes a range of spirits including Drumshanbo Gunpowder Gin. "We export six times more spirits to the United States than we import [to Europe].

"It's progress, but there's a long way to go."

While there is relief in the industry that targetted US tariffs are now unlikely, it still has to deal with the 20% tariff that has come into effect on all European goods that reach American shores.

Mr Rigney said he hoped the company would be able to absorb some of the impact - but it would not be able to fully cover it. As a result, its US prices will have to rise - which will likely dampen demand for its products there.

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"It's obviously going to have an effect on sales - and in this case I don't think it really matters whether you're a big producer or a small producer, everybody is going to be affected," he said. "Because we export so much to the US - in our case 35%, but in the industry closer to 50% - diversifying will only take you so far into other markets."

And while US tariffs are supposed to be of benefit to producers there, he says American drinks companies are predicting a dip in their own sales, as the broader economic impact leads to weaker demand.

"They're expecting a decline in sales aligned also with a recessionary environment, of at least 15-20% over there across the sector," he said. "And job losses in the US, and reduced investment in marketing and promotion across the US.

"So they're going to get hit again with this - it will have a multiplier effect in the US."

While The Shed's products are considered premium, Mr Rigney said his goal was to keep them accessible to consumers. He said more expensive drinks products will come under severe pressure, though.

"It depends how premium you are - I think anything above $100 in the US is really in trouble," he said.

There is also a potential secondary effect on businesses like The Shed, and the Irish economy in general.

Distillers and brewers here have increasingly turned themselves into tourism destinations in recent years, offering tours and tasting events to visitors. However that is contingent on the brands being known to overseas visitors first and foremost, while it also relies on people having the money to make trips to these shores.

"One of [international consumers'] first touch-points with Ireland is our brands... it's music, it's literature but it's also our drinks brands," he said. "And when they come here many of them want to go to see the home of the brand.

"I would be concerned if there was any dip in tourism - because that experience they get evangelises them, but in the short term it also gives us income, and that's something we need to keep an eye on."