UK & US: Diageo warns of Scottish whisky jobs threat from US-EU trade dispute

Spirits giant Diageo has warned that thousands of Scotch whisky jobs could be affected by the ongoing US-EU trade dispute, BBC News reported on January 30.

Diageo's global supply chain boss Ewan Andrew said tariffs had left smaller distilleries vulnerable, as well as supply chain operators such as farms.

The US imposed a 25% tariff on imports of single malt Scotch in October.

It was among measures introduced by the US in retaliation against EU subsidies given to aircraft maker Airbus.

According to industry figures, more than 10,000 people are directly employed in the Scotch whisky sector in Scotland. A further 40,000 jobs across the UK are supported by the industry - 7,000 of which are in rural areas of Scotland.

Mr Andrew told BBC Radio's Good Morning Scotland programme: "The important thing as we look forward is that we de-escalate on both sides and that products such as consumer goods are not tied in to something that is about the aerospace industry.

"My concern would be for the broader industry and for those smaller players in the industry.

"Right now I am sure it has had an impact on some of their businesses but if it were to escalate, that really would be difficult for Scotland.

"So what's good for Scotch is good for Scotland, and that's why we would encourage a de-escalation so that it doesn't impact thousands of jobs right out into farming and rural communities."

Mr Andrew's comments come after representatives of the UK and US whisky industries called for the end of "punitive tariffs that are wiping millions off export values every month".

The chief executives of the Scotch Whisky Association and the Distilled Spirits Council of the United States urged the UK and US governments to "urgently find a negotiated solution to unrelated trade disputes and to remove all tariffs on distilled spirits".

In a separate development, Diageo has reported a rise in half-year profits, boosted by a strong performance in China.

However, it expects sales to grow more slowly because of "uncertainty in the global trade environment".

The company - whose brands include Smirnoff, Guinness, Johnnie Walker, Tanqueray and Gordon's gin - reported that in the six months to 31 December, operating profit increased 0.5% to £2.44 bln.

In Greater China, which includes Taiwan, net sales increased 24%, with double-digit growth in both Chinese white spirits and Scotch.

Chief executive Ivan Menezes described the interim figures as "another good, consistent set of results", but warned that they had been delivered "in the face of increased levels of volatility in India, Latin America and Caribbean and travel retail".

31 January, 2020