Pernod Ricard is lobbying US President Donald Trump’s administration for exemption from a border tax proposal that it says would result in US consumers paying higher prices for its Absolut vodka and Perrier-Jouet champagne.
The spirits industry is regulated by provenance rules whereby cognac and champagne cannot be produced outside of their designated namesake regions in France, or tequila outside of Mexico, the subject of Trump’s proposed 20 per cent levy on exports to the US, chief executive officer Alexandre Ricard said Tuesday.
The distiller is putting its case with “a huge group of members,” including Wal-Mart Stores Inc and retail associations, “because they view this potential border tax just as a consumer tax,” Ricard said in an interview with Anna Edwards on Bloomberg TV.
“If your cost of imports increases via taxes, the only way to cope with it is to pass it on to consumers, which is not nice to consumers, but we don’t have much of a choice,” he said.
A border tax could also lead to inflation in the US and weigh on consumption, Pernod Ricard’s chief financial officer Gilles Bogaert said on a call with investors last week. A slowdown would come as the company exports record numbers of cases of its Martell cognac and Jameson Irish whiskey to the US, its largest market by sales.
Pernod Ricard last week reported first-half earnings that beat estimates as sales of Jameson extended a seven-year surge and revenue in Asia rebounded.
News by Bloomberg, edited by Hospitality Ireland
