Scottish whisky is the UK’s largest food and drink export – accounting for 20% of exports overall. Worth an export value of over £4 billion, 39 bottles are shipped overseas every second of every day.
Like most industries in the UK, distilleries across Scotland are wondering what the recent Brexit trade agreements will mean for their future. Will there be shipping delays; increased tariffs; decreased demand?
And, besides Brexit, in October 2019, former President Trump imposed a 25% tariff on Scottish whisky imports as a result of a trade dispute, seemingly compounding the misery. Moreover, with the UK weaving in and out of various lockdowns (mostly in, let’s face it), supply chains to pubs, clubs and restaurants have all but come to a halt.
The Middle East and Asia remain popular export destinations for our “national drink” and should remain largely untouched by the fall out of Brexit talks. However, what about the markets that are going to find themselves trying to keep up with new and evolving regulations?
An immediate priority for many distilleries is to ensure smooth customs and excise procedures. Whilst whisky is not a perishable good – such as Scotland’s seafood exports – many distilleries do not want to see cross-border delays preventing their good from reaching the desired destination on time. There are fears that hold ups and administrative problems could lead to contracts being lost.
Distilleries will need sufficient notice of any new systems and requirements in order to ensure that their flow of exports is not disturbed.
Another key priority – which, ultimately, will be influenced by the ability to continue to trade at current rates – is to secure jobs. The whisky industry, in recent years, has seen significant growth and development. New technologies have been invested in; new brands have popped up in locations across Scotland. The industry felt like a “sure thing” in terms of job security.
But, if high tariffs, loss of trade and logistics problems were to ensue, some distilleries may feel the need to either let existing staff go or put on a hiring freeze. None of which will help rural economies – many of which benefit from being distillery sites.
However, it’s not all doom and gloom. Exports to Canada and Mexico are likely to remain at their current 0% tariff. There are also ongoing negotiations with Japan – where whisky exports roll in at just shy of £150 million – to ensure that their 0% tariffs also continue, despite the UK having now officially left the EU. The fact that a “no deal Brexit” has been avoided should also help to smooth relations with our mainland neighbours.
During lockdown, many distilleries also pivoted their offering by manufacturing hand sanitisers and other alcohol based cleaning products in order to keep up with UK demand. They have demonstrated agility and resilience, and have almost been able to maintain production levels as normal – even with increased hygiene measures and social distancing.
Many distilleries remain cautiously optimistic that the desire for their product will encourage friendly relations and smooth cross border transportation. As Burns once said, “Freedom and whisky gang thegither.”
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