How Will the Brexit Affect the Beverage Alcohol Industry?

Jul 8, 2016 in Alcohol Beverage, Startups

On June 23, the United Kingdom voted to leave the European Union – which the United Kingdom has been a part of for over two decades.

The move to leave took 52% of the total votes, and more than 30 million people voted. Scotland and Northern Ireland voted to stay in the EU, but England and Wales opted to leave.

Duty-free sales, pensions, investments, leadership, and more will all face inevitable changes in the near future. Among the affected industries is beverage alcohol – although reports differ as to whether the Brexit will bring positive or negative repercussions.

In 1994, the United States signed a treaty with the European Union for a zero-for-zero tariff on distilled spirits – leading to tax-free imports and exports for the last 22 years.

As a consequence of the UK’s vote to leave the EU, wine industry suppliers and merchants are looking to benefit from the weak pound currency that has hit a 31-year low. The wine trade between France and the UK is affecting French wine dealers because of decreased purchasing power. Similarly, wine producer Australian Vintage has said the Brexit will hurt the company’s profit.

The Scotch Whiskey Association believes that the European single market is “central to the success of Scotch.” The Brexit could lead to higher tariffs and export costs, and the term ‘Scotch whiskey’ carries weight that would devalue products if removed. Scotland’s smallest distillery has related fears, however, a strong positive sentiment remains surrounding the strength of the Scotch market.

C&C Group, manufacturer, marketer and distributor of cider, beer, wine, and soft drinks, is uncertain of the Brexit effects. Connecting with customers, export business, and currency movements are among potentially volatile factors.

In the midst of continual changes, beverage alcohol suppliers and distributors must optimize data collection to fully understand trends, consumer behavior, and relevant information. Competition, market direction, and existing statuses will surely deviate from the current environment.