Sunday 17 February 2019

Guinness owner warns that hard Brexit will cost 'tens of millions'

Dan Mobley, Diageo's head of corporate relations, said losing the benefits of EU trade deals with so-called third countries such as South Korea, Colombia and South Africa would be unwelcome
Dan Mobley, Diageo's head of corporate relations, said losing the benefits of EU trade deals with so-called third countries such as South Korea, Colombia and South Africa would be unwelcome

Elisabeth O'Leary and Paul Sandle

Diageo has said Brexit could cost it tens of millions of pounds if Britain does not replicate the EU's trade deals with other countries for Scotch whisky and keep an open border in Ireland, where it makes Guinness stout and Baileys liqueur.

Dan Mobley, the drinks giant's head of corporate relations, said losing the benefits of EU trade deals with so-called third countries such as South Korea, Colombia and South Africa would be unwelcome.

The introduction of border controls in Ireland would hinder its supply chain, and hurt its many small suppliers, he said.

The company treats the island of Ireland as one, he said.

Diageo makes Baileys using ingredients from both sides of the Border, taking 11pc of Ireland's cream output to make the drink, Mobley said.

"We are moving about 18,000 trucks a year over that border, so even small hold-ups to process those truck movements would be really unwelcome, but the big problem would be for our suppliers," he said.

He said Diageo had advised the Irish and British governments about technical measures that could relieve pressures on any new controls, but retaining an open border was preferable.

"We would much rather what was agreed last week, which is for an open border," he said. "We are heartened that all sides say that's what they want, but we need to now see the details."

UK Prime Minister Theresa May moved closer to unlocking stalled Brexit talks last week by offering Ireland and her allies in the North a pledge to avoid a hard border.

Scotch whisky accounts for about a quarter of Diageo's £12bn annual turnover, while Scotch is Britain's biggest food and drink export, worth around one fifth of the total.

"For us to lose the benefits of (EU) trade deals would be unwelcome, but it would be manageable, it would be tens of millions of pounds lost, rather than hundreds of millions," Mobley told a parliamentary scrutiny committee in London.

Diageo is also pressing the British government to get India to lower its 150pc tariff on imported Scotch, which makes the premium spirit unaffordable except for the very wealthy.

Reuters

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