A year after the latest wave of US tariffs reshaped global trade, the drinks industry is still absorbing the aftershocks. Scotch whiskey exports to the US have has decreased by 15 percentEuropean wine imports were a decrease of 11 percent in January 2026 compared to a year ago and retail wine prices increased by 12 percent at the end of 2025.
These pressures are unfolding against a backdrop of renewed US-EU trade tensions, supply chain nationalism and growing geopolitical fragmentation that is forcing consumer industries to reconsider how global growth actually works. What once looked like a temporary hiatus is starting to look like a more permanent restructuring of international trade.
For years, beverage brands can build strength in one market and then scale globally with relatively predictable economics. This model is now more difficult to maintain. When products must physically cross borders, tariffs make them more expensive and harder to move. Champagne must come from champagne. Scotch must be made in Scotland. These are geographically protected categories. You cannot shift production to work around trade barriers.
When supply chains are already complex and globalized, these costs increase quickly. Even when a beverage product appears local, it rarely is. A Kentucky-distilled bourbon may still rely on imported glass, aluminum, machinery, or agave-derived ingredients. A gin or vodka may depend on internationally sourced wheat, botanicals or packaging. Tariffs can therefore hit multiple times throughout a single production cycle, creating cumulative pressure across the value chain.
The costs of packaging and raw materials already have increased significantly across the industryy over the past year, particularly for internationally sourced aluminum, glass and agricultural inputs, further squeezing margins for manufacturers operating in a slower growth environment.
Additionally, rates were lowered in a category already under strain, navigating structural changes in consumer behavior. Younger generations are consuming alcohol in different ways, often less frequently, more selectively and with a greater interest in moderation, wellness and value, as inflation and cost-of-living pressures continue to squeeze discretionary spending across markets.
Across the sector, the effects are already visible. International expansion has slowed and producers are dealing with excess stock in categories such as whiskey after years of growth and major producers are recalibrating operations. At the end of 2025, the giant of souls Suntory discontinued production at Jim Beam’s flagship facility in Kentucky, while Diageo suspended distillation on three high-profile sites.
Some operators had also expanded production capacity during the post-pandemic premium spirits boom, leaving the sector exposed as demand softened and inventories began to pile up.
Relying too heavily on any single market, whether in the US, China or elsewhere, has become an obvious vulnerability. The question facing the drinks industry now is how to turn this around in a more fragmented and less predictable market.
Case for clarity
For many, the solution lies in a more disciplined branding strategy. Over the past decade, beverage companies have expanded aggressively, introducing new formats, line extensions, sub-brands and limited editions in hopes of finding more ways to market. In a high-growth environment, that strategy often worked. In a limited situation, it creates confusion.
Bud Light offers a helpful caveat here. As the brand stretched into beer, seltzer and other additions in an effort to broaden appeal, its core identity became harder to read. This matters more in a fee-driven environment because rising costs force consumers to make more deliberate choices where they might have experimented before. Consumers become less willing to pay premium prices for brands whose positioning appears ambiguous or interchangeable. At the same time, private label brands and value products have continued to gain share as more consumers trade down in search of clearer value.
The brands that will get through this period the strongest will be those that are more clear about who they are. They need to quickly answer some basic questions: What is this product for? Why should consumers care? And why is it worth the price?
Pricing power under pressure
For years, premium liquor brands have been able to justify their prices on the assumption that heritage would carry them through. Heritage still matters, but it is not enough on its own. As Diageo’s new CEO Dave Lewis recently explained, the era of premiumisation is slowing down. After years of prioritizing the growth of high-end spirits, major beverage companies must now turn their attention to lower price points and more accessible formats to support growth.
If a bottle moves from $35 to $45, the value proposition should be clear. That’s where ready-to-drink (RTD) beverages and brands like BuzzBallz and High Noon have found continued appeal: they offer a lower entry price, convenience and a clearer sense of value.
Brands now have to justify price more actively than ever, and this pressure should push brands to think more about what they’re giving consumers in return. More durable RTDs, larger formats, and products with added functional or health-related cues all help make it easier for consumers to understand the value trade-off. If someone is going to spend more, they want more immediate and tangible evidence that they are getting something valuable in return.
Making heritage useful again
All of this is changing the way brands use their story. A rich history still matters, but it can’t just stand as static mythology behind glass. The legacy must do something commercially useful. Absolut’s local releases, from Brooklyn to California, illustrate how a global brand can create a more specific regional relevance. It’s the same principle in a different form: a brand cannot rely on a single global message if it wants to remain culturally relevant across markets.
This challenge is particularly acute in the heritage spirit categories, where you risk becoming too closely associated with older rituals and drinkers. Whisky, for example, needs to find ways to feel more alive, more accessible, and less locked into a narrow set of traditions. The challenge is to make them relevant to a new generation that drinks differently and buys more selectively without losing the credibility that made the category valuable in the first place.
A more disciplined global model is emerging. Brands that treat the charges as a temporary disruption may survive the coming months. Brands that treat them as evidence of a more structurally fragmented, price-sensitive and regionally differentiated market will be better prepared for what comes next.
Tariffs haven’t created every problem facing the drinks industry, but they are challenging the old growth model built on frictionless globalization and endless premiumization. Growth now depends less on extending a brand as far and as wide as possible, and more on defining exactly what it stands for, then tailoring that identity carefully enough to gain relevance in different countries. In this sense, tariffs could force the drinks industry into something leaner, clearer and potentially more resilient.
