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Hi, I'm Matt. And I'm Leah, and we're from the Grown Up Stuff Podcast.
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And this is Andrew Peech with World Business Report on the Bucy World Service.
Good to have your company.
Today, the US bourbon makers at the centre of a trade war.
We prefer to understand the rules and the rules are changing on a daily basis right now, so it causes many of us to begin to move away from export markets.
Why supermarkets in the UK are giving away food, and is Versace about to be taken over?
Well, Versace is one of the most well known Italian luxury brands.
Its business remains smaller than the brand, And so the main reason for the Prada group to acquire it is because they believe they could grow it into a much bigger business.
First, the US President Donald Trump has threatened a 200 % tariff on alcohol from EU countries.
This was in response to the EU's plan to impose a 50 % tariff on US whiskey.
Major stock markets in the US and the EU have moved lower.
The US Treasury Secretary Scott Besson says tariffs will ultimately protect American workers years, and he's less concerned about the short term.
A bit more concerned is Pauline Bastadon, who is Director of Trade and Economic Affairs at the trade body, Spirits Europe.
Spirits Europe is really deeply alarmed by the threat of tariffs, both on the EU and the US side.
We were already very worried by the promised 50 % tariffs that the EU would impose on US periods, but I'm 200 % on EU spirits.
This is just too much.
And well, who knows whether it will happen, I suppose, because quite often tariffs have been threatened and then withdrawn.
But this is a direct response to the EU talking about tariffs specifically targeting bourbon, which will hurt some parts of the US.
Look, our industry is actually completely integrated.
So we have EU producers that produce in the U .S., that produce bourbon and other types of U .S.
whiskey, and vice -versa.
I mean, we have American companies that produce in Europe as well.
And for more than 20 years, there were no tariffs, basically.
We were tariff free.
And this is very much where we want to go back.
The cycle of tit -for -tat retaliation honestly must end.
It's extremely damaging, the uncertainty is damaging as well, and we are sick and tired of being used as a bargaining chip in conflicts that have absolutely nothing to do with us.
Would you therefore want the EU on this one to go, okay, we back down on the tariff threatened on US whiskey because the states have already said that it's just about getting that stopped.
It's not a question of backing down.
We've never asked for these tariffs on US whiskey.
We think it was deeply misguided because in so doing, you're also targeting EU companies.
So what's the sense of that?
We also don't see how targeting spirits in general is going to resolve unrelated disputes.
This being said, I think it's deeply unhelpful to see the escalation.
One side is basically coming up with a proposal for tariffs, the other one is saying, well, I'll come up with even more tariffs, and with our American colleagues, we don't want any tariffs.
We don't want any tariffs in any direction, whether on EU or US spirits.
Now is the time when both sides need to really get to the discussion table, the negotiating trading table and just find a negotiated solution.
Get us out of this.
There's a danger we don't get to that because no one wants to lose face.
Well, I hope they will not be proud to that extreme.
To be fair, you know the EU has always said that they would be ready to negotiate with the US.
And then on the other side, President Trump is known as the master of the deal.
So surely there should be some kind of negotiation possible between the EU and the US.
And I mean, let's not forget that all of this started it because of something that had absolutely nothing to do with us, still an aluminium.
Meanwhile, other parts of your industry will be trying to grab a bit of market share, won't they?
Scotch whisky makers, spirits distillers in Japan will be eyeing up this situation thinking hang on a minute there are consumers here who need to be satisfied.
As a matter of fact, the integration of our sector also extends to these countries, tariffs on spirits were liberalised by all these countries years ago, as a result you have companies is in all these jurisdictions in Japan, in the UK, in the US, in the EU that are invested into each other's markets, that produce spirits that are very unique to these regions.
These companies have been building their success on being so integrated across these various continents and enabling products that consumers want to try.
We don't look at it as one segment is going to win.
in fact, the risk we see is that what will take the place of legitimate products if these tariffs go through will be illicit products smuggling.
Final thought, I wonder what stockpiles there are of French wine and other imported alcohol into the U .S.
ready for U .S. consumers right now because managing businesses is all about knowing what's going to happen.
So if people foresaw this, they'll have loads of stock already there, right?
The positive thing about Working For Spirits is that our products don't go bad, so you can enjoy them over a certain period of time.
We hope that it will not get to a situation where you cannot find our products, clearly.
We hope that we will be able to have common sense prevail, that both sides are going to get to the negotiating table, find a solution, make sure these tariffs don't happen, and and that you'll still be able to enjoy all these wonderful products in the US, also in the UK, everywhere else, that retailers will be able to sell them, and this is so important because you have all these jobs that depend on this trade, that depend on this production.
So how do things look from the other side of the Atlantic?
To find out, I've been talking to Jeff Quinn, the founder of Cedar Ridge Distillery, which is in Iowa.
We really feel as a bourbon industry here in the U .S.
that we're kind of collateral damage in this whole process.
We wish we weren't.
U .S. bourbon is a distinctively American product, it can only be made here in the U .S.
and so we distilleries in the U .S.
have to supply the global demand for it and when outside countries place tariffs on, it obviously lowers overall demand for it.
So if If you're a bourbon producer like Cedar Ridge is here in the US, we see some issues with potential demand on the road, anxious to see how this sorts itself out.
And I guess that's that's why the European Union have specifically threatened to retaliate against US tariffs by tariffing your product.
I think so. It might be what I would do if I were in that situation.
So there's no resentment in terms of this was a stupid move to make.
It's just confusion in that it creates a very unstable environment to try to do business as a spirits industry here in the US and working with our counterparts in the UK and EU.
We're all in favor of zero tariffs in either direction.
So we wish that were the case but it doesn't appear that that's going to be the case.
Does it feel to you like Donald Trump is on your side because he would certainly say he is?
He's saying lay off the bourbon industry, otherwise I'll hit you with tariffs so punishing you won't be able to survive them?
He speaks as though he's on our side.
Sure. But we're a long ways from sorting this out.
As a business decision maker, we don't want to have to work in an environment that's so uncertain does this, we prefer to understand the rules and the rules are changing on a daily basis right now.
So it causes many of us to begin to move away from export markets.
Cedar Ridge we were sending product to the EU, we were sending product to Canada, now we're not sending product to either one of them anymore.
And that's because of the underlying tariff issues.
So I don't know how widespread this will get.
But until there's a bit more certainty, would tend to want to avoid those scenarios.
When you say we won't be exporting for the moment to the EU or Canada, does that mean you said all your bourbon in the US or you're looking for markets elsewhere?
We also ship to some other countries but we're not going to make any effort to get back into the EU or Canada while these discussions are going on or while there's looming tariffs.
we would gravitate to more of a domestic strategy and try to sell more of our bourbon here in the US.
Now we can do that as a smaller player here in the US but some of the largest bourbon distilleries in the country probably can't do that.
Of course and it doesn't mean you have to produce less, you just think you'll be able to sell it domestically.
Well we can probably do that at our scale but if we all have to do that then I think that's probably going to be actually be good for the US consumer in bed for the distilleries such as ours because you know if they have to dump product in the US there's going to be lower prices and we're not in a position to try to win on lowest price scenario because there's only so much bourbon Americans can drink that's the bottom line that's right and unintended impacts of this every barrel of bourbon has 17 bushel of corn and some other grains so you know this This problem does also push down to the next
level in the form of lower grain prices, et cetera.
And do you worry about your slice of the market in other territories being taken by distilleries elsewhere in the world, where, you know, they're not going to worry about this at the moment?
Are you thinking, you know, that people will start buying their spirits from Japan or they'll start buying them from Scotland or they'll start buying them from somewhere?
Yes, absolutely. You know, any market you go into, you're looking at a minimum three to five year investment in that market.
You don't just roll into a new market, like if I were to roll into France and start making money right away.
It's going to be three to five years of spending money before you can expect any kind of return at all.
And so when you pull out of a country, it's a whole new decision whether you reenter that country or not because to some extent you're having to start over.
So in this environment, you just generally wouldn't.
Did you think it would be like this when Donald Trump won?
I don't know what I thought it would be like.
The administration's saying there's going to be some temporary issues here and we're certainly seeing the issues as our stock market's been going down every day.
So we just want to see things get stabilized and sorted out, but I'm afraid it might be a while longer yet.
And are you losing sleep at night over this or are you fine?
I am not yet losing sleep over this, but if I were a larger player and had all my eggs in the bourbon basket I would be a bit more nervous.
And that was Jeff Quint talking to me from Iowa, where his Cedar Ridge Distillery is based.
Live now to George Convoy, Chairman of Brighton Securities on World Business Report.
George, thank you for being with us.
What's all this chaos doing to the value of drinks companies?
About the same thing it is doing to the value of everybody else involved.
Yesterday the European drinks companies were hit, LVMH down a little over 1%, Heineken down 2%, Bernourocard down 4 % and putting most of those companies for the year into solid bare territory down anywhere from 5 -18%.
Is that just because the value of markets is going down or can you see the specifics of this little spat around this industry in the figures?
Yesterday was absolutely because of the tariffs.
You look at the trading charts and you see they dropped like a stone when that news hit.
They were having a modest day and then got hit.
So yesterday, certainly they're affected, and with an uncertain future, as you've discussed with your other guests, everybody's going to wait to find out what comes in that market.
We'll come back to George in a second or two.
A bit more reaction to all of this on alcohol first though.
Olof Gill, who's the European Commission spokesperson for economic security and trade, told us that so far this is nothing more than a social media statement, but the EU will react in a swift and definitive way if this idea of 200 % tariffs does translate into something more tangible.
Donald Trump's former economic adviser Stephen Moore told the BBC this will end in a negotiated deal.
The only question is whether that takes one day or six months and speaking to our colleagues on the BBC's hard talk programme, the president of the European Central Bank Christine Lagarde said there would be no winners from this.
Any trade war is going to hurt the global economy, the initiator, the retaliator, the re -retaliator and so on and so forth, all of that is going to hurt growth at large.
Everybody will will suffer from that.
This is a constant in in history of trade.
Now some countries will be hurt more than others, some countries will see inflation move more than others, but everybody is to lose as a result of that.
And she agreed there is still time to avert an all -out trade war.
Between now when it's announced and the time when it's implemented there is a lag, during which, possibly, not certain, but negotiations can take place.
George Conway from Brighton Security is still with me.
Tell me about the flight to gold.
Gold is way up. We've seen kind of a benchmark number reach down to $3 ,000 the other day, which is the first time gold has hit that price.
Traditionally, gold in the metals are seen as haven for safety in uncertain times, and We've got the very definition of uncertain times right now, so investors are fleeing into that hidey -hole.
Can anyone yet tell me why Donald Trump has seemed to stop caring about markets?
These were really important to him in the first term, and although people knew the second term would bring all kinds of uncertainty, I think people thought that he'd want markets to do well, that he'd be looking to their performance, and it doesn't seem to be.
There are two possibilities there.
One is, as a New York real estate operator, he's used to operating just absolute hammer and tongs negotiations, and that hasn't changed.
But what he may not be used to is in a New York real estate deal, everything is behind a closed door.
That's not used to the public issue here.
The other is that most presidents will say, take your recession early.
if you're going to have a recession, if you're going to have a bad market, have it happen early in your term, so later in your term, you can see the recovery, and you can benefit politically from whatever it was you did that finally we came back from.
Don't know if that's the case, but it may be that.
And obviously for a second term president, he doesn't have to face re -election personally.
Exactly, and that can be seen as a blessing or a curse.
If you don't like what he's doing, and you think, gosh, he's not worried about re -election.
If you like what he's doing, you think, gee, I'm glad he's not worried about re -election.
So it's 50 -50 across the board on that score.
George, thank you. George Convoy, chairman of Brighton Securities Live with me.
This is World Business Report with Andrew Peage.
She's listening to the BBC World Service.
Let's talk about Versace in the news today because Donatello Versace is standing down as creative officer of the luxury fashion label.
The new creative officer is going to be Dario Vitale from MuuMuu, which is part of Prada with the expectation that Versace could soon be added to the Prada group itself.
I've been talking to Imran Ahmed, who's the CEO of the business of fashion.
Donatella's been in this role for almost 30 years and, you know, she's been such a fixture at Versace.
Sometimes people don't remember that she kind of stumbled into this role after her brother, the founder of the brand, was killed in 1997 and She wasn't a trained designer, but she ended up taking on the creative helm after he passed away and has really been the one who's kept the Versace flame going over these past almost 30 years.
And so it is the passage of time.
She's been in the role for quite a while and, you know, I think the brand's leadership and probably Donatella herself felt that it was time to bring in some fresh creative ideas into the business.
So that's interesting because it's obviously going beyond the family, beyond the name, and therefore that's a change to the brand one way or another.
There's also a talk about it being taken over though.
Reports in the industry that Versace is on the sale block.
It was acquired, I think, back in 2018 by an American fashion group called Capri Holdings.
Capri was trying to merge its business with another American group called Tapestry.
but the FTC blocked that merger.
And since then, Capri has been trying to figure out its plan going forward.
And so Versace is reportedly for sale.
And it looks like the Prada Group is in pole position right now to buy the brand, which is interesting because Dario Vitale, the new chief creative officer, was previously in a senior design role at MewMeu, which is also owned by Prada.
And would Prada keep Versace as a separate brand?
And if they would, what would they want to do to expand it?
Yes, absolutely. I mean, Versace is one of the most iconic brands in the fashion industry and that word, iconic, tends to be overused.
But in this case I don't think it's an exaggeration.
Versace has a very, very clear design and brand DNA.
And, you know, it would be a mistake to dilute that by trying to combine it with anything else.
So what they would be buying is a brand that has the potential to grow and scale.
While Versace is one of the most well -known Italian luxury brands, its business remains smaller than the brand.
And so, you know, the main reason for the product group to acquire it is because they believe they could grow it into a much bigger business.
Do you risk undermining the specialness of the brand, even by making it bigger?
I think Versace is sub scale and I think making it bigger would not undermine it.
It does about 1 billion in revenue and if you compare that to some of the big mega brands in the industry, like V ton, which does 20 billion or Gucci, which does around 8 billion euros in revenue, you can see that there's still a lot of opportunity for that brand to grow and it certainly has all of the DNA and the elements required to scale it into a much bigger business.
Who in the fashion world will be worried?
Today, Gucci announced, in the last couple of hours, that it has also appointed a new creative director.
There's a lot of change happening in the luxury fashion sector at the moment.
So Versace is not the only business that's trying to reposition itself.
There's a new creative director at Chanel, who will be debuting his first collection for the brand in September.
And there's rumors of big changes happening, also at LVMH which owns brands like Dior and Loewe.
So there is a lot of change happening in fashion.
I think it's a good thing for the industry.
The industry has become a little bit formulaic in its approach to the market.
And what we need now is more creativity, more innovation and more exciting ways to connect with customers.
And so all of these brands will be competing for attention and in a luxury market that's not growing as quickly anymore.
So it's all about fighting for market share and creativity is the best place to start.
And that was Imran Ahmed, who's the Chief Executive of the Business of Fashion.
The UK's biggest supermarket, Tesco, has started a trial to give away food, which is about to go out of date.
From 9 .30 in the evening, it's going to be offered to charities and then staff before being given away to customers.
The environmental journalist Lucy Seagour says it's all a positive step towards tackling food waste.
I think it's pretty interesting actually and I think supermarkets do really need to do something because they need to make a bigger dent in their food waste which, as we know, is responsible in the UK for about 5 .5 of all greenhouse gas emissions.
Well, we wondered how supermarkets and grocers are dealing with these issues of food waste elsewhere, specifically in the much larger US market.
To tell us, here's Jacqui Suggitt, who's Vice President of Business Initiatives at REFED, which is a US -based non -profit organisation working to reduce food waste.
Jacqui, you're with us from Bentonville, Arkansas.
Thank you for joining me on World Business Report.
Does this kind of thing already happen in the US, where food that's passed its best gets given away at the end of the day?
You know I don't think we have anything exactly the same where you're seeing this food big eight being given away for free to consumers we do have a lot of similar programs to what you also heard referenced in that clip about donations to charities as well as technology -based solutions that will discount that food near the end of the day as it is approaching that deadline and in the UK that already happens that the food is very heavily discounted already with you know special little yellow stickers that get put on so something that's you know £2, £3, £4 is reduced just a few pence.
Yes exactly. This is part of an initiative by Tesco and indeed other supermarkets in the UK to try and halve the amount of food they waste by 2030.
Yeah and that's the goal we actually see pretty consistently across the country here and across several countries around the world is its alignment to a 50 % reduction in food waste by 2030.
How much food gets thrown away from big stores?
It's not a small amount.
As we look across the U .S.
we see that retailers here have about 4 .45 million tons of what we call surplus food.
So this is food that is not going through its intended sales channel, but it could include food is going to donations and other destinations, but it's still over 4 million tons of that surplus food.
I mean obviously they're dealing with large quantities, but what's causing that?
Because no one wants to throw food away, at least at all the supermarkets who could make some money from selling it.
So what's gone wrong when that happens?
Absolutely, no one wakes up saying I really hope we waste some food today.
I think if we if we hone in on the retail sector in particular here in the US, the top three causes that we see driving that unsold food.
The first is date label concerns, which is also actually something we see the UK market leading in with really innovative solutions, handling errors within stores, and then also spoilage, just because of that short shelf life of so much of that fresh food, it actually is boiling out before it gets to the store or before it can be purchased by consumers.
And I suppose there's also this sort of thing whereby what we want is determined by weather and those kinds of things.
So if the sun shines, our desire is to buy something to put on a barbecue is high and if it's raining then we don't buy that same stuff.
Yes, we as consumers are fairly fickle and we also do not align our purchase behaviors very well with the natural seasonality of food.
I think there's also an interesting dynamic where even someone like me, who I spend every day focus on food waste, I go into a grocery store and I'm I have a lot of these behaviors that retailers have to put in place with how we spend our dollars and how the expectations that we set as consumers for what we want to find in the store how we want to find it when we want to find it and that kind of I want it now I want it always mentality.
That's interesting.
So we as consumers, we like the sort of big display of more apples than they could possibly sell.
Yeah, we do. We like knowing we can get it, right?
We like abundance. and I think the resulting dynamic in a retail environment is if I run out of food, that's sales that I could have had, right?
So there is resistance to eliminating food waste entirely from a business standpoint, which makes total sense.
But there's a lot of great progress happening where we're seeing very high tech, high cost, but also very low tech, low cost solutions being successfully implemented and driving down a lot of that surplus food.
And what more could they do?
What would you like to see them do to go further on this?
Yeah, I think there's a lot to do even getting deeper into the data to understand where the highest ROI opportunities there are a million solutions to food waste out there.
So how do we prioritize where to take action first?
I think another thing with retail in particular is there's a lot of work to do within my four walls as a retailer.
But there's also a lot of work I can do if I can break down silos within my supply chain and start working closer with my suppliers, working closer with their producers and working all the way up that supply chain and also working to educate consumers to change some of our mentality and some of our practices for how we purchase and prepare food.
Jackie thank you very much that's a Jackie Suggitt from ReFED joining us from Arkansas.
If you want to know a bit more about the brewing trade war it seems between the US and the EU over alcohol there's more on the live page at bbc .com slash news this is interesting and just posted at the top on that live page which country do you think in Europe would suffer the most if this 200 per cent tariff on imported alcohol into the US actually happened as threatened by Donald Trump on truth social the answer by a country among us France followed closely by Italy and France and Italy are way way ahead of all other EU countries in terms of the amount of alcohol they sell to the US.
BBC .com slash news for more from me Andrew Peach and the team here on World Business Report.
Thanks for being with us.
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