Pure Gould: Scotch and the EU

Diageo is said to “have concerns about any developments which could add cost or complexity to our business; and about the possible impact of independence in areas such as the currency, EU membership, regulation and support for exports and international trade”, while Pernod Ricard’s chief, Pierre Pringuet, has said that scotch whisky “is a global industry which is also very fragile” and that the industry was vulnerable to tax laws in other countries that favour home-grown brands. The Scotch Whisky Association has been doing a good impression of treading on egg shells and in its strongest message to date has expressed “major reservations”. Indeed in its annual review, chief executive David Frost says the ramifications of leaving the UK are “huge”.

“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 warns. And as we know Scotland will not be fast-tracked into the EU as Salmond has suggested. The EU accounts for £1.4bn-worth of business (2012) and more importantly it can be exported tariff-free across the European single market and enjoys the benefits from the EU’s ‘clout’ when it comes to trade negations. Additionally Frost points out that the Scottish Government White Paper envisages a network of 70-90 overseas missions, “but we export to around 200 markets”. 

While some Scottish-based companies are in a position to set up satellite operations south of the border, this option is not open to scotch producers, for obvious reasons. However it’s an option that is open for gin producers so Beefeater might not have London to itself, after all. But the more you think about it this independence business is not even a curate’s egg because, unless it fails, it’s bad in all parts.