International Trade News

U.S. Seeks a Maker’s Mark Christmas in Vietnam to Boost Exports

Dec. 20, 2018, 10:57 PM

A week before Christmas, the U.S. consulate in Ho Chi Minh City toasted the holidays with a whiskey showcase, featuring Wild Turkey, Maker’s Mark, Rittenhouse and 10 other American-based varieties.

Vietnamese importers and restaurateurs, quaffed highballs and old fashions at the U.S. Department of Agriculture-sponsored event aimed at making whiskey converts out of Southeast Asia’s biggest beer market.

The Dec. 18 event was part of a broader lobbying and marketing effort to roll back taxes on alcohol imports and increase sales in Vietnam. The communist country of 100 million people more than doubled its imports of American spirits in 2018 compared to 2017.

Higher sales would be welcome news among distillers in Trump-friendly Kentucky and Tennessee looking for new buyers this year, after Europe and China issued 25 percent tariffs on bourbon to retaliate against President Donald Trump’s tariffs. In fact, the consulate whiskey night—and an earlier dinner to introduce U.S. beans and lentils to Vietnamese palates— were funded in part by a U.S. government bailout to offset farmers’ tariff-related losses.

“We have been working closely on that,” Megan Francic, a USDA attaché at the consulate, told Bloomberg Law.

Scotch, Japan Whiskey

The whiskey celebration is part of an uphill fight for the U.S., made tougher by Trump’s withdrawal from the Trans-Pacific Partnership in 2017. Vietnam hasn’t shown signs it plans to lower consumption taxes that are compounded by import taxes still in effect since the U.S. left the TPP.

Hanoi is going ahead with the rebranded trade deal, including cutting tariffs on liquor from fellow members Canada, Japan, and Australia.

Vietnam also plans to decrease duties under a trade pact signed with the European Union, which will make Macallan and Glenlivet cheaper rivals to Jack Daniel’s and Jim Beam.

Scotland overwhelmingly dominated in 2017, with Scotch whiskey taking 93 percent of the Vietnam market, followed by Japanese whiskey at 4 percent and U.S. whiskey at 2.5 percent, according to Euromonitor. The market researcher also said Vietnamese drink more beer than anyone else in Asia except China and Japan.

Still Vietnam’s overall imports of U.S. spirits grew 137 percent this year through October, to a total of $52 million, according to USDA data. Whiskey imports from the U.S. increased nearly 400 percent.

The country used to buy U.S. alcohol until the Vietnam War ended in 1975, then resumed imports after Washington lifted a trade embargo in 1994.

Now bars and tasting clubs dedicated solely to whiskey have opened around Vietnam, where income per capita jumped 260 percent in the past decade, according to the World Bank.

More Income, and Cancer

“The income of Vietnamese is increasing, and they want to experience wines and liquors from different countries,” said Tran An, who does marketing for Lighthouse Group Indochina, which imports Bernheim, Evan Williams, Elijah Craig, and Pikesville from the U.S.

Euromonitor predicts alcohol consumption will rise in Vietnam, thanks to its young population, the increase in western, Japanese, and Korean arrivals, and the spread of convenience stores like 7-Eleven and MINISTOP and supermarkets replacing outdoor markets.

Rising Vietnamese liquor consumption comes at a price, triggering higher rates of liver cancer, said Hanoi University of Public Health associate professor Cuong Pham. Only Mongolia, Egypt, and the Gambia surpass Vietnam on the World Cancer Research Fund International’s liver cancer index.

“I think that is a big problem in Vietnam right now,” Pham said by phone.

To contact the reporter on this story: Lien Hoang in Ho Chi Minh City at correspondents@bloomberglaw.com

To contact the editors on this story: Seth Stern at sstern@bloomberglaw.com; Jerome Ashton at jashton@bloomberglaw.com;@bloomberglaw.com; Madelyn Callahan at macallah@bloomberglaw.com

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