Fears of scotch on the rocks after Brexit scenario

Liam Hughes is not afraid to take risks. Last year, the Armagh man opened the first single malt whisky distillery in Glasgow for more than a century, in a onetime bonded warehouse on the city's southside.

The Glasgow Distillery, which already produces a popular gin, hopes to market its first dram in 2018. But right now Hughes has a far more immediate concern – Thursday’s referendum on EU membership.

“We are very worried about it. Our business is very heavily skewed towards export. The EU countries are very mature and experienced whisky markets and we have huge interests in those markets,” says Hughes. “Anything that puts a potential barrier against those markets is something to be wary of.”

Scotch is big business. The industry employs about 40,000 and adds just over £5 billion (€6.5 billion) to the UK economy. Over a hundred distilleries are dotted around Scotland, with another 30 currently under construction.

The Brexit debate has been relatively muted in Scotland, but many within the Scotch industry are growing increasingly anxious that a vote to leave could damage a prosperous export trade. With net exports of £3.95 billion, whisky is crucial to the UK's net export performance.

Success stories

Bruichladdich is one of Scotch’s biggest success stories in recent years. The Islay distillery - bought by international giant Remy Cointreau for £58 million in 2012 - employs 75 people on an island of just 3,000 and boasts an annual turnover of €28 million.

"As an export-driven Scottish distiller this referendum is a no brainer," says Bruichladdich spokesperson Carl Reavey. "90 per cent of what we produce here goes to export with around 40 per cent to the European Union. "

Leave campaigners have often accused Brussels red tape of holding back UK industry. But Reavey says Scotch has profited from streamlined EU-wide regulations, while the union's negotiating heft has helped to secure access to overseas markets and break down tariff barriers.

“People have this completely erroneous idea that trading within the EU is difficult and if only we could trade with counties outside the EU, things would be better. But this is complete nonsense. Exporting spirits to the EU is a breeze compared to exporting to Canada, the US or many other markets,” says Reavey.

"The biggest whisky market in the world, India, have a 150 per cent tariff protecting its domestic market against imports of Scottish whisky. The chances of us breaking that tariff barrier down outside the European Union is zero."

The Scotch Whisky Association, the trade body for the industry, has called for members to vote remain on Thursday.

"The EU's single market, including its regulation of food and drink, and its single trade policy, are central to Scotch whisky's success. The single market lets us trade across the EU simply and easily," says David Williamson, director of public affairs at the Scotch Whisky Association.

Geographical location

“And of course the protection of the Scotch whisky geographical indication is rooted in European law. In all these areas British influence can shape the rules in a way that supports industry jobs and growth,” he says.

Tom Harris, head of Vote Leave in Scotland, believes that Scotch would continue to thrive outside the European Union.

“Why would the EU want to impose punitive trade tariffs on one of its biggest trading partners? It just wouldn’t be in their interest to do that,” said Harris.

“Our net contribution to the EU budget is equivalent to a 7 per cent tariff. Even if they did put tariffs on exports like whisky they would not be as high as that, so we would be better off anyway.

“The biggest issue facing the whisky industry is Indian tariffs. The EU has failed to do anything about that. On our own we would be in a position to negotiate a much better deal.”