If you thought "Canada Dry" was just a soft drink, U.S. alcohol producers are discovering it's also a way to describe a Canadian market suddenly devoid of American booze. In the first half of 2025, U.S. alcohol exports to Canada plummeted by more than 60%, wiping American spirits and wines from shelves and costing producers hundreds of millions in lost revenue.
Track the stock behind Coors Light, (NYSE:TAP), here.
Trade Tensions Leave Shelves Empty
The cause of the dry spell? Trade disputes. In early 2025, the U.S. imposed a 25% tariff on select Canadian imports, prompting Canada to retaliate. Several provinces, including Ontario, responded by removing U.S. liquor from store shelves. The Liquor Control Board of Ontario (LCBO) reported zero sales of American alcohol, while overall U.S. spirits sales in Canada dropped by over 66%, with Ontario alone seeing an 80% decline.
Total spirits sales in Canada fell more than 12%, signaling a major hit to U.S.-based alcohol exporters.
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Brands Feeling The Burn
Among those affected are some heavy hitters:
- Jack Daniel's (Brown-Forman), where Canada accounted for 1% of total sales.
- Sagamore Spirit, a Maryland-based distillery, projects a $2 million revenue decline from lost Canadian sales.
- Kentucky Bourbon Producers, which export millions worth of whiskey to Canada, are bracing for deeper losses.
Even giants like Constellation Brands Inc. (NYSE:STZ) and Molson Coors Beverage Co. (NYSE:TAP) are feeling the squeeze. Constellation's Canadian operations, including its 2006 acquisition of Vincor International, are integral to its global strategy, while Molson Coors' Canadian arm, Molson Canada, contributes significantly to the company's revenue. Past downturns in the Canadian segment have already shown the potential for earnings volatility.
Investor Takeaway
The Canadian boycott highlights the vulnerability of U.S. liquor brands to geopolitical and trade policy shifts. For investors, the sudden revenue hit underscores the importance of market diversification and risks of relying heavily on international operations—even for iconic American brands.
While Canadians may be sipping a little less Jack Daniel's this year, U.S. producers are learning a costly lesson: in international trade, "dry" can mean a lot more than a tasty ginger ale drink.
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