The craft brewers and tariffs
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Enjoy savings on top of savings when you shop in-store or online for easy drive-up-and-go pickup or delivery. Subject to availability restrictions apply. Visit JewelOsco.com for more details. They've been on again, off again, raised, lowered, threatened, paused, and then back again. President Trump's announcements on tariffs have had businesses around the world analyzing their supply chains and reassessing their bottom lines.

And so today we are taking a snapshot of one industry and the beating heart of a popular American product, craft beer. We meet the brewers to talk tariffs. We've looked at it and tried to figure out who wins with that, which we don't find a winner with that. That's the odd thing about things.

Hello and Namaste. You're with Business Daily from BBC World Service with me, Divina Gupta.

And we'll be finding out how Trump's tariff politics is leaving its mark on the breweries industry in North America. According to the American Brewers Association, the overall beer market in the US is worth over $110 billion. And while big players still dominate the market, over the past 20 years, craft beer has carved out a loyal following with its bold flavours.

But their rise hasn't been steady. First the pandemic and now the changing aluminium and steel tariffs are hitting them hard. To get a real sense of how brewers are coping across North America, I have been speaking to three business owners from the US, Canada and Mexico. Robin Rydicic of Exchange Brewery in Niagara-on-the-Lake in Ontario in Canada.

Luis Osona of Boqui Beachy Brewery in Jermoseo in Mexico and Justin Cox of Atlas Brewing in Washington, D.C. in the U.S. I started by asking Justin how his business had been affected by recent economic pressures.

The tares have hit us in a lot of different ways. We primarily package our beer in aluminum cans, and that ends up being about 20% or so of our costs on a case of beer. And so a tariff on that aluminum drives our costs way up, of course. And then barley and malted grains, that is obviously a huge part of the ingredients of beer. We get our barley from maltsters, which are separate companies who do a processing of

the raw product into something that we can use in our beer. And they are sourcing the raw grains from somewhat in the U.S. and some from Canada. And so the tariffs hitting Canadian imports are going to increase the cost of our barley, which obviously is, you know, can be somewhere between 60 and 70 percent of the cost of our beer.

Meanwhile, in Canada, which has a massive steel and aluminium industry, Robyn says fresh tariffs are not good news for her business. We have a tremendous amount of primary aluminium here in Canada. What we don't have is the rolling mill capacity to take that raw aluminium and roll it into thin sheets that are then made into cans.

And so what happens is we take our Canadian aluminum, we ship it across the border to the U.S. where they roll it into sheets and they either ship it back as sheets or already made cans. But what that means is we actually get hit with the tariff twice. The tariffs have been on again, off again over the last few months. But what we don't know is we had 25 percent tariffs on everything and then they went away.

And then they came back and then they went away. And what we don't know is what's coming over the coming months, weeks or days, really, in regards to tariffs. And so I, for my business, I'm taking a look at all of my input costs and which one of those am I heavily reliant on the U.S.? And so hops is one as an example where we source a lot of American hops. And so we're making changes. We currently have West Coast style IPA.

And we next month are rolling that out to our Niagara Fruit Stand IPA. It's a lot of uncertainty there. And Louis, of course, none of us like that. But for exporters like you who want to do more business in the U.S., what's been the impact of these tariffs that we've been discussing on different products? And how are you dealing with it? I think uncertainty has been the word because you're trying to plan ahead and not really sure what's going to happen.

For us, we do somewhere around 75 to 80% of our business in Mexico. So now we haven't had here in Mexico any impact on our cost of our raw ingredients. We source some of them from Europe, but most of them come from the States, big on Northwestern hops and on American malt as well. I mean, they place tariffs on agriculture products, I don't know, maybe one week, and then they took them off. I

And we've looked at it and tried to figure out who wins with that, which we don't find a winner with that. That's the odd thing about things. But these tariffs were also supposed to bring jobs back to the U.S., create opportunities locally, boost industries locally. Is that happening? Are more jobs being created? My accountant is working overtime, if that counts. Hmm.

I'm trying to figure this out. But no, I mean, that's such a macro question. It's hard to know. I mean, there's obviously no aluminum plants popping up in Washington, D.C. anytime soon. So we're not going to have an influx of aluminum workers here. And, you know, as the economy is a pretty dynamic thing and as changes are made, things shift around. But I'm not sure that the jobs that

theoretically are being created are necessarily the most efficient way for the economy to work. But Robin, in Canada then, how are these tariffs playing out? Is there then focus on local manufacturing and local beer that is getting a boost perhaps?

Yeah, one of the benefits to Canada of the tariffs and President Trump's sentiments in the media about Canada becoming the 51st state is it created a tremendous amount of nationalism within Canada where we are quite united in buying Canadian right now. And so I think that is why, despite having higher costs,

I'm still able to grow right now because there has been a consumer shift to buying local. But what does it mean for the industry? Because all of this is being done to protect the domestic players. Do you think this could then at least give small players that level playing field, which they might have lacked?

before the tariffs were introduced. I don't think that it will because it's simultaneously increasing our production cost as well. If that theory held and say we were able to grow our market share 10%, but then our raw material costs are up 40%, then that's probably a wash, if not a loss. Luis,

Are you also exploring other markets for your products because of this? The sourcing of them, yeah, that's a common thing that we're always looking for, other ways of sourcing them. But there aren't that many options. Our brewery makes a lot of U.S.-based styles. A lot of the raw materials we want to get them from the States and our customers are what they're looking for.

We always can find some substitutes and stuff, but it's not ever going to be the same. You're listening to Business Daily from the BBC World Service.

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Enjoy savings on top of savings when you shop in-store or online for easy drive-up-and-go pickup or delivery. Subject to availability, restrictions apply. Visit Jewelosco.com for more details. I'm Divina Gupta, and today we are hearing from craft brewers in Canada, Mexico, and the U.S. about how the uncertainty around President Trump's tariff plans are impacting their industry.

Now, supply chains have been under pressure for a while. But what about the people at the other end of the bar, those who drink the beer? To get a sense of how consumers are feeling, our reporter Kizzy Cox visited Thalia Brewery in New York City. Are you seeing any increases in prices of beer? So I would say that when I was much younger, I wouldn't really see beer above $10. I think it was very common to maybe be at that $7, $8 range.

And now you do see that it hits that double digit, $10, $12, even $13. Right, right. And do you buy beer at home? Have you seen prices go up that way? I live right on the outsides of New York City. And I would say that normally we get like that special in the supermarket for maybe like $12.99. Now I think the base is like $16. Or maybe they don't even give that special anymore.

So I would say that for imported beers, probably, specifically for Mexican imported beers. And so have you noticed prices going up for beers? I don't know if I necessarily have. I will say I've been commenting on some of the beers I typically expect to be cheaper beers are harder to find now. When I come to a local brewery, I'm expecting to pay more money. So it could just be that I'm not noticing subtle differences yet.

And so, speaking of being in a local brewery, if the prices were to go up, would that affect whether or not you came here or not? I love it here, so I think it would have to go up quite a bit for it to affect whether or not I come here.

That being said, when I'm just at a bar and I notice that whatever beer on draft has gone up by a couple dollars, it would definitely affect the likelihood that I would order it. Have you noticed prices going up at all on beer? I have not. Yeah, I haven't. I mean, beer's kind of expensive in Brooklyn and New York already, so I haven't really noticed anything.

much difference yet. Yet. Keyword yet. So if it were to go up, would it affect how much you choose to go out or not? Probably not. I still bought eggs even though I really like eggs and I really like beer. So I'm not that price sensitive to either of those. Okay.

Drinkers in Talia Brewery in New York City, speaking to reporter Kizzy Cox. Robin, do you have to also pass some of these costs that are happening to your consumers? What kind of adjustment are you going to make in the competitive market to still remain competitive and relevant?

Yeah, our pricing to the end consumer is a huge issue for us. And we were thinking about that. You know, there is a breaking point where we're not able to absorb a lot of the tariff cost and still stay in business. And the pressure point on the other side is, you know, we're a craft brewery that makes a premium product. So if you're in the store, our Atlas beer is, you know, maybe $13 for a six pack, whereas our

our macro beer competitors might be as low as $6.99 or $7.99. And so it's very much a question of how much room is there in the consumer's mind. Lewis, what are you hearing from your partners in the U.S.? Are they asking you to absorb these additional tariffs, or is there a room where they could help out perhaps?

I think the expectation is for us as the producers to absorb most of it because it is a very competitive market. So in order for you to be like a good amount, a good percentage more expensive than the competition, I mean people might just not even choose a macro beer over yours but if the other craft options are still a few dollars cheaper, that's a tough battle to win.

Robin, then, are you sensing any shift on how Canadian customers are viewing U.S. beers right now? I mean, is there a bit of bitterness, maybe even a local, bi-local push because of these tariffs? Absolutely, there is. The bi-Canadian movement came on fast and furious.

I think right now, I as a small business owner am feeling hurt financially by the tariffs, but I'm also kind of feeling hurt emotionally, as I think most Canadian consumers are. That we trusted, the U.S. has always been our best friend, our best trading partner. We have genuinely considered the country important.

an ally basically in every definition of the word. And right now we're feeling very vulnerable and very hurt. And we still love Americans. And please continue to come up to Niagara and visit our beautiful region. But there are a lot of Canadians who...

are feeling vulnerable and hurt. And the only voice they have is with their wallets and with their feet. And so we're seeing people buying a lot more Canadian-made products and looking on those grocery shelves and the ones that have the maple leaves, that there's two orange juices sitting right next to each other. They lean towards the one that's Canadian-made. And in addition, with our feet, in the sense that Canadians aren't traveling to the U.S. in April alone,

the traffic at our land borders of Canadians going to the U.S. dropped 35%. Now, again, I hope this is just a temporary blip and that all of the trade agreements get sorted and we can go back to being best buddies just like we always have been. But for sure, there's a consumer shift that was pretty immediate and quite impactful. So a trust broken but can be healed. Justin, are you seeing...

the impact of what Robin is mentioning, especially about the Canadians who are coming to the U.S. and going around spending, coming to breweries like yours. Are you seeing that activity slowing down? We're absolutely seeing activity slow down. You know, we're in Washington, D.C., which is obviously a large tourist destination, both for

domestic U.S. travelers and international. And traditionally, you've had a lot of visitors from Canada. And now that that is slowing down, that's fewer people who are coming into D.C. and dining at restaurants and coming into our pubs. And, you know, international travelers in particular, when they come to visit, they usually stay longer and they spend more money because they're staying here longer.

And that has definitely slowed down as we see what would traditionally be an uptick for the summer season. It's just not been what it has in years past. Lewis, how are you reading what we're hearing between Canada and the U.S., the consumer sentiments over here? In Canada, buy more local products. In the U.S., yes, the demand is there right now, but we don't know whether it's going to grow. How is that impacting consumers?

those breweries like yours in Mexico? What are you observing there in terms of consumers? We've experienced a slowdown in demand in the past few months now, maybe a little over a year. And we have some other issues such as public safety and some other issues that even have a bigger impact that tariffs might have. And

And Justin, then, so what's the message coming out from the U.S., from you, to partners like Luis and Robin who are looking for some sort of headway in this stalemate? Well, I think I would ask administrations and leaders around the world to recognize the irony of these new policies that are purporting to help bolster domestic U.S. manufacture.

And as a domestic U.S. manufacturer, they're making our business and life much harder. And I think revisiting what these agreements look like with a scalpel rather than a sledgehammer would be a great start. What's your favorite beer then, Justin? Which is the favorite one that you brew? I had to pick one. I would raise a glass of our Bullpen Pilsner. What about you, Robin? I would say our new Niagara Fruit Stand IPA, which...

celebrates all of the locally grown fruit here in Niagara, like peaches and strawberries and apricots. And it is delicious and refreshing and summer in a pint glass. And Luis? I would have to pick our Kolsch-style banquetera. Oh. World Beer Cup gold medal last year. So we're very proud of it and we enjoyed every sip of it.

Congratulations. That's a big deal, Luis. Thank you. Congratulations for that. But a big cheers to all of you. Thank you so much for joining us. Thank you very much. Thank you. Thanks for having us. And thank you all for listening. We were talking to Robin Rudisic of Exchange Brewery in Canada, Justin Cox of Atlas Brewing in the U.S., and Luis Osona of Bukidichi Brewery in Mexico.

And as we heard on the show, from changing tariffs to supply chain snags and shifting consumer habits, there's a lot brewing for this industry in the days ahead. That's it from me, Divina Gupta and producer Hannah Buley. For more from Business Daily, just search for the program wherever you get your BBC podcasts. Till next time, cheers and namaste.