Hard Brexit would threaten Scotch whisky export growth, say producers

File photo. Illustrated here 8 November 2010 is wooden box for a Scotch whisky next to shelves of whisky bottles in a specialised shop in central London. [Felipe Trueba/EPA/EFE]

Leaving the EU in March without a deal would pose risks to Scotch whisky’s current healthy rates of export growth, the Scotch Whisky Association said on Tuesday (22 January).

It told Reuters it was also concerned about significant increased labelling costs of a no-deal Brexit to Britain’s biggest food and drink export.

It said a no-deal would add cost and complexity to UK/EU trade and mean the loss of trade benefits worth £50 million ($65 million) annually in tariffs.

“Moreover, we have real concerns about the ability of port operators to cope with significant, last-minute changes to export systems, and the risk of disruption at ports is high,” the group said in a statement.

An SWA spokeswoman said one of the biggest concerns was to do with labelling requirements. If a no-deal scenario takes effect from end March, EU-bound product labels would need to display either an EU address of the producer or the address of the relevant importer into the EU market.

Currently many Scotch Whisky companies list a Scottish address to comply with this requirement. However, from late March this may no longer be possible, since an EU address is likely to be required because of EU labelling laws.

A no-deal Brexit could necessitate at least two different label templates from March: one for products sold in the UK; and at least one – in some cases many more than one – for products destined for the EU, the spokeswoman said.

“This would significantly increase costs with companies forced to use shorter bottling runs and manage additional stock keeping units (SKUs) in their inventories,” she added.

Scotch is dominated by multinationals like Diageo (DGE.L) and Pernod Ricard (PERP.PA) and has been an export sector for centuries.

Whisky exports were worth 4.5 billion pounds (€5.1 billion) to Britain in 2017, its biggest food and drink export ahead of salmon, chocolate and cheese.

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