What Does Brexit Mean For Scotch Drinkers?
I feel a bit uncomfortable commenting on a subject like this so new and not yet fully understood, but since I'm getting bombarded with questions about this I figured I'll share with you what I know. We can't fully comprehend what's going to happen with Brexit and Scotch exports until we know two things:
1) What the UK's new trade negotiation will be with Europe and the U.S.
2) Whether or not Scotland will now hold a referendum and vote to leave the UK and rejoin Europe.
The first thing I can tell you with absolute certainty is that the price of Scotch is not going to go down with the weakened British pound. If anything, it's going to go up! Why would that be the case? Because when you the consumer buy Scotch you're not buying it directly in pounds from a British producer. You're buying it in dollars from a retailer, who bought it in dollars from a distributor, who bought it in dollars from an importer likely owned by the multinational corporation that owns the distillery. If there's any gain to be had on the currency exchange, the importer/producer is going to keep that profit for itself. What is possible, however, is that taxes or embargoes might be higher as the UK faces a different trade scenario. Since the large majority of Scottish single malt is exported, the idea of a more difficult path to market might actually lead to price increases to counteract reduced sales. But, again, this is all hypothetical.
Where things might get interesting, however, is with our UK/Euro direct business. Since we are buying many products directly we will most definitely be passing on any savings on currency to you. But that's only if the pound continues to struggle. We saw the same thing happen with Armagnac prices when the Euro dropped and we were able to offer some very nice deals to our customers. That's the nice part about doing business with a retailer that buys from the source: there are no middlemen taking their cut and keeping the currency gains (which is always a good thing, Brexit or no Brexit). If the pound stays low, we might increase the amount of direct business we do in the face of greater value. So in the case of K&L exclusive whiskies, you might see some serious value coming your way as early as next month. However, I wouldn't expect to see any deals with the major players as they start scrambling to access their changing international trade routes.
-David Driscoll