Pernod Ricard CEO Says Trump's Border Tax Will Burden Consumers

  • Distiller lobbies with ‘huge group’ for exemption from plan
  • Increased import costs would have to passed on in prices

Pernod Ricard CEO Says Lobbying Against U.S. Border Tax

Pernod Ricard SA is lobbying U.S. President Donald Trump’s administration for exemption from a border tax proposal that it says would result in U.S. consumers paying higher prices for its Absolut vodka and Perrier-Jouet champagne.

The spirits industry is regulated by provenance rules whereby cognac and champagne cannot be produced outside of their designated namesake regions in France, or tequila outside of Mexico, the subject of Trump’s proposed 20 percent levy on exports to the U.S., Chief Executive Officer Alexandre Ricard said Tuesday.

The distiller is putting its case with “a huge group of members,” including Wal-Mart Stores Inc. and retail associations, “because they view this potential border tax just as a consumer tax,” Ricard said in an interview with Anna Edwards on Bloomberg TV. 

“If your cost of imports increases via taxes, the only way to cope with it is to pass it on to consumers, which is not nice to consumers, but we don’t have much of a choice,” he said.

Ricard weighs in on the impact of a possible U.S. border tax.

(Source: Bloomberg)

A border tax could also lead to inflation in the U.S. and weigh on consumption, Pernod Ricard’s Chief Financial Officer Gilles Bogaert said on a call with investors last week. A slowdown would come as the company exports record numbers of cases of its Martell cognac and Jameson Irish whiskey to the U.S., its largest market by sales.

Pernod Ricard last week reported first-half earnings that beat estimates as sales of Jameson extended a seven-year surge and revenue in Asia rebounded.

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