Tariffs, tariff delays and retaliatory tariffs have resulted in a never-ending drumbeat of news during the past few months, leaving food and beverage companies struggling to keep up.
A 20% tax on goods from China went into effect on March 4. President Donald Trump implemented 25% tariffs on some items from Canada and Mexico earlier this month while delaying taxes on certain goods from those countries through April 2. The U.S. is also raised duties on steel and aluminum on March 12 and plans to implement “reciprocal tariffs" on April 2 on countries around the world.
While the tariffs are set to raise some costs for food and beverage manufacturers, a majority say the impact won't be detrimental to their bottom line. For the most part, companies aren't planning major price increases in response to tariffs, especially as persistent inflation dampens consumer spending.
Instead, the bigger issue could arise from countries' retaliatory responses to Trump, which has already resulted in boycotts of U.S. products. Lawson Whiting, the CEO of Jack Daniel's owner Brown-Forman, said earlier this month that removing U.S. products from shelves is “worse than a tariff.”
Still, duties could present a more pressing challenge for those businesses with more exposure to the agriculture sector. Canada suspended imports from a Smithfield pork processing plant, while top agricultural buyer China implemented a 15% tariff on U.S. agricultural products including beef, pork and soybeans.
Here's a look at what CEOs from some of the largest food and beverage companies are saying about the unfolding tariff situation.
The Campbell's Company says tariffs could hit soup
CEO Mick Beekhuizen warned tariffs could raise packaging costs and have a negative impact on its namesake soup brand.
Campbell's imports steel for its cans and canola oil for its chips from Canada. The company also produces its soups in the U.S. and ships them to Canada, leaving the New Jersey company vulnerable to retaliatory tariffs.
Beekhuizen said the company is working with suppliers to mitigate the potential impact. Campbell's could raise prices on its products depending on the extent of tariffs and how long they're in place.
“Now that being said, I'm obviously going to be very focused to make sure that we provide a good value to our consumers," he said.
Jack Daniel’s owner Brown-Forman warns boycotts more harmful than tariffs
Canadian boycotts over U.S. tariffs may be worse than the tariffs themselves, the CEO of Jack Daniel's owner Brown-Forman told analysts earlier this month.
Retailers across Canada have taken U.S. products off the shelves in a move that is taking “sales away completely,” according to Chief Executive Lawson Whiting. The Liquor Control Board of Ontario — one of the biggest importers of American alcohol to Canada — also ceased the purchase of U.S. products.
Brown-Forman is preparing for tariff fallout in Europe if duties go into place in April. Potential backlash against American whiskey or other U.S.-affiliated products could limit the market for brands like Jack Daniel's.
“If it rolls out where they're coming after American whiskey again … then the market for spirits once again gets very distorted,” Whiting said. “That is a big disadvantage for us.”
Whiting added that the alcohol producer is “going to try to continue to believe and hope that American whiskey is not involved in this big dispute.”
However, last week, the European Union announced countermeasures to the U.S.’ tariffs on steel and aluminum, including a return of previously suspended duties on U.S. goods like bourbon, boats and motorbikes.
General Mills says tariffs ‘aren’t really meaningful’
CEO Jeffrey Harmening told analysts at the Consumer Analyst Group of New York gathering that tariffs “aren't really meaningful” for General Mills because the Cheerios and Nature Valley bar maker sources 95% of its products in the U.S.
However, Harmening called out the potential for higher costs on Canadian goods, including oats used in the company's cereals and snack bars. Tariffs on tinplate steel could also impact packaging for soup, wet pet food and/or Yoplait lids.
Coca-Cola could switch to more plastic bottles
CEO James Quincey said on an earnings call in February that while tariffs will increase the costs of Coca-Cola soda cans,”we are in danger of exaggerating the impact of the 25% increase in the aluminum price relative to the total system.”
Cost increases from tariffs are “not insignificant,” Quincey said, but he added that “it is not going to radically change a multi-billion dollar U.S. business”"
Coke could take a variety of steps in response to steel and aluminum tariffs. Quincey said this could include changes in sourcing and weight of cans. The beverage giant could also implement price increases and potentially switch to more plastic bottles.
Quincey called tariffs a “manageable problem.”
“It is a cost. It will have to be managed,” he said. “It would be better not to have it relative to the U.S. business, but we are going to manage our way through.”
Mondelēz International predicts higher cookie, cracker costs
CEO Dirk Van de Put told Food Dive in an interview last month that tariffs “will have an effect” on its finances since it produces some cookies and crackers for the U.S. in Canada and Mexico.
At the time, he said Mondelēz was looking at possibilities to offset the higher costs. It could increase prices in the U.S., but with inflation already causing consumers to cut back on purchases, it’s unlikely to be a major tool.
Instead, Van de Put said Mondelēz would likely boost promotions and marketing for some of its brands like Oreo, Ritz and Chips Ahoy!, with higher volumes offsetting the elevated costs incurred by the snacking giant.
Tyson Foods prepares for retaliatory tariffs
For meat companies and other agricultural firms, one of the biggest risks of a prolonged trade war is retaliatory tariffs against U.S. products.
Exports make up a substantial part of their businesses, with Tyson sending 10% of every hog it processes to Mexico. CEO Donnie King told analysts on an earnings call in February that tariffs from Mexico and Canada would force the country to find new markets.
Tyson is assembling contingency plans for its pork business and in chicken, where it sends legs and other parts to Mexico. The company sends very little chicken to Canada, though it does import feeder cattle and hogs into the U.S. from its northern neighbor.
“Essentially what we would do, whether it be pork or whether it would be chicken, is we would find other markets,” King said. “We would leverage our global knowledge and expertise to try to move those products if necessary.”
