What tariffs are really asking of drinks brands

A year on from the latest wave of US tariffs, the numbers are still striking. Scotch whisky exports to the US have fallen by 15 per cent. European wine imports were down 11 per cent in January 2026 compared with the year before. Retail wine prices climbed by as much as 12 per cent at the end of 2025.

These are supply-side figures, and they matter. But they do not quite capture the harder question now facing the drinks industry: what happens when the old growth model no longer works?

The structure of the problem

For a long time, drinks brands could build strength in one market and scale globally with reasonable predictability. That model has become more difficult to sustain. When products must physically cross borders, tariffs make them more expensive and harder to move. And some of the most valuable categories in the industry cannot simply relocate production to sidestep trade barriers. Champagne must come from Champagne. Scotch must be made in Scotland. These are geographically protected designations. The economics cannot be engineered around.

The costs compound further when you consider how globally entangled most drinks supply chains already are. A bourbon distilled in Kentucky may still rely on imported glass, aluminium, machinery or agricultural inputs. A gin may depend on botanicals sourced from multiple continents. Tariffs can therefore hit several times across a single production cycle, creating cumulative pressure throughout the value chain. Packaging and raw material costs have already risen sharply across the industry over the past year, particularly for aluminium and glass.

And all of this arrived on top of structural shifts already in motion. Younger generations are consuming alcohol differently: less frequently, more selectively, with greater interest in moderation and wellness, while cost-of-living pressures continue to squeeze discretionary spending across markets. The premium spirits boom that followed the pandemic has given way to excess stock and operational recalibration. Suntory paused production at Jim Beam's main Kentucky facility. Diageo suspended distilling at three high-profile sites.

The problem with proliferation

Tariffs have not created every challenge the drinks industry is navigating. But they have sharpened a reckoning that was already overdue.

Over the past decade, drinks companies expanded aggressively: new formats, line extensions, sub-brands, limited editions. In a high-growth environment, that strategy often worked. In a constrained one, it creates confusion.

Bud Light illustrates the risk. As the brand stretched across beer, seltzer and other extensions, its core identity became harder to read. In an environment where rising costs force consumers to make more deliberate choices, vague positioning becomes a liability. Consumers become less willing to pay a premium for something they cannot clearly place. Private-label and value-tier products have continued to take share as more people make the rational decision to trade down.

The brands best positioned to survive this period are not necessarily the biggest. They are the ones that are clearest about what they stand for.

Heritage has to do something

For years, premium drinks brands could justify their prices on the strength of heritage alone. Heritage still matters. But it is no longer sufficient on its own.

A rich backstory cannot sit as static mythology behind glass. It has to do something commercially useful. As Diageo's new CEO Dave Lewis has noted, the era of premiumisation is slowing. After years of prioritising high-end growth, major drinks companies now need to redirect attention to lower price points and more accessible formats. If a bottle moves from $35 to $45, the value proposition has to be immediately legible. That is where Ready-to-Drink brands such as BuzzBallz and High Noon have found continued traction: a lower entry price, clear convenience, and a straightforward sense of what the consumer is getting in return.

Whisky faces a particularly acute version of this challenge. The category risks becoming too closely associated with older rituals and an ageing drinker base. The task is to make whisky feel more playful, more approachable, less locked into a narrow set of conventions, without sacrificing the credibility that made the category worth something in the first place. That balance is genuinely difficult. It is also the kind of brand strategy problem that a new label alone cannot solve.

Absolut's local editions, from Brooklyn to California, offer one model for how a global brand can create regionally specific relevance without losing its core identity. A brand that wants to stay culturally relevant across fragmented markets cannot rely on a single global message. It has to adapt, precisely and deliberately, market by market.

The question the market is now asking

What is emerging from this period is a more disciplined model of global brand building. The brands that treat current disruption as temporary may survive the next few months. The brands that treat it as evidence of a structurally more fragmented, price-sensitive and regionally differentiated world will be better prepared for what follows.

Tariffs have not changed the fundamentals of good brand strategy. They have simply made the consequences of ignoring them more immediate. The brands that come through this period strongest will be those that can answer a few questions without hesitation: What is this product for? Why should consumers care? And why is it worth the price?

These are not new questions. Tariffs have just made them urgent.

Hamish Campbell is Executive Creative Director at Denomination's US studio. This article was first published in Observer on 15 May 2026.