Eric Gregory on Potential Bourbon Distillery Tariffs

Episode Transcript

Speaker 1 (00:00):
Good morning. I'm Tony Cruz News Radio A forty whaes
and I'm happy to have Eric Gregory, a good friend
of the show. Kentucky Distillers Association. He is the president,
President Gregory. How are you?

Speaker 2 (00:12):
I'm doing fined, Tony, excuse me, I'm doing find Tony,
good morning? How are you?

Speaker 1 (00:16):
Good morning? I need a shot a whiskey and then
I probably few better. I know it usually sounds like
I have it on the show sometimes, but regardless, you know,
you've got a very important job. And of course we
know that tariffs are coming. President Trump indicated that and
ran on that, particularly as it pertains to foreign nations.
But this has a big impact on Kentucky distillers especially.

(00:39):
Tell us a little bit about what you're working on
right now.

Speaker 2 (00:42):
Yeah, thanks, Tony, And we're concerned right now, not just
about new tariffs, but we're still under kind of a
tariff hangover from the twenty eighteen tariffs. Kentucky bourbon and
American whiskey guy caught up in the tariffs on steal
it or the tree war on stealing aluminum, and the

(01:02):
EU and other countries put retaliatory tariffs on things that
can only be made in America, of course, and obviously
Kentucky bourbons America's only native spirit, and so we got
tariffs from several other other countries. Now most of them
have been worked out, but we still have a tariff
from EU countries and it has been delayed for the

(01:24):
past year or so, but it's coming back if we
don't do anything in March, and it's coming back at
a fifty percent rate. And we lost hundreds of millions
of dollars in exports at the previous twenty five percent rate,
so if it comes back at fifty percent, it's gonna
be devastating to our signature industry.

Speaker 1 (01:43):
Tell us what happened when the twenty five percent tariff occurred.

Speaker 2 (01:48):
Well, the first thing that happened was every distilled in
the Commonwealth's and as much whiskey if overseas as possible
to try to open the tariffs. So we hope that
led to a you know, search popularity. But what eventually
happened was again that our companies suffered, especially companies like
Brown Foreman, who not only get hit on Kentucky bourbon,

(02:10):
they also got hit on Tennessee whiskey and Jack Chanels's
you know the adhram pound gorilla of American whiskey exports.
So we went from you know, growing about ninety eight
percent in exports between twenty ten and twenty eighteen to
like putting the brakes on a freight train. We dropped,
you know, down to about the three hundred million mark

(02:31):
in exports, up from five hundred to six hundred million year.
And you know, the companies tried to absorb that as
much as possible, but after you know, two years, three years,
you just can't do that without impacting your bottom line.
So you pass it on. And you know that's in
the hoping and prayer that the consumers oversees, you know,

(02:54):
their bourbon now that they've usually been drinking scotch or
some other whiskey, it's twenty five percent more at the
staurant or the package store or something. You know, do
they switch back to what they used to be drinking.
That's that's probably cheaper, and then you've lost a potential
consumer for for a generation.

Speaker 1 (03:09):
Yeah, tariffs are attacks, and attacks has to be passed
on to consumers, regardless of who's in office or those
kinds of situations. So you went to Washington, d C.
Trying to iron some things out with our representatives and
I guess senators, how'd that go in Washington the other day.

Speaker 2 (03:28):
Yeah, that's why I'm losing my voice a little bit.
I've didn't a lot of talking this week. Yeah, you know,
we're kind of preaching to the choir with the Kentucky delegation.
They obviously understand, you know, how much bourbon means to
Kentucky and our economy and our tourism. And you know,
everyone we spoke to obviously is for zero h zero zero,
for zero tariffs, getting back to where we were when

(03:50):
you know, our exports were growing as much as possible.
But you know, everybody is kind of in a wait
and see and watch and see movement right now to
see what President Trump will do. Like you said beginning,
he's you know, kind of promised some across the board
tariffs on incoming goods to America, and that might trigger

(04:11):
some other retaliatory tariffs overseas, you know, but it might
also force people to the table to negotiate. So we're
all kind of just watching and waiting. But our job
this week was getting the message out to as many
Congressmen and senators that we could possibly talk to of
how much the damage did to us last time. And
you know, we can't afford to wait and see for

(04:33):
very long with the new president coming in, because our
tariffs come back in March and pun intended. You know,
we're staring down the barrel of fifty percent, which which
will just be devastating to the industry.

Speaker 1 (04:47):
Yeah, a no doubt about that. Can you hang on
because I want to talk about a little bit more
with you. Yeah, let me take a break for some
traffic and weather, and we'll have Eric Gregory, he's the
president of the Kentucky did Sellers Association, kind enough to
join us this morning here News Radio A forty whas.
Good morning. I'm Tony Cruz with Eric Gregory. He is
the president of the Kentucky Distillers Association. Eric, we're looking

(05:08):
at the bourbon slash whiskey industry here. We have some
great distilleries here. What are the distillers telling you? We're
regarding the possibility of President Trump's tariffs as well.

Speaker 2 (05:24):
Yeah, everybody's pretty anxious at this point, just like we
were back in twenty eighteen. So we're trying to be
cautiously optimistic but also making plans to see you know,
if they do go in, what are our next steps?
And that's kind of the most frustrating thing we learned
the last time around, was that, you know, these decisions

(05:45):
are made at the highest level of government and have
incredible geopolitical, you know, consequences and things all across the world,
and so they're taking into account all those things. And
we're obviously, you know, being a little selfish in Kentucky
to look out for our industry as well. But you know,
one thing about tariffs. You know, they're supposed to do

(06:06):
a couple of things. Number one, hopefully make Americans buy
American goods. So if American companies have moved manufacturing overseas,
you know, encourage them to bring back homes. We're already
doing that right now.

Speaker 1 (06:19):
Your phone, your phone's kind of breaking up. I'm sorry.

Speaker 2 (06:22):
I'm sorry about that. We're already doing that, you know.
I mean, you can only make bourbon in the United States,
and you know, we believe you can only make the
best bourbon in Kentucky. And we're creating jobs over here,
and we can't move our production facilities elsewhere because if
you did, you couldn't call it bourbon. So we think
we're a really good American success story, and you know,

(06:43):
we're going to try to keep getting that message out
to as many people as possible.

Speaker 1 (06:47):
In a way, this though, is kind of a microcosm
of the rest of industries. For example, we have BMW
over here. Yeah, we have a Volkswagen Tennessee BMW and
South carore a lot of we have Hyundai, and we
have Toyota and Georgetown, et cetera, et cetera. There's no
problem with those companies being here that kind of situation.

(07:10):
But you know, Ford has I got a Broncos sport.
It's manufactured in Mexico. President Trump says it's going to
come back, and that's great, But the costs are going
to be also handed down, whether it's tariffs or whether
it's going to be you know, you know, we have
unionized labor here and I'm not anti, but obviously it's

(07:31):
going to be more expensive those kind of things. So
with this, my point being is that you have diversified
companies that aren't just Kentucky companies. They're international companies. And
you know, you pointed out Brown Foreman for example, in
this case, how would that would impact them and their workers?

Speaker 2 (07:48):
Yeah, you're right, we live in a global coimming and
you know, over the past twenty to thirty years, you know,
we have been ramping up manufacturing in Kentucky to produce
as much bourbon as POSP spool to try to ship
overseas so they can get a taste of Kentucky and
you know, and the little taste of America. But our companies,
you know, when bourbon took a nose dive in the

(08:09):
seventies and eighties, all the bourbon companies in Kentucky diversified
and they bought a tequila or they bought a Scotch
whiskey or an Irish whisky or Canadian whiskey. And so
a company like Brown Foreman or you know, heaven Hill
or other ones who have all these different whiskeys around
the world in different spirits. If these tariffs keep multiplying,

(08:31):
they're not only going to get hit on America whiskey
or Kentucky bourbon. You know, if there's a tariff on Mexico,
then they're going to get hit on tequila. There's a
tariff in Canada Canadian whiskey. If there's a tariff overseas
in Europe or the UK, you know, and then their
Scotch products suffers, and so those all just start to
you know, mount up, and again, you know that's bad
for Kentucky because if you know, fewer profits feer sales,

(08:55):
that's less jobs and investment that they can make here
in the Commonwealth. And you know, we've been on such
a boom the last ten years that you know, everybody's
seeing that. You know, we don't want this to slow
down and affect the twenty three thousand plus Kentuckians who
depend on the Bourbon industry for their livelihoods.

Speaker 1 (09:12):
Well. And speaking of which, let's not forget the farmers.
What are your thoughts. You got the final site here, Yeah.

Speaker 2 (09:18):
Yeah, farmers, farm You know, we're at agriculture commodity. We're
liquid corn, and you know we couldn't do this without
our hard working farmers. We purchase over twenty million bushels
of corn and other grains a year. The majority of that,
over sety five percent is from Kentucky farmers. Corn production
in key Bourbon counties like Nelson, Maryon, Shelby, Woodford and
others e'xcept three hundred percent in the last decade. And

(09:40):
you know, every every entity, like you said, farmers, Coopers, truckers,
you name it that works in the bourbon industry supply chain.
Eventually they're going to feel, you know, the hurt from
these terraffs as well. So we're doing all we can
to try to get out of this mess.

Speaker 1 (09:58):
Best luck to you, of course, and let's talk soon.

Speaker 2 (10:01):
All right. Appreciate it to thank you.

Speaker 1 (10:03):
I appreciate you. Eric Gregory,