The UK is preparing for a time of great change as we approach Brexit. Leaving the European Union will undoubtedly have a major impact on British industries and exporters, including Scotch Whisky.
We have a team of specialists at the Scotch Whisky Association working hard to ensure the industry is ready for Brexit and that our voice is being heard. One area of great importance is looking at what Brexit might mean for the legal protection of Scotch Whisky, including its geographical indication (GI) status.
Our Director of Legal Affairs, Alan Park, considers how Brexit might affect the legal protection of Scotch Whisky.
Scotch Whisky has been defined in UK law since 1933. Brexit is not going to change that. Scotch Whisky is also recognised as a GI and has been since the concept was introduced by World Trade Organisation (WTO) rules in 1994.
A GI has unique characteristics and a reputation associated with its origin. Brexit will not alter the fact that Scotch Whisky is a GI. There is an obligation on members of the WTO, the vast majority of nations, to protect GIs from misuse. Some WTO members do that by providing a register for GIs in the same way countries provide a trade mark register. Scotch Whisky is recognised as a GI in this way from the Dominican Republic to Thailand.
Other countries choose to protect GIs in other ways and the SWA has taken advantage of those different approaches.For example, Scotch Whisky is specifically protected in the domestic legislation of many markets, such as the recognition given to Scotch Whisky in the US Federal Code. Brexit is not going to affect that either.
Where Brexit will have an impact is in the protection given to Scotch Whisky in some bilateral agreements between the EU and third countries. We want the UK to negotiate the continued benefits of those agreements but, in the meantime, the SWA is already taking steps to ensure that Scotch Whisky is recognised and protected in those markets in the range of ways available to it.
The key fact to remember is that the SWA has been protecting Scotch Whisky around the world before GIs were defined by the WTO in 1994, and before the EU existed, so whatever changes Brexit brings, the SWA will continue to do what it has done for many decades: stop the sale of any products unfairly taking advantage of the reputation of Scotch Whisky.
This means the consumer can continue to enjoy Scotch Whisky knowing that it is a well protected and high quality drink.
Article courtesy of: Scotch Whisky Association
05 Mar 2018
“We accept the Supreme Court’s ruling on minimum unit pricing (MUP) of alcohol in Scotland. Looking ahead, the Scotch Whisky industry will continue to work in partnership with the government and the voluntary sector to promote responsible drinking and to tackle alcohol-related harm.
“We will now look to the Scottish and UK Governments to support the industry against the negative effects of trade barriers being raised in overseas markets that discriminate against Scotch Whisky as a consequence of minimum pricing, and to argue for fair competition on our behalf. This is vital in order that the jobs and investment the industry provides in Scotland are not damaged. At home, we hope to see an objective assessment of the impact of MUP.”
More news from www.scotch-whisky.org.uk
15 Nov 2017
Chancellor urged to cut tax at home to boost global success story
Scotch Whisky exports increased in value by 3.4% in the first half of the year to £1.8 billion, boosted by the continuing growth in popularity of Single Malts across the globe, including the USA, the industry’s largest market.
This growth benefits the entire UK economy and its export performance. Scotch remains Britain’s biggest food and drink export, making up almost a fifth of the sector’s overseas shipments.
The analysis of official HMRC figures published by the Scotch Whisky Association (SWA) today shows consumers are continuing to sample more Single Malts with exports up 7% to £479 million in the first six months of the year. Single Malts now make up more than a quarter of the value of all Scotch shipped overseas.
This trend was clear in the USA where total Scotch exports were up 8.6% to £388m and Single Malts jumped 14% to £123m.
Scotch exports to many other mature and emerging markets increased. There was a marked return to growth in China – up 45% to £27m as the country’s economy grows – and exports to Japan expanded 19% to £43m.
The European Union (EU) remains the biggest regional destination for Scotch with the value of exports up 4% to £559m, almost a third of the total.
But the Scotch Whisky industry needs support to sustain growth in the long term, not least as it manages the impact of Brexit. Overall, the volume of whisky shipped overseas was down 2% to 528m bottles, and this was in the context of relatively favourable exchange rates. The lower volume and higher value is partly as result of the shift to Single Malts.
Some markets declined in the face of continuing economic and political headwinds, such as Brazil where the value of Scotch exports fell 20% to £22m.
The SWA argues that a strong home market is required to underpin the industry’s global success and that Chancellor Philip Hammond could help next month by cutting tax on an average bottle of Scotch from an onerous 80%. Recent figures show that the UK market has shrunk as excise duty has increased, with a near 4% hike in the March Budget seeing Scotch sales fall by 1m bottles in the first half of 2017. A fairer domestic excise regime would help boost a world-famous industry which supports 40,000 jobs across the UK.
Such support at home would also encourage long-term confidence and underpin continued investment in the industry and supply chain that, in turn, relies on export success.
And one of the SWA’s priorities for Brexit is domestic reform to improve competitiveness, including changes to the current excise duty system.
Karen Betts, Scotch Whisky Association chief executive, said:
“The value of Scotch Whisky exports was up more than 3% in the first half of this year to £1.8 billion, which is great news. More and more consumers around the world are seeking out the fabulous range of Single Malts. It is good to see demand for Scotch increasing in a diverse range of mature and emerging markets around the world.
“But the figures mask more concerning underlying trends. The value of exports is up but the volume is down. With the changes Brexit will bring to the way the industry operates and trades, we need the support of the UK Government at home and overseas if we are to grasp the opportunities and keep this international success story going.
“Overseas demand for our quality product requires investment by the industry in the UK and that needs government support. A strong domestic platform for growth is vital and the Chancellor could take a step in the right direction in next month’s Budget by cutting the tax on an average priced bottle of Scotch from the staggering level of 80%.”
SWA’s Annual Review, May 2014
The people of Scotland face a historic choice in September’s independence referendum. The implications are huge and the basis for the eventual decision needs to be fully discussed. So I make no apology for dealing with it at length.
This industry is in a special position in this debate. We can make Scotch Whisky only in Scotland and our brands are indissolubly linked with it. 35,000 jobs depend on the industry. Our operations are at the heart of many communities around Scotland and we sustain economic activity in rural and remote areas that might otherwise have difficulty in attracting it.
That success is not the result of chance. It has come about because of a wide range of factors which have been well provided for us within the United Kingdom and would need to be similarly provided in the future if it were to be within an independent Scotland.
At the UK level, we are fortunate to have – on the whole – certainty in our domestic business environment. Monetary and fiscal policy is predictably managed. We benefit from the fact that our domestic market is the sixth biggest economy in the world, large enough to support broad and balanced growth and provide a pool of relevant skills. In contrast, as of now, the nature of an independent Scotland’s currency remains unclear, and self-evidently this could affect our exports, management of supply chains, pricing, and competitiveness. The taxation regime also remains to be developed, and any regulatory divergence between Scotland and the rest of the UK may increase costs to business. In all these areas, we need further information and reassurance before we can assess whether we can mitigate these potential risks.
At the EU level, the legal framework provided by EU membership is fundamental. The ‘Scotch Whisky’ geographical indication is protected in EU law. We are able to export tariff-free across the single market, use EU mechanisms to eliminate market access problems, and benefit from the EU’s clout in trade negotiations. Of course, not everything in the EU is perfect and, in my view, many areas need reform. But even a temporary interruption of EU membership involving exclusion from the single market or the customs union, if this were a consequence of independence, would be damaging and difficult to manage.
Internationally, as an export-oriented sector, we rely on effective support from government in our overseas markets, whether in influencing EU negotiations or pressing other governments to allow fairer market access. Both the UK and Scottish Governments have been supportive of us and there will be risks if this support is not maintained. The Scottish Government White Paper envisages a network of 70 to 90 overseas missions, but we export to around 200 markets. A diplomatic network with the necessary geographic footprint, expertise, and influence to provide commercial and political support globally will continue to be essential.
In short, as we consider the potential impact of constitutional change, we look for reassurance on how an independent Scotland could deliver a business, regulatory, and export environment at least as supportive as that which the industry currently enjoys.
Whatever the result on 18 September, we are committed to working with government in the future to deliver sustainable economic growth – either helping to shape the policy regime for an independent Scotland or engaging in the debate about further devolution. That is what the people of Scotland would expect and it is what I am determined to deliver.”
David Frost, SWA Chief Executive
11 Sep 2014
I felt a real buzz when I arrived at our first New Distillers Forum event in Perth on Monday. The Scotch Whisky industry is enjoying record expansion with great confidence in the future. This is good for the wider economy and is creating optimism across the supply chain. I thought that optimism was abundant at our event to help new entrants make sense of the commercial and regulatory landscape governing Scotch whisky production. The numbers say it all – more than 30 new ventures attended the fully-subscribed event.
After the rationalisation of the 1980s and early 1990s, Scotch producers of all sizes are now investing in expanding production capacity and infrastructure. Some £2 billion of investment is committed over the next two years. This kind of growth has not been seen since the early 1970s and it feels to me like a great time to be working in this industry. As a result of the entrepreneurial spirit of those I met at our Forum, the number of distilleries licensed to operate in Scotland is set to grow from 109 to… well… who knows. These planned developments span the country from the Borders to the islands and range in size from micro distilleries to sites at a scale akin to mature distilleries in the sector. They are poised to help create jobs and underpin communities around the country. This surge in investment reflects confidence in Scotch’s strong export performance over the last ten years, with international prospects remaining bright.
New distillers will benefit from being able to walk in the footsteps of those who fashioned the age-old traditions that underpin the making of Scotch and, if successful, will build brands upon the best of what went before. This advantage comes with a responsibility to safeguard the industry’s reputation for consistency and quality while innovating and making a modern offer to an ever more educated market place.
But new distillers also face many barriers to entry. Scotch Whisky is, by its very nature, a long-term investment, with limited returns over the first decade. There is a complex array of licences, rules and regulations to navigate and cash flow to generate. It is no doubt a daunting, as well as exciting, prospect.
Delegates at the event heard that starting a new distillery is not for the faint-hearted. Those who have succeeded have faced ups and downs, delays and heartache. It requires patience, passion, a long-term view, investors with foresight and access to the correct advice to ‘get it right’ first time. This is all while daring to be different in an industry where new developments have been the norm rather than the exception.
The SWA exists to help create the conditions for Scotch Whisky’s long-term growth at home and abroad – from legal protection of Scotch Whisky from fakes to securing fair and equal access to export markets.
My own focus is to secure a competitive and sustainable business environment for all distillers, in areas as diverse as energy, taxation, product labelling and marketing. As our industry evolves, we want to work with new distillers to steer them towards the best available advice and to learn more about their plans. We were pleased to be joined in Perth by a number of high profile and expert speakers from Fergus Ewing MSP, Minister for Energy Enterprise and Tourism, HMRC, the Scottish Environment Protection Agency (SEPA), Scottish Enterprise and, importantly, from individuals such as Anthony Wills of Kilchoman Distillery who has already navigated the unclear path to create a durable site with an international brand.
I hope our event will help new distillers take their plans forward and I wish them every success in their exciting ventures. Judging by the number of handshakes I saw at our New Distillers Forum, the business cards being exchanged and the real bustle over coffee and lunch around the exhibition, I feel encouraged that this new generation of distillers are on course to engage, collaborate and learn, as well as, perhaps question and challenge. This is the stuff our great industry has been built on.
Julie Hesketh-Laird, Scotch Whisky Association director of operational and technical affairs
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