As the CEO of an emerging company, an American, and a human being, I have found the first 10 days of the Trump administration to be particularly worrisome for the future of our company, the future of our country, and our reputation around the world. Usually as a spirits company, we try to stay out of the political process, as political affiliation has little determination if one is going to enjoy spicy cocktails. However, the proposal to impose border adjustment taxes, the executive order banning entry into the United States for people of certain national origins, and the escalating tension with Mexico all have dramatic potential consequences for the future of Tanteo and the liquor industry in general. In the below letter I wanted to outline my stance on these issues, and highlight how they are affecting our business.
All tequila comes from Mexico. Similar to Cognac, Scotch, and Champagne, Tequila is regulated through various multinational trade deals. For Tanteo to continue making tequila, we need to continue making Tanteo in Mexico. Whether through a tariff, or a border adjustment tax, the overall result is that Tanteo, and every other tequila, will cost more. While this will disproportionately hurt lower priced tequilas that are sold more on their price than the merits of the brand, these rising prices for tequila will make it more expensive to drink all tequilas, limit the quality of spirits on cocktail menus (all good quality spirits will become too expensive), and squash the booming craft movement coming from agave based spirits. While the goal to buy American does have some appeal to me, the irony of these proposed taxes is that they will disproportionately hurt American earnings. Tanteo is an American owned company and the brunt of this tax is paid by consumers which will inevitably slow down our growth and hurt our bottom line. While I still believe the rhetoric of the last 10 days will die down as the consequences of these choices are fully vetted, the risk of new border taxes on our business are real.
Last thursday’s floating of a 20% border adjustment tax proposal seemed to take a back seat to the more inflammatory travel ban announced Friday afternoon. While as a company we see this ban as closeted religious discrimination, it also personally affects us. We are 3 weeks away from a company trip to the distillery, and with one of our full-time staff born in Iraq, she is unsure of her ability to leave and freely return to the US. She is currently seeking legal advice but as of now has been told by the legal team to wait as they don’t feel qualified to make this decision given the uncertainty of the current administration. This ban is not only causing fear, bigotry, and appears ineffective, it is also disruptive to our normal company business.
Third, with our upcoming trip to our distillery for all our full-time employees as well as a number of our top accounts, I worry about how we will be perceived by our host country. Whether it is calls to renegotiate NAFTA, the escalating rhetoric around walls, and the absurd claim that Mexico will pay for it, we are dividing two cultures that need each other. For me personally, spending time in Mexico through Tanteo has given me new friends and a new appreciation for a nation I was not likely to experience from growing up in the Midwest (not to mention some great tequila). I am confident the cultural exchange has gone both ways as we grow our operations south of the border. Knowing that a feud is escalating from the highest branches of government between the two countries makes me worry how these different cultures will accept or reject each other in the coming months and years.
None of the actions taken by the executive branch of government are surprising if you had listened to the rhetoric of the 2016 campaign. However, now that these talking points are being put into action, It is time we take a firm stand as a company and reject proposals that hurt our company, our country, and our world.
Para la buena vida,