Scottish independence will have ‘significant implications’ for Scotch whisky

Scottish independence could make pricing Scotch whisky difficult and have “significant implications” for its largest producers, experts have cautioned.

Scottish independence could “significantly” damage the Scotch whisky industry, potentially forcing it to shrink

With unanswered questions still hovering around Scotland’s future EU membership, international trade agreements and its access to Scotch markets, analysts at Citi Bank foresee potential trouble ahead for Scotland’s largest food and drink export.

The warning comes as Mark Carney, governor of the Bank of England, ruled out the notion of Scotland keeping the British pound as its currency.

Speaking to trade unions in Liverpool yesterday (9 September), Carney remarked that, “a currency union is incompatible with sovereignty.”

Andrea Pistacchi, beverage analyst at Citi, said: “An unstable Scottish currency would make it difficult to price Scotch.”

More importantly, Scotland’s subsequent exit from the EU following a “Yes” vote may affect producers’ access to the main Scotch export markets. With trade agreements left behind, lower EU-agreed import tariffs may well be out of reach for Scotland in the short-term.

Pistacchi added that for the larger Scotch producers, such as Diageo and Pernod Ricard, who both count Scotch sales as representing around a quarter of annual revenues, independence could have “significant implications”.

However, even independent, Scottish-owned whisky groups are concerned by the prospect of a “Yes” vote on 18 September.

Mike Younger, finance director for Ian Macleod Distillers wrote to The Telegraph: “We are wholly based in Scotland so, unlike our globally based competitors, will face the full impact of the ensuing changes and associated risks.

“The prospect of higher interest rates will curb our ability to fund stock and therefore reduce growth or force us to contract.

“Our global representation will be diminished as few Scottish trade missions will be established, and they will take time to become credible.

“I am concerned that these risks will only be appreciated when it is far too late.“

Younger’s concerns were mirrored by a warning from financial group Credit Suisse, which claimed independence would mean “Scotland would fall into a deep recession” as investors rush to withdraw their savings.

David Frost, CEO of the Scotch Whisky Association, recently said any break from the EU could effect the protection of Scotch whisky’s geographical indication status, which may lead to increase counterfeiting.

“Even a temporary interruption of EU membership involving exclusion from the single market or the customs union, if this were a consequence of independence, would be damaging and difficult to manage,” he said.

Last week, Alex Salmond, leader of the SNP, said media attention around the referendum could temporarily boost Scotch whisky sales.