Michter's Distillery on Tariffs, Canadian Boycotts, and Declining Alcohol Consumption

Impact of Tariffs and Boycotts

• 🎯 Tariffs have had less of an effect than anticipated, with Michter's seeing a 14% increase in the first half of the year.
• ⚠️ The primary issue for American distillers is a governmental ban on American alcohol in eight Canadian provinces, not a consumer boycott.
• 📈 Shipments to Canada are down 62% this year, but exemptions for tequila and Canadian whiskey under USMCA have benefited the industry.
• 💰 A 25% tariff in Alberta and Saskatchewan will significantly increase prices, for example, raising a bottle of Michter's US1 Bourbon from $108 to $133 CAD.

Declining Alcohol Consumption Trends

• 📉 A Gallup poll indicates that only 54% of Americans regularly drink alcohol, the lowest share on record, with notable declines among younger adults.
• 📊 US spirit sales are down 6% for the first half of 2025, according to SIP Source data.
• 🌿 Marijuana substitution is a significant factor, with a Bloomberg Intelligence survey showing 74% of young alcohol users substituted marijuana for alcohol in the past week.
• 💡 The speaker suggests that as marijuana usage becomes more normalized, its initial allure may fade.

Industry Outlook and Shakeout

• 🚀 Despite industry-wide declines, Michter's brands are performing well, with overall sales up 6% and exports up 14%.
• 💡 GLP-1 drugs may indirectly benefit high-end spirit brands as consumers opt for fewer, more expensive drinks.
• 📈 A recent IWSR survey shows Gen Z alcohol consumption increased from 46% to 70% over a two-year period ending March 2025.
• 🧐 Market Watch suggests current trends are more likely a temporary blip than a cultural shift.
• 📉 A significant shakeout is occurring in the industry due to venture capital and private equity influx, with some distilleries entering bankruptcy or receivership.