Are Tariffs an Opportunity for Canadian Whisky?

The appeal of Jack Daniel’s, Jim Beam and Southern Comfort in export markets has helped the American whiskey category achieve nearly double the growth of Canadian whiskies over the past 10 years. A third of all US whiskey is now consumed outside North America; by contrast, little more than 6% of Canadian whisky leaves North American shores. With US whiskey now burdened with punitive tariffs in key markets, maybe the time is right for Canadian whisky to push into new markets.

Exponents of Canadian whisky point to flexible regulations that put no limit on the type of wood used to age the whisky – encouraging a diverse range of flavours and providing plenty of scope for experimentation and innovation. Their smoothness and slightly sweet taste also make them more appealing to younger palates than what they might consider the more challenging flavour profile of Scotch. The high rye content is also a plus: rye whiskies are in vogue in the States, and this trend is gaining momentum in North-West Europe. From a small base, sales doubled there last year.

The lightness of Canadian whiskies also makes them an option for mixing into highballs and cocktails – a key driver in the US market. The rise of Diageo’s market-leading Canadian whisky brand Crown Royal has in part been driven by its popularity as a mixer in cocktails – and this trend is becoming more visible in other influential markets around the globe. With growth out of North America of 7% last year, green shoots are emerging for Crown Royal in some export markets but, to date, sales continue to be polarised in North America.

Canadian whisky growth has been enviable in the past decade, with sales expanding by more than a third.

Perhaps what’s needed is a brand to act as a standard bearer for the segment outside North America, as Jack Daniel’s has done for US Whiskey or Jameson for Irish Whiskey. Canadian Club, the leading Canadian whisky out of the core North American market, could be a contender for flying the flag for Canadian whisky in export markets, but it could also be a brand with less heritage that adopts a fresh approach and is tailored specifically to the modern marketplace.

Should a product emerge as a talisman for the segment, you would expect it to be a premium product with a price low enough to be inclusive but high enough to authenticate a sense of quality. It would need to have a well-defined consumption occasion and would have to be cocktail-friendly to travel with the tide.

Jameson’s rejuvenation of Irish whiskey has demonstrated what one brand can do to galvanise a segment of the market, but it has been a relatively slow-burn process: Pernod Ricard has nurtured the brand for more than 30 years. Any invigoration of Canadian whisky cannot be expected to happen overnight – but the tariffs now in place on US whiskey do represent a considerable opportunity for Canadian whisky to market itself to a bigger audience.

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