Although Scotch whisky is doing exceptionally well at the moment, it is always worth looking a year or even several into the future to see where the industry is heading and where it might be a decade or so from now.
One big current stumbling block, although the industry is being discreet about it, is Brexit. Vast quantities of whisky are exported to the EU and, once there, only pay local alcohol taxes rather than any tariffs. However, if we get saddled with a “no-deal” Brexit, whisky will face an unwelcome tariff hurdle in addition to local or national taxes. That will certainly badly dent whisky sales in the short or medium term.
However, should a “no-deal” Brexit look likely, Scotch whisky importers will bring in as much stock as possible before March 30 next year to ensure they have good supplies at pre-tariff prices. However, the industry must reckon that sales to the EU will nosedive for the rest of 2019.
How sales will fare in the rest of the world remains to be seen. The UK may set up FTAs (free trade agreements) with hosts of countries (although these will take time to negotiate and implement) and Scotch sales to those countries may rise as a result. But it will not happen overnight. Indeed, based on past trade negotiations, it may be years before the UK has re-established the sort of trading patterns we take for granted today. True, Scotch has strong appeal and repute and exports will continue to all established markets but, as the expression goes, there may be some turbulence.
Luckily, Scotch does not depend on the kind of cross-border, just-in-time delivery systems that the car, Airbus and countless other industries depend on. However, barley and other cereals, bottles, corks and 101 other oddments, as well as key capital equipment, used by the Scotch industry come in from other countries. Hence the industry may have to seek UK suppliers where possible.
There is a long tradition in British industry of airing concerns about government policies to ministers in private, rather than stating them publicly. However, amid the current Brexit chaos, industry and commerce must overcome their silence and collectively tell the Government just what a disaster no-deal will be.
