Why Brexit could be bad for Scotch whisky

EPA/FELIPE TRUEBA

A bottle of Scotch whisky in front of a map of Scotland in a specialised whisky shop in central London, Britain.

Why Brexit could be bad for Scotch whisky


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The Scotch whiskey industry will be shaken by Brexit. New research suggests that leaving the European Union means international trade tariffs and uncertainty over exports.

The findings of a study conducted by investment bank Macquarie show that companies such as Diageo, which owns the Johnnie Walker whisky brand, will experience a rapid increase customs tariffs, Macquarie said in a note to clients.

As reported by Business Insider, leaving the EU would mean falling out of the 27-nation bloc’s free trade agreements with other countries, hiking tariffs up to 30% in markets like South Korea.

In India and Indonesia, the rate could increase to 150%, according to Macquarie’s table of tariffs.

“The Scotch industry relies on the UK’s membership of several key trading agreements, all of which are directly or indirectly linked to EU membership, for protection from tariff and nontariff barriers to trade,” Macquarie said.

Around 70% of Diageo’s whisky exports could be affect, according to Macquarie.

In response to the growing concern, Andrea Leadsom, the secretary for the Environment, Food and Rural Affairs, unveiled a plan last month to put UK-made products, such as cider, whisky and biscuits, at the heart of a new trade strategy.

“Our food and drink is renowned for having the very best standards of animal welfare, quality and safety and I want even more of the world to enjoy what we have to offer,” Leadsom said in a statement.

“Scottish salmon, Welsh beef, Northern Irish whiskey and English cheese are already well-known globally and I want us to build on this success by helping even more companies send their top quality food and drink abroad,” Leadsom said.

In a separate report, Imbibe, the UK’s leading publication for on-trade drinks professionals, noted that the Scotch Whisky Association (SWA) has demanded the government end the “Scotch Supertax”, which equates to around 79% of the price of each bottle.

The call comes as the SWA is setting out its priorities for the new UK parliament. It says the combination of excise and VAT equates to a near-80% tax burden which is holding the industry back. It warned that the industry would need to be more competitive to future-proof itself against the pressures of Brexit.

According to the SWA, a unit of alcohol served as Scotch is taxed 51% higher than the same unit of alcohol in beer and 19% higher than wine.

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