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US whiskey makers about to get soaked by higher tariffs

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President Trump’s lingering trade wars are about to soak American whiskey makers even as the rest of the US booze industry celebrates a recent lifting of tariffs on wine, vodka and rum.

Major US whiskey brands — from Woodford Reserve to Jim Beam and Maker’s Mark — have been on the rocks since 2018 over massive 25 percent tariffs imposed on their sales to Europe and the United Kingdom — thanks to a Trump-era war on steel and aluminum imports.

Now, even as the Biden administration works to rebuild US trade relations with Europe and the UK, tariffs on US whiskeys are poised to double on June 1 to 50 percent. Distillers say their sales to Europe, a key market for whiskey, will be put on ice indefinitely if that happens.

A 50 percent tariff would make us “so uncompetitive with a $30 bottle in the US costing 60 euros, that I won’t be able to ship product to Europe anymore,” Michael Langan, general manager of Yellow Rose Distilling of Houston, told The Post.

Yellow Rose’s shipments to Europe fell by fivefold to just 1,000 cases last year as a result of the tariffs, Langan said. If the 50 percent tariffs kick in, his US exports to Europe will fall to zero, he said, and bouncing back will be tough.

“American whiskey is losing market share and shelf space in Europe to competitors from Japan and Asia who are taking our place,” Langan lamented.

US whiskey exports to Europe were on the rise before the tariffs went into effect, up 28 percent for the first six months of 2018, according to the Distilled Spirits Council of the United States. Since then, however, US whiskey exports have fallen by 37 percent to Europe and 53 percent to the UK, the trade group said.

Among those suffering are Brown-Forman, the maker of Jack Daniel’s, which has been absorbing much of the added costs in an effort to not lose market share — suffering profit margin declines in the process.

But even a company like Brown-Forman, which also makes Woodford Reserve and Finlandia vodka, finds the impending 50 percent tariff hard to swallow.

“At a tariff rate of 25 percent, we decided to shield our European customers … whenever possible,” Chief Executive Lawson Whiting told Politico on March 11. “Everyone can imagine that, at a rate of 50 percent, suddenly that shielding becomes much more difficult.”

Brown-Forman is headquartered in Kentucky, the birthplace of bourbon, a type of whiskey that relies heavily on corn for its distinctive sweet flavor. Kentucky is also the home state of noted Trump ally Sen. Mitch McConnell, which is a big reason the whiskey industry was targeted by European trade representatives in the first place, experts said.

Tariffs on US whiskeys are poised to double on June 1 to 50 percent. Distillers say their sales to Europe will be put on ice indefinitely if that happens.

“The Trump administration took a very aggressive posture with the EU and as a result that contributed to the EU being very targeted at the time on where to apply the pressure points,” Chris Swonger, chief executive of the Distilled Spirits Council told The Post. “There’s a lot of whiskey made in Kentucky.”

It’s not just Kentucky that’s suffering, however. There are 37 states that export whiskey overseas and distillers from Virginia to New York say they are feeling the pain.

Cleveland Whiskey has already thrown in the towel on exporting to Europe as a result of the tariffs. “No one wanted to put product on a boat that they’d have to pay a lot more for when the product arrived,” explained Tom Lix, chief executive of the Ohio distillery, which derived 20 percent of its revenues from exports in 2017.

Exporting whiskey had also been the fastest growing segment of New York Distilling Co.’s business in hipster Williamsburg, Brooklyn, before the tariffs, accounting for 15 percent of sales in 2018, owner Tom Potter told The Post. The tariffs stopped that growth in its tracks and exports now account for just 5 percent of overall sales, Potter said.

“We thought it could eventually reach 50 percent of our sales,” said Potter, whose company makes rye whiskeys with names like Mister Katz’s and Ragtime Rye. “We don’t know if we can count on exports helping our company again.”

Catoctin Creek's distillery and tasting room.
Catoctin Creek’s distillery and tasting room.
The Washington Post via Getty Im

The tariffs have also poured cold water on exports at Catoctin Creek Distilling, a Purcellville, Va., distillery whose internationally recognized hootch is sold at Manhattan’s popular Astor Wines & Spirits.

Catoctin Creek’s whiskeys currently generate about $10,000 in sales from Europe versus several million in sales prior to the tariffs. “We had predicted that our overseas sales would double in 2018 to 22 percent,” Scott Harris, Catoctin Creek’s founder, told The Post. “But now it’s about half a percent.”

The Biden administration reached a truce in Trump’s trade war over aircraft subsidies earlier this month, resulting in a four-month freeze of tariffs that had been hammering a wide swath of US booze buyers and sellers — including a 25 percent tax by Europe on American rum, brandy and vodka and a 25 percent tax by the US on wines imported from the UK, Spain, Germany and France.

US Trade Representative Katherine Tai
US Trade Representative Katherine Tai
Bloomberg via Getty Images

And the president’s newly confirmed Trade Representative, Katherine Tai, is now offering the whiskey industry hope, including a March 22 discussion with her EU and UK counterparts over “global steel and aluminum overcapacity,” the trade office said.

But the industries hurt by the on-going steel and aluminum trade war — a group that also includes tobacco sellers and Harley-Davidson motorbikes — continue to be slammed as Biden faces pressure from steelmakers and their unions to maintain the steel tariffs.

Harris of Catoctin Creek popped a bottle of champagne and posted on Twitter when the aircraft tariff truce broke on March 5, because he initially thought it would help the whiskey industry, he said.

“But then my wife sent me a private message telling me the reprieve wasn’t for us and I had to retract our congratulations that were going on out social media,” he said. “We felt unloved.”

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Glasses retailer Warby Parker eyeing IPO as soon as this year

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Hipster glasses retailer Warby Parker is eyeing an initial public offering.

The 11-year-old business, which started out as an e-tailer before rolling out some 130 stores across the US, is considering an IPO as early as this year, Bloomberg reported on Wednesday.

The New York-based company has amassed a huge customer following by offering less expensive prescription glasses. Warby Parker raised $120 million in its most recent funding round giving it a $3 billion valuation, according to the report.

“We’ve always explored various financing opportunities in both the debt and equity markets,” the company said in a statement. “To date, we have successfully and deliberately raised money within the private market on favorable terms and have plenty of cash on our balance sheet. We’ll continue to make strategic decisions in line with our commitment to sustainable growth.”

Founded by college buddies Dave Gilboa and Neil Blumenthal, who met at the Wharton School at the University of Pennsylvania, Warby Parker has attracted some large investors including the mutual fund company, T. Rowe Price.

It turned it first profit in 2018, Gilboa told The New York Times at the time.

Warby Parker co-founder Neil Blumenthal
Warby Parker co-founder Neil Blumenthal
Brian Ach/Getty Images

Customers can get prescriptions through their apps on their smartphones and use cameras to pick out frames. The company also has an optical lab in Sloatsburg, NY where it produces lenses.

While Warby Parker is not the least expensive option, it beats Costco in a recent comparison with Costco charging as little a $126 for a pair of prescription glasses compared with Warby Parker’s least expensive pair at $95.

“As consumer walk into a LensCrafters or Sunglass Hut, they see 50 different brands of glasses but don’t realize that all those brands are owned by the same company that owns the store that they’re standing in, that probably owns the vision insurance plan they’r using to pay for those glasses,” Gilboa said in a recent CNBC interview.

“And so, it’s no surprise that a lot of those glasses are marked up 10 to 20 times what they cost to manufacture,” he said.

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Dogecoin hits new high boosted by DogeDay hashtags

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Dogecoin prices hit an all-time high on Tuesday, with a market capitalization above $50 billion, after social media fans used hashtags to fuel a rally in the meme-based cryptocurrency.

An 8,000 percent price surge this year has seen Dogecoin, which was launched as a satirical critique of 2013′s cryptocurrency frenzy, overtake more widely-used cryptocurrencies like Tether to become the fifth-largest coin.

While Dogecoin, whose logo features a Shiba Inu dog at the center of the meme, a represents only a fraction of bitcoin’s $1 trillion value, it can be traded on crypto exchanges and more popular mainstream trading apps.

“The Doge rally represents an interesting convergence,” said Diana Biggs, CEO of crypto start-up Valour, after Dogecoin’s price soared by more than five-fold in the last week to a record 42 cents, according to CoinMarketCap.

“A meme coin created as a joke for early crypto adopters whose community found that kind of thing to be fun, with now a new generation of retail investors for whom memes are a native language,” Biggs added.

Dogecoin fans used the hashtags #DogeDay and #DogeDay420 to post memes, messages and videos on Twitter, Reddit and TikTok, referring to the informal April 20 holiday to celebrate cannabis which is marked by smoke-ins and street parties.

“GIMME THAT DOGECOIN LAMBO!!! #DogeDay” one tweeted, referring to the Lamborghini car popular in crypto culture.

Dogecoin’s rise has come amid a surge in online trading of stocks and crypto by retail investors, stuck at home with extra cash because of the COVID-19 pandemic. It has not coincided with a growth in usage of the coin for payments or in commerce.

The same trend has spurred a boom in usage of online trading apps like Robinhood, and also fueled the social-media driven rally in GameStop stock that pitted retail investors against hedge funds earlier this year.

“It’s an extension of the same phenomenon that has led Tesla stock to be valued well beyond fundamentals and more recently to the GME (GameStop) short squeeze,” said Ajit Tripathi, head of institutional business at decentralised finance startup Aave.

Like other cryptocurrencies, Dogecoin’s price is heavily influenced by social media users including Tesla chief Elon Musk, whose tweets on the cryptocurrency in February sent its price soaring over 60 percent.

“If this goes as planned and everybody including Mr. Musk go ahead and just pour money into Doge on April 20th all at once Doge will reach prices that originally were not even conceptual,” a TikTok user said in a video promoting the coin.



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Amazon is opening a beauty salon in London

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Amazon is opening a hair salon in London — its latest odd lurch into new businesses as the pandemic continues to fuel the e-commerce giant’s torrid growth.

The Amazon Salon, unveiled in a Tuesday blog post, will occupy a two-story, 1,500-square-foot space in Spitalfields, a trendy neighborhood in East London that is also home to Amazon’s UK headquarters, which houses about 5,000 employees.

Indeed, the new salon, which will be open seven days a week, initially will only cater to Amazon workers. Members of the public will be able to make bookings in “the coming weeks” by calling, emailing or visiting the salon, the company says.

“This will be an experiential venue where we showcase new products and technology,” Amazon said in a blog post on Tuesday, adding that there are no plans to open other salons.

That will include making Amazon’s Fire tablets available at each station, allowing customers to use augmented reality technology to see what they look like as a platinum blonde, brunette or with highlights, the company said.

The salon is located at Amazon’s UK headquarters, which houses about 5,000 employees.
The salon is located at Amazon’s UK headquarters, which houses about 5,000 employees.
Amazon

The salon will also test new “point-and-learn” technology, where customers can point at a product they are interested in on a display shelf and the relevant information, including brand videos and educational content, will appear on a display screen.

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