Spirits giant Brown-Forman said the ongoing Canadian boycott of U.S. alcohol spurred by President Donald Trump's tariff policies continues to drag down earnings, with sales in the country declining 62% in the second quarter.
While Canada only makes up about 1% of Brown-Forman’s total sales, the continued absence of its products from a bulk of the country's stores is impacting its entire top line. Total net sales for the quarter fell 5% year over year to $1 billion.
The drop off also impacted the company’s ready-to-drink Jack Daniel’s portfolio, which fell 4% in the first half of its fiscal year.
As Canadian consumers protest Trump's tariffs, only two provinces continue to sell alcohol from the United States, according to the BBC. A majority have pulled stock from the shelves in a bid to promote Canada-produced goods, though some provinces have moved to sell their remaining U.S. inventory to raise funds for charity.
Growth of Brown-Forman's Diplomático and the Glendronach, which are produced outside of the U.S., wasn’t enough to offset the declines elsewhere, executives said in an earnings call last week.
"The continued unavailability of American spirits products in Canada resulted in a significant impact to our top line performance," CFO Leanne Cunningham said on an earnings call. "While we are hopeful for the return of American products to Canadian store shelves, we continue to assume this headwind will persist."
The company expects its full-year net sales to decline in a low-single digit range.
In March, Brown-Forman CEO Lawson Whiting said Canadian retailers pulling U.S. alcohol from stores was worse than a tariff.
Dan Su, equity analyst for Morningstar Research Services, said that earnings calls at several Canada-based grocery stores seem to indicate that the anti-U.S. sentiment among Canadian consumers has eased significantly, which could pave the way for Brown Forman's return in the country.
“It seems to me the friction between the two countries on the tariff subject has eased off in recent months, and hopefully the retailers [and] smaller liquor stores will put Brown-Forman products back on the shelf,” Su said in an interview. “But it’s probably going to take a couple of quarters, and within this time period, that will continue to be a headwind for the company.”
