Canadian Whisky on the Rocks? Crown Royal is Set to Avoid Trump's New Ban.

Dow Jones
16 hours ago

Canada's top liquor brand looks on track for a reprieve because it's bottled in the U.S. for American customers

Canadian whiskies look set to avoid Trump's new ban as long as they cross the border in a container that's larger than 4 liters.

Fans of Crown Royal probably don't need to start searching for alternatives.

President Trump has rolled out a plan to ban a wide range of Canadian alcoholic drinks in the U.S. - but the plan's details include a workaround for the top-selling Canadian whisky.

While Canadian-produced spirits, wine and beer are slated to get hit with the ban beginning Sept. 29, Canadian whiskies can avoid it if they're crossing the border in a container that's larger than 4 liters, or about 1 gallon.

Diageo's Crown Royal product is doing exactly that. It's distilled and matured in the Canadian province of Manitoba, but then shipped in large containers to bottling facilities in the U.S. for distribution to American customers.

Last year, Diageo drew flak in Canada for closing a bottling facility for Crown Royal in Ontario. The alcoholic-beverage giant said it was "part of an ongoing commitment to increase the efficiency and resiliency of its manufacturing footprint." Ontario Premier Doug Ford responded to that closure announcement a year ago by pouring out a bottle of Crown Royal during a news conference.

About five months ago, Diageo touted the official opening of a new facility in Alabama, saying the move was about "bringing the company's iconic beverage alcohol brands closer to customers."

In the rollout of its ban for Canadian alcoholic products on Tuesday, the Trump administration said whiskies that aren't Irish and Scotch whiskies and not elsewhere specified will be excluded from importation into the U.S. if they are "in containers each holding not over 4 liters." In other words, Canadian whiskies in containers larger than 4 liters won't get banned from the American market.

Crown Royal is by far the top-selling Canadian whisky brand, according to the Beverage Information Group, with a market share well ahead of other brands such as Canadian Club, Canadian Mist and Black Velvet.

Crown Royal was created by Sam Bronfman and his Seagram Co. in 1939 to mark a royal tour of Canada by the U.K.'s King George VI. Bronfman became one of Canada's richest men initially by exporting alcoholic products to the U.S. during the Prohibition era, relying on bootleggers and middle men. The Seagram empire eventually was dismantled and sold off, with Diageo ending up with the Crown Royal brand.

Diageo's London-listed shares (UK:DGE) closed lower by 1.3% on Wednesday, while its U.S.-listed stock $(DEO)$ recently was trading down 0.5%.

-Victor Reklaitis

 

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