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ABFI: 'No Deal' Brexit Would Be Disastrous For Drinks Industry

Published on Oct 15 2018 8:31 AM in Drinks tagged: Featured Post / Alcohol Beverage Federation of Ireland / Brexit / ABFI

ABFI: 'No Deal' Brexit Would Be Disastrous For Drinks Industry

The Alcohol Beverage Federation of Ireland (ABFI) has warned that a ‘No Deal’ Brexit would be disastrous for Ireland's all-island drinks industry, delaying and disrupting 23,000 cross-border truck movements, applying unnecessary tariffs on cross-border supply chains and putting €364 million worth of trade between the UK and Ireland at risk.

The ABFI has published a new position paper titled “Brexit and the Irish drinks industry - Priorities for the future relationship” which outlines the potential consequences of a ‘No Deal’ Brexit, including:

  • Lack of continuity in legal protection for Irish cross-border Geographic Indications for Irish Whiskey, Irish Cream Liqueur and Irish Poitín in Northern Ireland and the UK;
  • Lack of continuity in access for Northern Irish producers to global free trade opportunities;
  • Immediate tariffs on barley, malt, glass bottles, apples, finished cider and other supply chain inputs;
  • Regulatory and customs checks at the Irish border, leading to significant delays and additional costs for 23,000 cross-border truck movements;
  • Requirement for up-front VAT payments on cross-border trade;
  • Potential for regulatory divergence across a range of standards from labelling to bottle sizes.

Patricia Callan, director of the ABFI stated, “The Irish drinks industry is a highly integrated all-island sector that’s important for both the Irish and Northern Irish economies. For us, Brexit could be highly disruptive, particularly if there was to be a disastrous ‘No Deal’ scenario. However, this need not be the case and we would urge all parties to seek to ensure that a Withdrawal Agreement is concluded and that a ‘No-Deal’ Brexit is avoided. We want to see clear, robust provisions to safeguard the all-island economy and to avoid a hard border on the island of Ireland.”

The new ABFI paper outlines that global drinks exports from the island of Ireland were valued at €1.6 billion in 2017. The aggregate value of trade in drinks products between the UK and Ireland was €364 million, one third of which, (€121 million) was the aggregate value of north-south trade. The UK remains the dominant market for Irish beer (71%) and cider (85%).

Potential Tariffs

The paper goes on to state that a no-deal Brexit could result in a range of new tariffs on cross-border supply chains, including:

  • Tariffs of up to €93 per tonne on barley and €131 per tonne on malt;
  • An EU external tariff of 5% on 130 million glass bottles imported into Ireland from the UK;
  • A 7.2% tariff on apples grown in Northern Ireland.

Callan stated, “Tariffs would add significant costs to Northern Irish whiskey distilleries and breweries buying barley and malt from Ireland, to Irish craft distilleries and breweries buying specialist malts from the UK and to Irish cider producers buying apples from Co. Armagh. Similarly, tariffs on finished cider products would damage the cost competitiveness of Irish and Northern Irish cider producers, threatening sales and jobs.”

Callan added that while Brexit poses risks of disruption to free trade between Ireland and the UK, it also threatens trade between Northern Ireland and the rest of the world. She said, “We do not want Northern Ireland producers to face any significant comparative disadvantage if they lose access to EU free trade agreements.”

Brexit Loan Scheme

The, ABFI is calling on the European Investment Bank to end its prohibition on distilled spirits producers from accessing the Irish government’s Brexit Loan Scheme.

Callan stated, “ABFI welcomes the Government’s commitment to assisting businesses to deal with the Brexit threat. The expansion of sustainable financing measures for working capital and longer-term investment such as the Irish government’s Brexit Loan Scheme, are vitally important. However, as this Scheme is part-funded by the European Investment Fund, the European Investment Bank rules apply, which means that the producers of distilled spirits have been excluded from applying for the Brexit Loan Scheme. We are calling for an end to this unjustified discrimination.”

Future Growth Loan

She concluded, “ABFI welcomes the €300 million Future Growth loan scheme announced in Budget 2019. We are calling on the Irish government to ensure that this new loan scheme - or a separate bespoke strand - is open to Irish distilleries and spirits producers.

“We look forward to continuing our active engagement with the EU Commission and the Irish and UK governments to ensure our priorities are addressed in the ongoing negotiations and to achieve the best possible outcome and least possible disruption for the all-island Irish drinks industry.”

© 2018 Hospitality Ireland – your source for the latest industry news. Article by Dave Simpson. Click subscribe to sign up for the Hospitality Ireland print edition.

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