While Ireland’s dairy and alcohol sectors are expected to be among those most impacted by US tariffs, cautious optimism remains among Irish businesses working in these sectors, with opportunities arising in new markets.
Ireland’s dairy export sector is expected to be one of the hardest-hit industries by US tariffs, said Bill O’Keeffe, farm business chair of the Irish Farmers’ Association (IFA).
Mr O’Keeffe said 15 per cent of Irish dairy exports go to the US and noted that “probably the biggest risk” to the sector would be to Kerrygold, one of the largest butter brands in the US market.
The IFA farm business chair said the tariffs come at a time when the farming sector in Ireland is already struggling, and pointed to the difference in tariffs on certain Irish goods against competitors from the UK and New Zealand such as butter and alcohol products.
“There’s good demand for butter right across Europe and in other markets, so the short-term price for butter should be stable,” he said, adding that there has already been a “pushback in the malt and barley sector”, which he said was a worry.
In the long term, Mr O’Keeffe said, farmers could look at other tillage products if production of malt and barley was not profitable.
For farmers across the sector, the worry now is what reciprocal tariffs the European Union could apply to goods they import from the US, he said, noting that Irish farmers import much of their animal feed such as soya bean and corn gluten from the US. “We just have to wait and see if the cost of that goes up and where we will land there.”
Tirlán is one of the Irish dairy businesses set to be hit by US tariffs of 20 per cent, with its competitors in the UK and New Zealand subject to lower rates of 10 per cent.
The Kilkenny-based dairy co-operative exports to about 100 countries in different markets but still has significant ties to the US, Tirlán chief executive Sean Molloy told The Irish Times.
“We are a very export-focused organisation,” Mr Molloy said, noting that the US remains an “important market” for Tirlán “both directly, but also indirectly, because we have very valued customers who buy product from us and then export that product in the US market”.
In direct links, the Tirlán chief said Irish companies, including his own, export between €30 million and €40 million worth of butter fat to the US market, depending on the value of commodities.
In addition to direct exports, Tirlán also has indirect links to the US economy via domestic customers who later export their own products to the US.
“That might be, for example, Ornua, who go to the US market with their products as Kerrygold, as well as other international customers who ultimately sell products to the US,” he said.
Mr Molloy described the US market as “very valuable” to the dairy industry due to the high-spending consumers in that market, which has led to “a lot of value-add products ending up” there.
Despite the imposition of this tariff, Mr Molloy described the dairy export sector as “resilient”, noting the “significant turmoil when Brexit was announced”.
The anticipated shocks to the market are expected to be similar to Brexit, Mr Molloy said.
“This is very akin to what happened with Brexit. At that point in time, we had a huge exposure to the UK – especially with cheddar cheese – but since that point we have diversified our offerings.”
He said the new market opportunities in the aftermath of Brexit were in Asia and in the Middle East and that Tirlán “will look to see where opportunities might present themselves”. In the meantime, it would await the completion of any negotiations that might take place between the European Union and the US.
There is significant concern among Irish distillers that their competitors in the UK, who are subject to lower tariffs, will steal a march on them in the US.
“The fact is, the US is a very important market for the drinks industry generally. It accounts for about 45 per cent of all sales in the market. For us, it’s about 35 per cent – it’s our number one market so it’s very important,” said Pat Rigney, the founder of the Shed Distillery, creators of Drumshanbo Gunpowder Irish Gin.
The Leitrim-based distillery, which supplies 80 different countries, has built up “a big fan base of US customers” in recent years but is concerned by the “uncertainty” in the market now.
“People are just waiting to see what is going to happen. We are no different, we’re just a small cog in that very big wheel but we have to focus on what we can control.”
Mr Rigney said his Drumshanbo Gunpowder Irish Gin has risen to be the “number four premium gin” in the US following significant growth in recent months. “I just see this as another challenge that we have to step up to and get on with,” he said.
“You don’t want to have too much of a differential with the UK brands,” Mr Rigney said. “It’s not all about price, it’s about value, it’s about experiences and the relationship you have with the consumer.”
Other distilleries are looking to pivot to other markets. Michael Scully, founder of Clonakilty Distillery, said the tariffs had come just before the brand’s planned expansion into the UK market, which had been delayed following Brexit.
“We already sell well in Japan and South Korea, so we are focusing more on the east, as well as Northern Europe as well,” said Mr Scully, who revealed the brand is aiming to “become a relevant whiskey player in all the whiskey-drinking nations in that region”.
Amid the announcement of tariffs, the distillery is in discussions with importers in China and Hong Kong but downplayed the “inevitable” impact of tariffs in the US market.
“People have a choice as to whether they want to drink Irish whiskey,” he said, noting the large Irish diaspora in the country who appreciate Irish products. “I couldn’t see them changing their habits. If you’re an Irish whiskey drinker in the United States, you’re going to continue to be an Irish whiskey drinker even after tariffs.”
While other brands remain cautious of the US market, some newer brands see opportunities as tariffs create gaps on retail shelves they are eager to fill. Speaking from Texas, Alice Carroll, the co-founder of Irish whiskey brand Foxes Bow, said the tariffs create opportunities for the business.
Founded during the Covid-19 pandemic, Foxes Bow Irish whiskey has put significant emphasis on the US market, targeting a younger demographic which, Ms Carroll says, is less reactive to price changes.
Foxes Bow “launched at a slightly lower price point” in an effort to prove customer interest to retailers, which gives them “a little bit of room to play with on price if necessary”.
“We genuinely don’t think [a price increase] is going to have a huge impact on sales,” Ms Carroll said.
With the announcement of the tariffs, Ms Carroll said she and her co-founder Tony Foote have breathed “a sigh of relief having confirmed that there is a tariff and what the tariff is”.
“I know that sounds really bizarre, but actually the uncertainty was the hardest part, because there were comments around it being a 200 per cent tariff.”
Foxes Bow plans to “double down” on the US market, in an effort to fill the vacuum left by traditional brands. “All of a sudden, you’re not competing with all of the other brands [...] which makes room for a brand like us with a smaller customer base.”
Another significant market opportunity for Irish distilleries is in Canada, with American products having been pulled off the shelves in many retailers, said Ms Carroll.
“We leverage this as an opportunity to really take advantage of the fact that Canadians are looking for alternative options when it comes to whiskey.”
