FYI.

This story is over 5 years old.

Food

Scottish Independence Could Devastate the Whisky Industry

As excitement grows about whether Scotland will establish sovereignty from the United Kingdom, the Scotch industry bemoans potential repercussions for the whisky trade.
Hilary Pollack
Los Angeles, US
Photo via Flickr user Jack Zalium

With just days left until the election that will determine whether Scotland becomes a sovereign state, many forces of the United Kingdom's collective economy have brows furrowed as they hypothesize how such a secession could impact national currencies, debts, and trades. One of the most vocal (and conflicted) industries about the potential repercussions of independence is Scotland's second-largest but most-beloved export: Scotch whisky.

Advertisement

At the center of the current nationwide din is massive uncertainty. Many Scots are in strong favor of independence, but if Scotland does go it alone after 307 years of being tied to England, no one is entirely sure what currency it will use (or what impact the move would have on the British pound), what sort of turn the stock market might take immediately after the breakaway, or even what trade agreements could be compromised. (The United Kingdom has not explicitly agreed to let Scotland use the pound at the same exchange rate as England if it becomes sovereign, and adopting the Euro could take years.) One out of every five pounds of Scottish exports comes from Scotch—which also accounts for a full quarter of the UK's food and drink exports—and 90 percent of bottles are sold overseas to roughly 200 markets worldwide. David Frost, chief executive of the Scotch Whisky Association, has publicly expressed serious concern that the stability and predictability that comes along with inclusion in the United Kingdom—the world's sixth-largest economy—could be quickly stripped away, leaving markets vulnerable as logistics are hastily worked out. In a statement on the SWA's website, he remarks, "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 … 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."

Frost points to Scotch's protected geographical designation—whisky can be labeled and sold as Scotch only if it is made in Scotland, and, even more specifically, matured for three years. With more than 100 distilleries currently active, and with one out of five pounds from Scottish exports coming from its Scotch industry, the nation currently benefits heartily from the strictness of definition. But if Scotland's economy were to suffer greatly from sovereignty, there would be nowhere for the industry to run without compromising its product's protected status. And if trade agreements originally written with the UK as supervisor and beneficiary weren't upheld, Scotland could have to renegotiate or at least untangle its relationship with foreign markets, and its access to the European Union's "single market"—a tariff-free trade system between 27 different European nations—might not necessarily be upheld.

Watch Now: The MUNCHIES Guide to Scotland

Still, opinions vary about the impact that could derive from financial confusion, as some are certain that Scotland—and its industries—will experience a cultural and national boom once freed from the United Kingdom's power. Alex Salmond, the current First Minister of Scotland, is a strong believer that Scotch producers can withstand or even excel through the nation's independence, envisioning Scotland as being "pushed" onto the worldwide stage. One surprising backer of Scottish independence is North Korea. In a recent editorial in the pro-North Korea newspaper Choson Sinbo, managing editor Choe Kwan-il stated, "North Korea is rich in natural resources and we like the taste of Scotch whisky, so we can be beneficial to each other." But with North Korea's notorious and plentiful issues, that's not terribly reassuring.

In an open letter to The Telegraph, Mike Younger of Ian Macleod Distillers is among the wary. "It is startling that independence could affect an independent Scottish export business more adversely than others," he argues. "I am concerned that these risks will only be appreciated when it is far too late." But regardless of the financial repercussions of Scotland's succession, it continues to be poured into glasses worldwide night after night; the one thing that surely won't suffer is demand.