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Brexit: What's in store for Scotch whisky?

Published:  28 June, 2016

Diageo has said that protecting the long-term prosperity of its Scotch whisky is paramount following the referendum's shock result on Friday.

Diageo, one of Britain's biggest exporters, currently has around 30 distilleries in Scotland alone.

The result will come as a blow for Diageo's CEO Ivan Menezes who wrote to the company's 4,773 British employees before the vote, arguing that it would be better for the UK, Diageo and the Scotch whisky industry to stay in Europe.

Today (June 28), a spokesperson for Diageo said: "We respect the views of the British people in the EU referendum. As one of the UK's leading exporters, Diageo remains committed to the long term prosperity of the Scotch whisky industry and will now work closely with our industry bodies to seek clarity on the transition process.

"It is a priority that the UK continues to benefit from open access to the EU as well as favourable international trade agreements to protect the UK's important export industries, including Scotch whisky."

Since the result however, a look at the stock market reveals that some of the biggest multi-nationals trading in euros and dollars stand to gain from sterling's drop in value.

Diageo has seen 5% rise in the stock market since Friday's result was announced, reportedly having sold large volumes of Scotch and Guinness to overseas buyers.

The drinks giant has declined to comment on this.

The leave result has caused concern at Aberdeen bar Orchid, whose founder has recently launched gin brand Porter's Gin.

"Orchid has just launched its own gin which is really worrying in terms of exporting to Europe. If the government increases the tax on alcohol it will affect the gin business pretty heavily and whisky. I think if that happens we will see a lot more whisky being produced in Europe," Nick Gordon, assistant manager at Orchid said.

"There is a lot of discontent in Scotland over how the vote went," he added.

Alliance Wine's headquarters is in based in Ayrshire, but the company has contracts all over the UK including London.

Giles Cooke MW said everyone was "in shock" following the result, adding that Alliance is committed to its business on both sides of the border.

While it may be impossible to predict how the Brexit vote or the possibility of a second independence referendum for Scotland will affect business, Cooke raised some questions over the future political landscape.

He said: "It's not particularly coherent that the SNP wants to be out of the UK but stay in Europe. If they were one day in the position to become a new member of EU, then will have to look at whether they will take on the euro which wouldn't make much sense for a country that does the majority of its business within the UK. I can't see them wanting to do that."

Until there is a clearer picture of how the leave vote will affect business, most are concerned - and rightly so - about the impact currency fluctuations.

Toby Sigouin, wine buyer at Glasgow company Inverarity Morton, said, "Given the total chaos and current turmoil our politicians seem to be in, I have not yet formed a final decision about what Brexit means, partly as it remains very unclear what is actually going to happen.

"The current weakness of the pound is of course not desirable for anyone in the wine trade, and we hope that it is a temporary blip rather than long term situation."