‘Years of uncertainty’ for drinks trade after Brexit

Representatives of the international drinks trade have spoken of “serious issues” that will require “urgent attention” to support producers in the wake of yesterday’s Brexit vote.

The drinks industry has reacted to the UK’s vote to leave the European Union

Results of the UK’s referendum on its membership in the European Union were revealed throughout the night and confirmed this morning (24 June), with 52% of the public voting to leave the EU and 48% voting to remain.

The pound has since fallen to its lowest level against the dollar in 20 years and the London stock market plunged more than 8%. David Cameron also announced his resignation as UK prime minister following his unsuccessful remain campaign.

Members of the international drinks industry who commented on the referendum ahead of yesterday’s vote almost unanimously urged for the UK to retain its EU membership

They claimed that Brexit would be a “leap in the dark” for businesses due to possible disruption of the EU single market the UK currently has access to, as well as its international trade agreements made as an EU member.

The Scotch Whisky Association (SWA), Wine and Spirit Trade Association (WSTA), Spirits Europe, Diageo, Chivas Brothers, and more advocated a remain vote.

David Frost, CEO of the SWA, issued a statement this morning urging “thoughtful and serious consideration” from the government to secure future access to EU and international export markets.

“The process of leaving the EU will inevitably generate significant uncertainty,” he said. “Of course, we are confident Scotch whisky will remain the pre-eminent international spirit drink.

“But equally, there are serious issues to resolve in areas of major importance to our industry and which require urgent attention, notably the nature of future trade arrangements with both the single market and the wider world.”

Impact on investment, jobs and growth

Meanwhile, European trade body Spirits Europe said Brexit will lead to “years of uncertainty” for the industry, not just in the UK and EU but around the world.

Last month, the group’s director general Paul Skehan told The Spirits Business that a leave vote would be “anathema” to spirits investment and could prompt other EU member states to hold their own referendums.

“We respect the British decision to leave the EU, but we also deeply regret it,” he said in a statement today. “For our sector, and many others, a strong UK within a strong EU is the scenario offering most certainty and the best prospects for growth.

“This decision will lead to years of uncertainty, with likely knock-on effects on investment, jobs and growth – not only within the UK and EU, but around the world.”

The WSTA said that it will “do everything it can to ensure that the UK’s wine and spirit industry has a powerful voice with a view to promoting the great British drinks industry’s leading position”.

Pub chain JD Wetherspoon was one of the few drinks industry voices to advocate a leave vote, printing 200,000 Brexit beer mats earlier this month. Today, the group’s chief executive Tim Martin issued a statement claiming the vote will “enhance freedom and security”.

“Some people will now be anxious, but concentrating on these immensely important factors will provide reassurance,” he said. “Anxiety about the economic effects of independence during the campaign was misplaced.

“The UK will thrive as an independent country, making its own laws, and we will work with our good friends and neighbours in Europe and elsewhere to ensure a positive outcome for all parties.”

Click through the following pages to see comments from leading voices in the international drinks industry concerning yesterday’s Brexit vote. The Spirits Business will update the feed throughout the day.

Miles Beale – chief executive, Wine and Spirit Trade Association (WSTA)

“The British public have voted to leave the European Union opening a new chapter in our history. While our members felt that the wine and spirit industry was stronger in the EU, we will work to assist government in preserving our access to the single market, supporting British drinks exports and agreeing the best possible international free trade agreements.

“The WSTA will do everything it can to ensure that the UK’s wine and spirit industry has a powerful voice with a view to promoting the great British drinks industry’s leading position and fulfilling its huge potential in an increasingly competitive international market place.”

David Frost – chief executive, Scotch Whisky Association (SWA)

“Voters have spoken and decided that the UK should leave the European Union.  All must now get behind the government as it faces the challenges, and the opportunities, this decision brings.

“The process of leaving the EU will inevitably generate significant uncertainty.  Of course, we are confident Scotch Whisky will remain the pre-eminent international spirit drink.  But equally, there are serious issues to resolve in areas of major importance to our industry and which require urgent attention, notably the nature of future trade arrangements with both the single market and the wider world.

“The government will now need to consult as it prepares its negotiating approach.  We look forward to working closely with them on that.  We urge thoughtful and serious consideration by all parties so that we can secure the best possible continued access to the EU and other export markets on which Scotch Whisky’s success has been built, whilst minimising costs and complexity.”

Paul Skehan – director general, Spirits Europe

“We respect the British decision to leave the EU, but we also deeply regret it.  For our sector, and many others, a strong UK within a strong EU is the scenario offering most certainty and the best prospects for growth.

“This decision will lead to years of uncertainty, with likely knock-on effects on investment, jobs and growth – not only within the UK and EU, but around the world.

“We will work closely with our sector colleagues in this new political and economic environment, to seek the best possible outcome of this divorce”

Diageo spokesperson

“We respect the views of the British people  in the EU referendum. As one of the UK’s leading exporters, Diageo remains committed to the long term prosperity of the Scotch whisky industry and will now work closely with our industry bodies to seek clarity on the transition process.

“It is a priority that the UK continues to benefit from open access to the EU as well as favourable international trade agreements to protect the UK’s important export industries, including Scotch whisky.”

Tim Martin – founder and chairman, JD Wetherspoon

“Some people will now be anxious, but concentrating on these immensely important factors will provide reassurance. Anxiety about the economic effects of independence during the campaign was misplaced.

“The UK will thrive as an independent country, making its own laws, and we will work with our good friends and neighbours in Europe and elsewhere to ensure a positive outcome for all parties.

“The most important factor now is to work together for our mutual benefit. On a practical level, from my experience of running a business, the key factor now is to avoid the appearance and the reality of rushing to ‘do a deal’ with the EU.

“There is plenty of time and the UK is in an immensely strong position. A period of calm, reflection and discussion will be beneficial.”

European Travel Retail Confederation (ETRC)

“The people of the United Kingdom have voted to leave the European Union.
“The UK finds itself in an unprecedented situation: no country the size of the UK or with its economic weight has ever left the EU. It is impossible to predict exactly what will happen over the coming days and months, and what this means for the duty free and travel retail channels. There are clearly very specific issues surrounding duty free and travel retail which we need to explore fully with both the UK and EU governments in the coming months.
“We are also acutely aware of the difficulties that Brexit presents to the UK and EU aviation industry which will need to be addressed as soon as possible. Article 50 of the Lisbon Treaty sets out the procedural requirements. To start the exit negotiation process, the UK Government must notify the European Council of its intention to leave.
“The exit negotiations need to be concluded within two years. At this point the UK’s EU membership ends automatically, unless the European Council agrees unanimously with the UK to extend the negotiating mandate. Over the next weeks and months ETRC will be working with the UKTRF to secure the best possible outcome for the businesses it represents, and to seek clarity as early as possible.”

Christine LoCascio – senior vice president of international trade, Distilled Spirits Council of the US

“As the result of a 1994 treaty, the vast majority of spirits exports and imports between the US and the EU have entered both markets duty-free.

“The UK’s decision certainly generates significant uncertainty. However, given the shared interest in spirits trade across the Atlantic, the Council looks forward to working with the US and UK governments and others to ensure continued duty-free access for US spirits to the UK.”