Brexit, where do I start? On the 29th March 2017, the UK invoked Article 50 of the Treaty of the European Union after 51.9% of the British public voted to leave our continental neighbours and make our own way in life. This has created all kinds of dramas for the government and as this hugely complex puzzle of negotiations unravels with a potential risk of ‘no deal’, it’s clear in the immediate future, many of us will be in for a rough ride in some shape or form. Unfortunately, the gin industry doesn’t escape this roller coaster. So, what exactly could impact our industry?
The Positives: Is it possible we will see the replacement of ‘Travel Retail’ signs with ‘Duty-free’? Yes absolutely, but before we all start celebrating (with a G&T of course), the UK Travel Retail Forum are in negotiations with their EU counterparts to ensure those travelling from the UK to the EU have the same rights as those travelling from the EU to the UK. Of course, there are always downsides and no doubt, the return of cheaper cigarettes and alcohol will ruffle the ‘anti’ camps in both categories, potentially making duty-not-so-free. On the upside however, a duty-free environment would mean substantial number of shoppers, greater exposure of gins and therefore greater sales opportunities. Tick, tick.
I would also say that being an advocate of all things produced in UK (and especially locally to us) that we as UK producers would expect to see an increase in sales to our own market. Small Gin producers do pretty well in this category, but let's support English Wine, local cheese, meat etc with the same gusto! #buylocal Equally, us producers should look to source locally too, supporting British manufacturing and British business where we can.
The Negatives: On the downside, leaving the EU could compromise the current freedom of trade which has benefitted many industries, including gin producers and of course, the government. Leaving the EU in March 2019 (if all goes to plan) could “apply the brakes to the gin boom” say industry experts.
How? Gin distillers could be impacted by elevated prices, taxes and supply of European raw materials. Juniper is a prime example, making up the bulk of a botanical bill for most producers, is sourced from Macedonia and the Balkans primarily. A significant hike in importation costs could seriously hurt the cost per litre to produce. The Wine & Spirits Trade Association (WSTA) predict an ‘adverse effect on juniper supplies’ to the UK, producing very testing times for distillers and especially the smaller producers who may only hold modest stocks. Many producers also source glass bottles, closures and labels from Europe, as well as the equipment that goes into building a distillery - stills, stainless steel vessels, bottling and labelling equipment, an elevation in costs or supply complications here could collectively have an equal or greater impact than juniper prices.
Many distillers source their base spirit from UK spirit producers who use UK wheat as a base raw material. Could there be a price increase in domestic wheat? The Beast from the East in March followed by the summer heatwave and drought, have already led to elevated food prices due to poor yields across numerous crop types. This economic gloom is also being experienced by other European countries. Unfortunately, some report that impact of Brexit will economically dwarf that of this year's extreme weather patterns, whichever you look at it, material prices will be adversely affected in 2019 to a greater or lesser extent.
With the UK being the largest exporter of spirits in the world, there is huge concern over trade post Brexit. With WSTA predicting that the Gin exports will hit £600 million in 2018, up 19% on previous year, there is uncertainty on the scale of the impact that Brexit will have, not only on exports to Europe, but also to America, China, and RoW.
All of these factors unfortunately have a direct impact on the end consumer and there is real risk that your favourite gin brands may be in short supply or god forbid, disappear off the shelves. Us distillers will endeavour to move heaven and earth to ensure this doesn’t happen!
I’m going to finish on a cheerful note, as those hardcore ‘Brexiteers’ truly believed back in 2017, we can run our country and provide for ourselves (apart from print our new blue passports, the French will do that for us!). Yes, I’m sure we can produce our own gin bottles, closures, labels etc… but with the gin industry enjoying such a fantastic resurgence at the moment, do us distillers a favour and plant a juniper bush!