Diageo CEO: We can handle a no-deal Brexit
Diageo, the world’s largest spirits group and the biggest producer of Scotch whisky, is unflustered by new prime Minister Boris Johnson’s promise that Britain will leave the European Union of October 31, “no ifs, no buts”.
“We don’t think a no-deal Brexit is a good idea: we want a deal” says chief executive Ivan Menezes. “But we can handle no deal.”
Diageo’s Corporate Relations Director, Dan Mobley, who has led the company’s lobbying and briefing on the subject with the government and civil servants, echoes Menezes’s thoughts.
“We still think a deal is the best outcome and encourage both sides [Britain and the European Union] to come to an arrangement, but we always though it prudent to prepare for a no deal scenario and we have done so” he said yesterday.
“We face very little challenge [from no deal]. Our supply chains are relatively short and largely indigenous to the UK so there is little prospect of disruption. We ship out of Scotland (Grangemouth) and Liverpool and are not expecting any significant disruption at those ports. We don’t use Dover to Calais, which you might expect to present some challenges in the short term in the event of a no deal scenario.”
As far as possible import taxes from Brussels are concerned Mobley said: “Spirits are zero rated in terms of tariffs under the World Trade Organisation rules so there a no significant tariff or non-tariff barriers on spirits entering the European Union. So even the hardest of no deal Brexits is not a material issue for us.
“With those countries that give EU spirits a good deal, we do not face significant tariffs”, he said. “The UK government has been very successful over the last couple of years in replicating continuity and the vast majority of the countries we export to are now covered by continuity arrangements which mean will not face significant new tariffs.
” Even in the no deal scenario there will be no material impact on Diageo.”