Scotch Whisky Association CEO Karen Betts warned on Thursday that Brexit is likely to be “disruptive” for the industry and that the loss of certain EU trade benefits “with third countries, including South Korea and Colombia” would cost the Scotch industry more than £50 million annually in tariffs alone.
Scotch Whisky exports rose 8.9% to a record £4.36 billion in 2017 — the equivalent of 1.23 billion bottles — according to HMRC data.
Scotch Whisky accounted for more than 20% of all UK food and drink exports.
Speaking at the Scotch Whisky Association Members’ Day, Betts said: “Scotch Whisky is doing well, with exports growing and new investment going into all aspects of the industry …
“But Brexit poses challenges for the industry, and is likely to be disruptive.
“We want to continue to be able to export Scotch Whisky to Europe and the rest of the world with a minimum additional cost and complexity, and so our industry can emerge from Brexit in growth.
“That means zero tariffs, a minimum of regulatory divergence and legal protection in the EU.
“But it also means continued access to the benefits of EU trade deals with third countries, including South Korea and Colombia.
“We calculate the loss of these trade benefits would cost the industry over £50 million annually in tariffs alone.
“We continue to urge the UK government to swiftly put in place agreements with those third countries so that Scotch can continue to flourish there post-Brexit.
“And to work on advantageous trade deals with our growth markets, such as India, China and Brazil to ensure the sector continues to prosper.”
Betts added: “We are proud of our industry’s success and of our global reach, that we are intrepid internationalists and that Scotch travels so well.
“But this is not taken for granted by the industry.
“Our success is determinedly cultivated. And nor should it be taken for granted by government.
“For countries need strong industries, strong employers, and strong and successful traders and exporters.
“More than in recent memory, we now need a closer and different kind of collaboration with government, a deeper understanding on all sides, to ensure that the next 20 years see as much steady growth as the last 20 years …
“The changes to how we trade that will likely come as a result of Brexit matter to the industry a lot.
“We run businesses that have well-worn routes to market for all our brands.
“We know exactly how to serve our markets around the world.
“We know how to follow the required procedures efficiently, cutting down costs and maximising sales, so to push what we earn back into jobs, investment and profitability at home.
“So we continue to call on government to ensure that, after Brexit, we can trade as easily with Europe as we did as an EU member.
“A third of Scotch whisky exports go to Europe, an established, mature market for Scotch.
“At a minimum, we want to see agreement on: zero tariffs, a minimum of regulatory divergence, and mutual recognition of geographical indications.
“Alongside the UK government’s negotiations with the EU, we want proper attention to be given to non-EU markets.
“How the UK trades with countries beyond the EU is, again, of key importance to our industry.
“The EU currently has agreements in place with more than one hundred countries which govern trade, one way or another.
“Twenty-four of these agreements are very important to Scotch whisky, such as the EU’s agreements with South Korea and Columbia.
“The loss of these agreements would directly, negatively impact Scotch whisky.
“So we are urging the UK government to swiftly put in place similar agreements with those twenty-four countries – on as good or better terms – to ensure Scotch can continue to be exported with a minimum of extra cost and complication.
“Beyond those twenty-four agreements, we are urging government to focus their efforts for future trade agreements on markets that are important for Scotch whisky’s growth.
“Advantageous trade deals with emerging economies such as India, China and Brazil have the potential to boost the industry’s growth significantly, and are critical to us in the longer term.”