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- The Scotch Whisky Association, the industry’s trade body, has stated that the European single market is ‘central to the success of Scotch’
- it's by EU law that the term ‘Scotch Whisky’ is under protection of Geographical Indication (GI) in the same way that Champagne is protected for the French sparkling wine of that region.
As the UK has voted to leave the EU, this whisky lover got curious as to what this might mean for the whisky industry in the future. No doubt the economic changes that Brexit brings will affect the whisky market, Scotland’s largest drinks export, worth £4 billion pounds a year, in a number of ways. So what are industry leaders thinking?
Back in May, Environment and Food Secretary Liz Truss warned that some of the whisky industry’s 40,000 jobs might be at risk as all British whisky benefited from trade brokered by the EU to open up export markets. The Scotch Whisky Association, the industry’s trade body, has stated that the European single market is ‘central to the success of Scotch’ . Major Scotch Whisky giants
There certainly have been multiple benefits for Scotch Whisky from EU membership. The EU has also managed to negotiate some substantial foreign deals for Scotch whisky as part of the FTA (Free Trade Agreements) that they cut around the world. The agreements include a deal with South Korea that reduced tariffs on Scotch whisky to zero, reducing tariffs in Vietnam on Scotch from 45% to zero over time (both of these are significant as the Asian market is a huge target for the industry), and an agreement with Colombia that makes it illegal to discriminate against foreign spirits, or to restrict availability of Scotch Whisky in their markets.
Possibly even more important, it's by EU law that the term ‘Scotch Whisky’ is under protection of Geographical Indication (GI) in the same way that Champagne is protected for the French sparkling wine of that region. Imagine if that was taken away? However, it's very, very unlikely that 'Scotch Whisky' will be coming from anywhere besides Scotland. This is speculation at the moment.
There are no obvious benefits to the industry from the Brexit result, aside from perhaps a tiny chance to change certain transparency laws. The Leave campaign has stated that "pro-EU campaigners are unable to comprehend that our leading exports and industries have prospered because of hard work at home, not because of EU membership.’’ They cite the EU’s inability to strike a trade deal with India, a potentially huge market that unfortunately has set Scotch Whisky tariffs at 150%, as well as a private email circulated by SWA chief executive David Frost bemoaning the EU’s trade negotiation power as a ‘missed opportunity’.
However, make no mistake. On the whole, the whisky industry is not pleased about this result. At the very least, it will probably lead to higher tariffs in some cases, much more additional paperwork, and many more complexities at borders, which increase costs.
It’s worth noting that the industry has been through much worse than Brexit over the course of history. As Frost has pointed out, the production of whisky has survived war, prohibition, and the closing of markets. And remember, the status quo in the industry only changes if Article 50 is enacted, which hasn't happened just yet. If it does, it may get a little harder or more expensive to get hold of a good dram of the water of life in the years to come, but it certainly won’t be impossible.
