On the rocks: Can the Scottish whisky industry survive Brexit?

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On the rocks: Can the Scottish whisky industry survive Brexit?

Glasgow, Scotland – Robert Burns, Scotland’s beloved 18th-century national poet and songwriter, penned words in praise of it. Winston Churchill, Britain’s war-time prime minister, breakfasted on it. And Robert Mitchum, screen legend and Hollywood hell-raiser, often got into trouble because of it. 

Scotch whisky, made only in Scotland, is a drink that has devotees across the globe. It has seen off world travails and even prohibition in the US to become the planet’s most sought-after international spirit with, in 2017, a UK export value of 4.36bn pounds ($5.65bn).

But this very Scottish industry is facing a new challenge – Brexit.  

The Scotch Whisky Association (SWA) trade body was not unique among UK industry in supporting a Remain vote.

Business hates uncertainty – and the European Union accounts for over 30 percent of overseas Scotch whisky sales.

Britain is due to leave the EU on March 29, after most people in England and Wales – unlike those in Scotland and Northern Ireland – voted to leave the bloc.  

If there is no deal agreed to govern that exit, then Britain is going to be trading with the EU and the rest of the world, on World Trade Organization (WTO) terms.

“There is a risk of losing benefits, including lower tariffs, secured through the EU’s bilateral trade deals with markets representing around 10% of Scotch exports,” according to the SWA.

The group’s chief, Karen Betts, said earlier this year that a no-deal Brexit would impact customs declarations at the UK-EU border, marking a “significant change to the straightforward way in which Scotch whisky enters the EU”, as she warned of greater costs.

We want to be able to continue to export Scotch whisky to Europe and the rest of the world as easily as we can today.

Scotch Whisky Association spokesperson

David Thomson owns Annandale Distillery in Southern Scotland. 

Despite harbouring reservations about the EU, the self-described “reluctant Remainer” told Al Jazeera that his vote to stay in the 28-member group was rooted in the hope of business prospects. 

“My reason for voting Remain was because I feared greatly the situation that we now face,” said Thomson, 64, whose distillery produces fine single malt Scotch whisky in Dumfries and Galloway.

“The uncertainty is the very difficult part of this to live with.”

Indeed, as the clock ticks down towards the Brexit deadline, uncertainty has gripped all four nations of the UK.

‘Water of life’

The negotiations with the EU, conducted by Britain’s beleaguered Prime Minister Theresa May, have so far failed to find favour with Westminster MPs who have voted down her proposed Brexit deal amid disputes over the Irish border.

For Thomson and his wife Teresa Church, co-owner of the whisky business, Brexit has brought Annandale Distillery’s international links, not least with the EU, sharply into focus.

“We currently export our products to the European Union, duty-suspended,” he said. “There’s an agreement that allows us simply to put them on a lorry that can carry bonded goods across the North Sea and deposit our products, duty-suspended, in Germany and the Netherlands – but also in Scandinavia. And that is just so easy – but I think that will become more difficult.”

Thomson explained that he sourced both his “special digitally printed bottles” for their main product from France and corks and capsules from Italy.

“I’m allowing an extra 20 percent for the forthcoming financial year for purchases out of the European Union in anticipation of a fall in the [UK] pound and the potential for tariffs,” he said.

The Scots Gaelic term for whisky – uisge beatha, or “water of life” – is useful for understanding the affection with which Scotland and its people hold this amber nectar. 

From Burns Night, the annual celebration of Robert Burns, in January to Hogmanay (or New Year’s Eve) in December, Scotch whisky greases the wheels of Scottish social gatherings like no other tipple.

A whisky barrel advertising Laphroaig single malt peated Whisky from Islay [Alasdair Soussi/Al Jazeera]

“Whisky is part of our family, it is intrinsic to us,” said Rachel MacNeill.

She lives on Islay, an island off the West coast of Scotland home to 3,000 people, which currently hosts eight operating whisky distilleries – a ninth will fill its first cask this year. 

MacNeill, founder of the Islay Whisky Academy, told Al Jazeera: “Your consciousness of the island just absorbs the distilleries. The distilleries physically look out to the sea – but they are like a lighthouse light that shines out to the world.”

The EU-supporting Scottish government, run by the pro-independence Scottish National Party (SNP), which is today making provisions for a possible second Scottish independence referendum, is fiercely protective of the Scotch whisky industry.  

Like most Remain-supporting bodies and individuals in Britain, it is fearful of the consequences of a no-deal Brexit, which would see the UK crash out of the EU without an agreement.

A spokesperson for the SWA told Al Jazeera: “Scotch whisky is a flagship export, with 39 bottles shipped from the UK to 180 global markets every second, and we are used to adapting to changes in the way in which we trade

“[But the] prospect of a no-deal exit is concerning. We want to be able to continue to export Scotch whisky to Europe and the rest of the world as easily as we can today, without having to deal with new trade barriers, the re-emergence of tariffs or untested customs procedures. To that end, we support the [UK] government’s Withdrawal Agreement.”

Countries like India, China and Brazil – these are markets that the EU as a bloc have generally not been able to fully capitalise on with all our exports.

Sam Simmons, head of whisky at UK drinks company Atom Brands

But some industry leaders spy opportunities.

Sam Simmons is head of whisky at UK drinks company Atom Brands. He told Al Jazeera that the Scotch whisky “ecosystem was one built on optimism”.

“Countries like India, China and Brazil – these are markets that the EU as a bloc have generally not been able to fully capitalise on with all our exports,” he said.

He continued: “Trading in the EU has also probably caused problems with trading into the US. There’s a lot of barriers to Scotch in the distribution and sales regulations in the United States, and the UK becomes more likely, than the EU, to secure new deals in the US.”

Sam Simmons believes there may be opportunities for the whisky industry after Brexit [John Paul/Al Jazeera]

Thomson also contends that the decision to quit the EU has opened his eyes to other potential markets for his small whisky producer.

“The market that I’m really targeting at the minute is Singapore,” said Thomson, who re-started production at Annandale Distillery in 2014 after it originally closed in December 1918. 

He said the island state’s high GDP and existing whisky-drinking culture meant that Singaporeans were “definitely prepared to pay for premium products.”

“Maybe we’re just going to have to work a lot harder to win business around the world, he said, “which is maybe no bad thing at all.”

The Pot Still in Glasgow, Scotland has been a bar since the late 1800s and it’s a good place to get an introduction to Scotch whisky [File: Michelle Locke/The Associated Press]

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