In a strategic move to regain access to Canadian markets, Minnesota-based Phillips Distilling Company has transferred production of its popular Sour Puss flavoured liqueur to Montreal. The company announced on November 12, 2025, that it has signed a multi-year agreement with Station 22 distillery to manufacture the sweet and sour beverage locally.
Navigating Trade Turbulence
Andy England, CEO of Phillips Distilling Company, revealed that production officially began at the Montreal facility on Wednesday. The relocation comes as a direct response to provincial liquor monopolies in Quebec and Ontario removing American-made alcoholic products from their shelves earlier this year.
"Back in March, when these tariff wars began, we soon found ourselves off the shelves in most provinces in Canada, along with other U.S.-made liquor," England explained in an interview. "From our point of view, firstly, that's not an acceptable outcome. It's not helping anybody for us to be off the shelves, and so it was pretty clear to us that we needed to evaluate our options."
The Search for Canadian Partnership
The distillery conducted an extensive search for manufacturing partners across Canada during March and April, evaluating 19 different Canadian operations before narrowing the selection to three final candidates. According to England, Station 22 emerged as the "clear winner" in the competitive selection process.
"It's obviously good for Canada, it's good for Station 22 that they've picked up more business and I think it's ultimately good for us," England stated. "We care very much about our Canadian business, it's an important business to us and if that's what we need to do in order to have a successful business in Canada, we're all in. So we're now proudly produced in Canada."
Canada represents approximately 98 percent of worldwide sales for Sour Puss, despite the product being manufactured in the United States since its 1998 launch. This market concentration made regaining Canadian shelf space particularly crucial for the company's overall business strategy.
Broader Trade Implications
Michael McAdoo, a Montreal-based partner at Boston Consulting Group who co-leads the firm's worldwide trade and investment practice, provided context on the business decision. He noted that when companies face exclusion from major markets like Quebec and Ontario's liquor monopolies—among the world's largest alcohol buyers—they must conduct careful financial analysis.
"If you are essentially shut out of that by a buying boycott on the part of those governments, a company will be doing the analysis, saying, what would it take, from a capital investment perspective, to produce this product in Canada and access those two large markets, which collectively are probably on the order of 20 million consumers," McAdoo explained.
While McAdoo didn't comment specifically on Phillips Distilling Company's decision, he observed that manufacturers with cross-border operations have responded to tariffs by shifting production between existing facilities. However, he noted limited evidence of companies making new capital investments to increase U.S. production capacity.
The current trade landscape remains highly uncertain, according to McAdoo. Multiple tariffs on Canadian goods face challenges at the U.S. Supreme Court, while potential national security tariffs and expanded metals tariffs create additional complications. The upcoming renegotiation of the Canada-United States-Mexico Agreement (CUSMA) adds another layer of unpredictability.
Securing Market Access
For Phillips Distilling Company, the move to Canadian production provides much-needed stability. "It's really that simple, it removes the uncertainty, because it doesn't matter what happens in the tariff wars," England emphasized. "We've signed a multi-year agreement with Station 22 so it really doesn't matter if tariffs go away tomorrow, we're being produced in Canada."
The company had previously sold more than 150,000 cases of product in Canada annually, equivalent to 1.8 million 750 ml bottles. Company leadership believes the partnership with Station 22 will enable them to recover this significant market share.
Hugues Gauthier, President of Station 22, views the production shift as part of a larger trend toward bottling beverages closer to consumers, driven partly by environmental concerns. He noted that even if trade conflicts resolve, Phillips Distilling Company will likely maintain Canadian production, similar to Spanish and Australian wines already bottled at the Montreal facility.
The partnership extends beyond Sour Puss production. Station 22 will also manufacture other Phillips Distilling Company products, including Kamora Coffee Liqueur and Phillips Butter Ripple. Additionally, the Montreal plant will produce a new ready-to-drink canned Sour Puss beverage called Shocktails, showcasing Station 22's innovation capabilities.
Station 22, which produces approximately eight million cases annually, often operates behind the scenes while helping partners develop new products. The multi-year agreement represents a significant business expansion for the Montreal distillery and demonstrates how Canadian companies can benefit from shifting trade dynamics.
