Tariffs might not happen but tequila is already paying the price

Donald Trump's tariffs on Mexico are not imposed, the threats and uncertainty caused by on and off-again levies have already cost the tequila sector money and could drive a temporary slowdown in sales, producers, investors and analysts told Reuters.

The 25% tariffs, initially due to be applied from February and briefly in place on March 4 before being suspended on both occasions, threatened billions of dollars of imports from huge producers like Diageo and Becle alone.

They prompted businesses and consumers to stockpile tequila, which can only be made in Mexico, freeze expansion plans and divert resources elsewhere.

Some producers, restaurants and drinkers accumulated hefty tequila stock, sometimes of up to six months — a bet which will pay off if tariffs are imposed. But producers say this also has a cost, hurting the sector even if the tariffs are rolled back.

«No matter what happens… a price has been paid,» said Mike Novy, chief executive officer of Calabasas Beverage Company, which operates the tequila brand founded by Kendall Jenner, 818 Tequila.

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The company asked its distillery to work flat out, with workers on overtime through the holidays in December, in order to be able to ship around six months' worth of product to the U.S. ahead of tariffs, Novy said, adding this cost up to $2 million, while storage fees would add about 10% to its costs.

The company had also put planned hiring and product launches on hold, he said, costing opportunities, as well.

Brian Rosen, founder of InvestBev, an investor that partners with early-stage spirits brands to help them grow, said tequila companies in his portfolio had also built up six months' supply, and are paying up to $20,000 per shipping container for