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Guinness's Journey in Ireland Shows Cost of Brexit to Free Trade

Published on Apr 7 2017 10:55 AM in Drinks tagged: Dublin / Diageo / Guinness / Northern Ireland / London / Brexit

Guinness's Journey in Ireland Shows Cost of Brexit to Free Trade

Guinness, the most iconic of Irish exports, shows the potential cost of the UK’s decision to leave the European Union.

Brewed at St. James’s Gate near the River Liffey in Dublin since the mid 18th century, what's in almost every bottle and can of the stout crosses the border from Ireland to the UK twice before reaching beer drinkers.

Ingredients from all over Ireland arrive in Dublin, where the water, barley, hops and yeast are mixed and brewed. The beer is then pumped into tanker trucks known as silver bullets and carried 90 miles north to Belfast in Northern Ireland. There, it’s bottled and canned before being sent back south for distribution.

Guinness highlights the concern over what happens to Britain’s only land border with the EU: the 310-mile frontier between the north and south of Ireland. While politicians and diplomats in Dublin, London and Brussels insist there will be no return to the controls in place during the violent sectarian conflict in Northern Ireland, the reality may be more complicated. EU leaders are scheduled to hold a summit on April 29 to pave the way for two years of Brexit talks.

“For me, there’s no question, there has to be some sort of customs visibility on either side of the border,” said Robert Murphy, a former customs official at the Irish tax authority who later worked at the European Commission in Brussels. “The idea of having a seamless and friction-less border is lovely, but I do wonder how realistic it is.”

Border controls began to melt away in the 1990s as the UK and Irish governments, backed by the EU, fostered a peace agreement between the mainly Catholic nationalists fighting for a united Ireland and the largely Protestant loyalists defending the status quo.

Shoppers are now free to filter back and forth using their Irish euros or British pounds. Cross-border trade is worth more than €3 billion a year, the Irish government estimates.

For London-based Diageo, the owner of Guinness, it means the company’s trucks can head north and south unencumbered.

Each year, they make 13,000 beer-related border crossings in Ireland. Add in Baileys, the whiskey and cream-based liqueur, and the number rises to over 18,000. A hard border could cause delays of between 30 minutes and an hour, costing an extra 100 euros for each journey, the company said. That alone would add 1.3 million euros to the cost of Guinness and other beers Diageo produces in Ireland.

The company has said it will work with the British and Irish governments on finding a solution to the border issue.

Brexit could cut trade flows between Ireland and the UK by as much as a fifth, the Economic & Social Research Institute estimated. In draft guidelines for negotiating the UK’s exit, EU President Donald Tusk said “flexible and imaginative solutions” will be needed to avoid a hard border.

“For big companies like Diageo and brands like Guinness, there might be solutions, whether that be electronic tagging or some sort of trusted trader program,” said Murphy. “Customs officers don’t want to waste people’s time. But it’s not going to be easy.”

News by Bloomberg, edited by Hospitality Ireland

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