Global liquor corporations Diageo's decision to transfer part of production for Crown Royal, the whisky that symbolizes Canada, to the United States has the entire country seething. As news spread that the brand, long a source of Canadian pride like its name "Royal," would leave Canada amid escalating trade tensions with the U.S., a wave of harsh criticism followed. Politicians as well as consumers launched a boycott, calling it "betrayal." Diageo appears unlikely to avoid criticism that, to cut expense, it has damaged the 86-plus-year brand's authenticity on its own.
Since Diageo announced the Crown Royal plant transfer on 28th, the controversy has not subsided as of 15th (local time) but is instead spreading further. Diageo said last month that it would operate the Crown Royal plant in Amherstburg, Ontario, Canada only until February next year and then shut it down.
The plant opened in 1970 and handled bottling for 55 years. Bottling is a core manufacturing process in which matured whisky spirit is diluted with water to set the proof and placed in bottles. In this process, caramel coloring may be added to adjust color, or filtration may be used to increase clarity. Diageo said the closure is "a move to increase supply chain efficiency and get closer to U.S. consumers."
Crown Royal was created in 1939 to commemorate the visit to Canada by Britain's King George VI and the queen. Made with Canadian grains and water from Lake Winnipeg in Manitoba, it is regarded as a representative product that symbolizes Canadian identity. It is also the best-selling among Canadian whiskies in the United States. It holds a 42% share in the Canadian whisky category in the U.S.
Diageo said the distillation and aging processes for making the whisky spirit will continue at facilities in Gimli, Manitoba, and Valleyfield, Quebec, Canada. The U.S. plant will receive high-proof spirit shipped from Canada, blend it with water to set the proof, and handle final bottling and packaging, as well as logistics within the United States.
Under Canadian law, "Canadian whisky" is "a spirit distilled and aged in Canada using Canadian materials and supplies." The bottling location is not a required condition. Even if bottled in the U.S., the "Canadian whisky" designation is legally valid. For this reason, Diageo's position is that there is no legal issue in maintaining the "Canadian whisky" label.
But Canadians think differently. In the whisky market, localizing the entire production process is directly tied to brand authenticity. For example, "single malt Scotch" must be bottled in Scotland. Mass-market whiskies that represent their countries, like Johnnie Walker (Scotland) or Jameson (Ireland), also proudly emphasize that all processes—distilled, matured, and bottled—took place domestically.
Crown Royal is also a key brand that drives Diageo's performance in North America. At the core of its reputation has been a solid identity as "a spirit crafted for more than 80 years with materials and supplies and water gifted by Canada's great outdoors." If Crown Royal is bottled in the United States, the tradition of setting proof with water from Lake Winnipeg in Manitoba disappears. This has sparked debate in Canada over whether a whisky blended with "American water" can truly be called "Canadian whisky." An employee who worked 24 years at the Amherstburg plant told the Ontario outlet the Toronto Sun, "If you use American water, it's no longer Canadian whisky," adding, "You won't be able to maintain consistency in taste and quality."
The liquor industry believes that while Diageo outwardly touts "supply chain efficiency," a strategic calculation lies behind it to remove uncertainties arising from the tariff war between the United States and Canada. Canadian whisky is currently duty-free under the USMCA (United States-Mexico-Canada Agreement). However, given the unpredictable tariff policy of the Trump administration, it cannot be ruled out that tariffs could be reimposed on Canadian liquor at any time under other pretexts, such as national security. At present, textiles and apparel, and electronics and appliances already face a 35% retaliatory tariff. If the whisky spirit is brought into the U.S. and bottled locally, it is classified as a U.S.-made product and can avoid such trade dispute risks.
The "logistics efficiency" Diageo officially cited and the "labor cost reduction" claimed by the union are also important motivations. The largest market for Crown Royal is the United States. It is more efficient to move the spirit to a U.S. production base and bottle and ship locally than to transport finished goods produced in Canada across the United States. In the global liquor industry, this strategy, known as in-market bottling, is often used for lower-priced whisky. Alabama, mentioned as a candidate site for the plant transfer, is a "right-to-work" state with weak union influence. Compared with Ontario, where unions are strong, industry sources said the company can expect long-term reductions in labor costs and labor management expense.
Some said the decision to shut the plant is a risky gamble that shakes the brand's identity. While it may help reduce expense in the short term, it raises concerns that it could topple the brand heritage and consumer trust built over 86 years all at once.
The whisky market is more conservative than other liquor segments. Consumers place high value on a brand's history and authenticity. If the core value of being "100% Canadian" is shaken, it is unclear whether price competitiveness alone can keep loyal U.S. consumers. It amounts to handing competitors an opening to attack it as "Canadian whisky in name only."
There is also strong backlash from Canadian politicians and the public over the fact that a brand akin to Canada's pride has, of all places, gone to the United States amid a trade dispute. Canada's public broadcaster CBC, citing a chamber of commerce official, reported that "local restaurants are joining the boycott by removing dishes from their menus that used Crown Royal in cooking."
Ontario Premier Doug Ford, on 2nd (local time), pulled out a bottle of Crown Royal whisky at a news conference and poured it onto the ground. He took a swipe at Diageo's management, saying they were "as dumb as a hammer handle." Pointing to the shattered bottle, Premier Ford said, "This is what I think of Crown Royal," warning, "If you hurt Canadians, you will get hurt too."
Premier Ford is even considering a hard-line step to oust all products made by Diageo from the LCBO, Canada's government-run liquor retailer. In Canada, the state directly oversees liquor. The LCBO effectively monopolizes retail and wholesale spirits sales in Ontario. If removed from the LCBO, the brand would see in-store and online sales halted across the province, and wholesale supply to bars and restaurants cut off. Ontario currently purchases 740 million Canadian dollars (about 750 billion won) worth from Diageo annually, making it the largest consumer market in North America.
The Guardian in Britain noted, "Premier Ford is one of the Canadian politicians most strongly opposing U.S. protectionism," analyzing that "this situation carries very significant political implications amid trade tensions between the two countries."