In case your only news outlet is TWL, let us first relay last week’s biggest news: The UK has voted to leave the European Union. I’ll be honest, when I first read the news about Brexit, I didn’t really care. Call me an ignorant American, but the only impact I foresaw this vote having on me was potentially an extra passport stamp when traveling to Europe. Then I opened my laptop Friday morning and saw my stock portfolio, mainly just a bunch of diversified Vanguard ETFs, DOWN 3%! What is this, 2009?
First, the good news. The worldwide whiskey industry is incredibly strong. It is not only growing, but it has historically been able to endure some of the worst regulatory environments that any industry has had to live through. The short term benefit here relates to the article’s picture. Brexit is impacting the pound’s relative value meaning fewer greenbacks are needed for one sterling. If you’re custom to buying scotch directly and shipping it to the states, you’re going to see an immediate impact on the amount of American dollars you have to spend.
The long term impact has to do with trade and while it’s yet to be seen (obviously), TWL isn’t estimating Brexit to be positive on prices in the future. The unfortunate reality is that these Brits, intentionally or accidentally have just voted to impact American lives for the worse. Far bigger than any one time 3% loss, is the potential massive increase in Scotch prices over the next few years. “The Scotch Whiskey Association has argued that EU membership is vital to growing Scotch Whiskey exports, with the EU playing a particularly important role in knocking down trade barriers as it negotiates Free Trade Agreements with third countries.” The bottom line is that negotiating leverage has gone down and regulatory expenses will go up meaning the bare bones cost to produce are going up. “The process of leaving the EU will inevitably generate significant uncertainty. Of course, we are confident Scotch Whiskey will remain the pre-eminent international spirit drink. But equally, there are serious issues to resolve in areas of major importance to our industry and which require urgent attention, notably the nature of future trade arrangements with both the single market and the wider world.” I know, optimistically these costs won’t be passed on to the consumer, but they 100% will. So next time you see your single malt scotch in the store, take note of the price……it’s likely to increase from here.
As always, TWL is here to help you find the lowest prices available!