Tariff threatens €900m drinks exports

In its outlook for the Irish drinks industry for 2025, Bord Bia said that if the new administration in the United States introduces tariffs on imported drinks “there will be strong headwinds facing the sector”.

President Trump last week suggested 200% tariffs on US imports of alcoholic drinks from the EU. If he were to follow through on tariffs at that level, it would practically put a full stop on Irish drink exports to that country.

However, Trump has something of a reputation of blowing hard and then walking back on a lot of what he says when it comes to crunch time.

The industry here had factored in the possibility of tariffs of 25%, which may seem like a considerable relief when compared to what Trump has outlined, but they would still be a fairly serious “headwind” for exporters.

Exports

In order to get an idea of the size of those headwinds, it’s worth first looking at which drinks Ireland exports to the US. In Figure 1 we see that the €900m of exports in 2024 fell into three main categories – whiskey, liqueurs and other alcohol.

That last category consists of ready-to-drink vodka-based products which are contract manufactured in Ireland.

This category jumped from €35m in 2023 to €202m in 2024 due to an increase in contract manufacturing here. It is fairly clear that if Trump were to bring in 200% tariffs on alcohol imports from the EU, then that contract manufacturing would quickly move somewhere else.

The loss of that business, while unfortunate, may not have a huge effect on Irish suppliers to the drinks industry as the contract manufacturing would likely have relied on imported ingredients.

The liqueur exports to the US of €185m were almost entirely Irish cream liqueurs. Baileys, by far the largest brand, is a substantial user of Irish dairy products.

According to the Baileys website roughly 200m litres of milk is required each year to provide the cream needed to make the drink. That cream is supplied exclusively by Tirlán.

Baileys

The good news here is that Baileys has a manufacturing facility in Belfast.

This factory, being outside the EU, could in theory avoid the tariffs. The US market could be served from there while manufacturing in the Republic of Ireland could serve customers in the rest of the world. Under this scenario, there would be little or no drop off in milk demand for Baileys.

Other Irish cream liqueur makers would not be as fortunate, but the level of production there may not be material to the overall demand for milk and cream from Irish dairy farms.

That leaves whiskey, which accounts for almost half of Irish drinks exports to the US. This sector is very exposed to that market.

Whiskey

However, Irish whiskey makers have been successful in recent years in expanding their presence in markets outside the US.

Total whiskey exports exceeded €1bn in both 2022 and 2024. In 2022, the US market accounted for 53% of those exports, while in 2024 that share had dropped to 43% (see Figure 2).

This is not to say that there won’t be some serious knock-on effects for whiskey production here, or that tillage farmers will not feel the effect on demand for malting barley, but the industry has already started to reduce its reliance on the US market.

President Donald Trump’s threat of 200% tariffs on US imports of EU alcohol, if taken at face value, is very bad news for the Irish drinks industry.

While Trump’s track record suggests that the final figure is likely to be considerably lower than that figure, a 200% level would effectively shut the US market to Irish exports.

For the farmers, the dairy sector is exposed as suppliers to the Irish cream liqueur industry. While the big player, Baileys, may have a work-around through its Northern Ireland production facility, many smaller operations could be hit.

However, the overall loss of demand for milk should only be marginal to dairy farmers who produced 8.5bn litres in 2024.

For tillage farmers, the exposure is through demand for malting barley, which commands a €40/t premium.

While the loss of the US market would be a blow, Irish whiskey exports to the rest of the world have grown significantly in recent years, so it should not lead to a complete wipeout of demand for malting barley.

On the margins, it is likely to put another nail in the coffin of the Government aims to get 400,000 hectares of tillage in the country by 2030 as availability of crop premiums would be reduced.

In short