Trump hits the tequila market

London. Even if the tariffs of the president of the United States, Donald Trump, Mexico, threats and uncertainty caused by intermittent taxes have already cost money to the Tequila sector and could drive the tequila sector and could boost a temporary slowdown of sales, manifested producers, investors and analysts.

Taxes of 25 percent, which had to be applied since February and were in force for a short time on March 4 before being postponed both occasions, threaten billions of dollars of merchandise from large producers such as Diageo and Becle Cuervo.

The taxes led companies and consumers to store Tequila, which can only be manufactured in Mexico, freeze expansion plans and divert resources to other places. Some producers, restaurants and consumers have great tequila reserves, sometimes up to six months, a bet that will be profitable if tariffs are imposed. But producers say that this also has a cost, harming the sector even if tariffs are removed.

Whatever happens (…) a price has been paidSaid Mike Novy, executive director of Calabasas Beverage Company, which operates the 818 Tequila brand, founded by Kendall Jenner.

The company asked its distillery to work in full performance, with workers doing overtime during the December holidays with the purpose of sending the product to the United States about six months before tariffs, said Nocer, who added that this represented up to 2 million dollars, while storage expenses would add another 10 percent to their costs.

Brian Rosen, founder of Investbev, an investor who is associated with marks of spirits in the initial phase to help them grow, said that the tequila companies of their portfolio had also accumulated stocks for six months, and are paying up to 20 thousand dollars per transport container for storage.

These storage costs alone could push some brands to raise prices, another planned effect of tariffs that could now occur even if they do not apply, he said.

Companies that depend on Tequila, from the main manufacturer of Diageo Liquor – producer of the Don Julio brand – to the small restaurants whose sales of Margaritas help them stay afloat, they are fighting against the high rates of interest and inflation.

Although some wholesalers have accumulated stocks, it is unlikely that this causes the painful cycle of shortage that has recently been seen with other spirits such as the cognac, since this was due to the low underlying demand and the tequila remains popular, said Michael Bilello, senior vice president of communications and marketing of Wine & Spirits Wholes of America, a commercial organism.

In Mexico, while, producers and industry agencies expressed that companies will seek new markets, in a sign of change in investment that could make the United States less attractive, said Noval of 818.