The CEO of Jack Daniel’s maker Brown-Forman (BF.B) says Canada taking U.S. alcohol off store shelves was “worse than a tariff,” describing the moves by some provinces as a “disproportionate response” to levies imposed by Washington.
Several Canadian provinces, including Ontario, have removed American liquor from state-controlled alchohol stores as part of retaliation against 25% tariffs imposed by Donald Trump this week.
“I mean, that’s worse than a tariff, because it’s literally taking your sales away, [and] completely removing our products from the shelves,” Brown-Forman chief Lawson Whiting said during an earnings call with analysts.
Canada imposed its own 25% tariffs on U.S. imports, including wine, spirits, and beer. Many Canadians are also steering clear of American goods and brands as the trade war has stirred emotions north of the border. However, with Canada accounting for about 1% of the distiller’s sales, Whiting was confident it could withstand the attrition.
Brown-Forman Wary of Escalation
The comments came after the company reported Fiscal third quarter reported organic net sales up 6%, while organic operating income rose 23%. Both reported net sales and reported income fell on a year-over-year basis due to the divestments of its Finlandia and Sonoma-Cutrer businesses last year. The stock rallied 10% on Wednesday following the earnings update.
Mexican tariffs may also be a worry for the company as tequila sales fell 13% on an organic basis due to more competition in the U.S. along with “challenging macroeconomic conditions in Mexico.”
“We’re going to have to see what happens with Mexico,” said Whiting on the call, adding that European Union tariffs were a “real possibility,” and that the levy “could be 25%, it could be 50%.”
Is Brown-Forman a Good Stock to Buy?
Based on two Buys, six Holds and two Sells, BF.B stock is considered a Hold on Wall Street. The average BF.B price target of $41.83 implies about 16% upside, although there could be further changes by analysts in the wake of earnings.
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