American Liquor Maker Moves Production to Canada After Trade War Wipes Out 70% of Sales
BBC Business reported Wednesday that a family-owned Minnesota distillery survived a near-total collapse of its Canadian business by relocating some production across the border.
A Trade Dispute Hits Home for Phillips Distilling
Phillips Distilling Company, maker of the brightly coloured Sour Puss liqueur range, watched roughly 70% of its Canadian revenue disappear almost overnight. The losses followed a wave of provincial decisions to pull US alcohol from government-controlled store shelves. CEO Andy England described the impact on the business as “a disaster,” telling BBC Business the company had to rethink its entire approach to its most important international market.
Sour Puss bore the brunt of the damage. Unlike most of Phillips’s other products, the fruity liqueur had found an outsized fanbase among Canadian university students over the years. England noted the brand sold barely 1,000 cases annually in the United States, making Canada far and away its defining commercial territory.
Background: How the Boycott Took Hold
The Canada liquor boycott began in March 2025, when Ontario moved first to halt purchases of American alcohol through its provincial liquor board, one of the world’s largest wholesale alcohol buyers. Quebec and British Columbia followed quickly. By May 2026, eight of Canada’s ten provinces had removed US spirits from their shelves.
The two holdouts, Alberta and Saskatchewan, operate fully privatised retail liquor systems rather than the government-run boards that dominate elsewhere. The broader dispute remains unresolved. Prime Minister Mark Carney has signalled provinces could reverse the ban if Washington reduces tariffs on Canadian automotive, metals, and lumber sectors, areas Washington has separately identified as sticking points in ongoing negotiations.
Moving North to Stay in the Game
Within weeks of the boycott taking effect, Phillips Distilling began exploring a Canadian manufacturing option. By October 2025, the company had signed a production agreement with Station 22, a Montreal-based alcohol manufacturer. The arrangement allowed the company to sidestep the provincial bans entirely, since the product would no longer qualify as American-made under the terms provinces applied.
Quebec was the first province to welcome the reformulated supply chain, and that early agreement helped Phillips open conversations with other holdout regions. England told BBC Business the company is now selling across Canada again and considers itself “on the road to recovery.”
Phillips remains one of the only US liquor producers to have taken such a direct production step in response to the trade standoff. Most American distillers have absorbed the financial hit without restructuring where their products are made.
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