Diageo reiterates ‘remain’ ahead of referendum

Ivan Menezes, Diageo CEO, has written to the UK-based company’s 4,773 employees ahead of this Thursday’s EU referendum stating his case for a ‘remain’ vote.

Menezes as written to staff making the case for a ‘remain’ vote in the UK’s upcoming EU referendum

On Thursday 23 June, the UK public will vote on whether or not if should continue its membership of the European Union.

Menezes has previously backed up calls to ‘remain’, and was one of 200 signatories to an open letter published in February 2016 which argued that a so-called ‘Brexit’ would “deter investment, threaten jobs and put the economy at risk”.

In his letter to employees, sent yesterday, Menezes cites access to the European single market and free trade agreements negotiated by the EU as key reasons to remain.

The letter in full reads:

Dear Colleagues,

As you all know, on 23rd June the UK will vote in the referendum on whether to leave or remain in the European Union. It’s a big decision, with implications for us all so, whatever your view, I hope you will take time to vote next Thursday.

Understandably, some of you have been asking what would be best for Diageo, so I wanted to share with you why I believe that it will be better for Diageo (and the Scotch whisky industry) for the UK to remain within the EU.

There are two main reasons:

First, remaining in the EU gives us easy access to the European single market – that’s 500 million people on our doorstep to whom we can sell our brands without much red tape.

Second, remaining in the EU means we benefit from free trade agreements negotiated by the EU with other countries. This allows us to operate on a level playing field with local products and brands from other spirits exporting countries like Australia, Canada and the United States. To bring this to life, the EU recently concluded a free trade agreement with Vietnam. Over the next seven years this will eliminate 45% import duty on spirits exported into Vietnam. If we leave the EU, our products will revert to paying 45% import duty until the UK is able to negotiate its own trade agreement – this will have an impact. The EU has so far concluded, or is negotiating, over 50 of these global agreements, many of which provide significant commercial benefits for Diageo.

Renegotiating the UK’s access to our European countries and beyond would be a huge and uncertain undertaking. As a business we rely on our ability to trade with increasing freedom all over the world, and do not want new trade restrictions. Even if the UK is ultimately successful in all its negotiations, they would take years to conclude and their terms may not be as good as those which exist today. It makes little sense for us to risk this uncertainty.

Clearly this is a personal choice but this is why I believe it’s better for the UK, better for Diageo and better for the Scotch whisky industry that we remain in.

Best wishes,

Ivan

A number of industry stakeholders, including trade organisations Spirits Europe and the Wine and Spirits Trade Association, plus suppliers including Chivas Brothers, have all called for Britain to remain in the European Union.

Pub chain JD Wethespoon however has called for a ‘Brexit’ vote, citing “governance issues” within the IMF as cause to leave.