Many small UK gin and whisky distillers and suppliers are struggling to ship their products to EU customers seven weeks after the introduction of post-Brexit trading rules, the industry has warned.
Multiple distilleries told the Financial Times that confusion over paperwork for alcohol shipments was making it next to impossible to ship single pallets of spirits to the EU.
“It’s been absolute murder,” said Alan Powell of the British Distillers Alliance, which represents independent and craft distillers. “We are not in a good place at the moment.”
The border issues affect companies across the UK but fall particularly hard in Scotland, which dominates the spirits sector and where there is already widespread dismay at Brexit, which Scottish voters in 2016 rejected by 62-38 per cent.
Powell, a former UK tax official, said problems had been caused by a lack of preparedness by freight forwarders, producers and their customers in Europe for differing approaches to excise duty in individual EU countries.
While major players such as international drinks group Diageo and Chivas Brothers, the whisky arm of Pernod Ricard, have in-house expertise and can ship bulk loads to Europe, smaller operators say they are struggling to find shippers who will accept single pallets of product.
“It’s easier to send a bottle to Japan now,” said Blair Bowman, a whisky consultant and broker of whisky barrels and bottles.
Simon Erlanger, managing director at Isle of Harris Distillery, said it had been trying to ship gin to Germany since the start of the year. “It’s been a huge struggle to obtain a quote or book part load shipments via freight forwarders. Our German importer has run out of gin and we are losing sales,” he said
Simon Erlanger said Isle of Harris Distillery had been trying to ship gin to Germany since the start of the year © Gary Doak/Alamy
Niall Macalister Hall, chief executive of Beinn an Tuirc Distillers in Kintyre, said he had encountered the same problem. They export about 3,000 of their 25,000 bottles of annual production to Germany, Spain, Denmark and Italy in small consignments of one or two pallets.
“Now no one is willing to take a single pallet. We’ve tried four different hauliers and agents,” he said.
Adam Elmegirab, owner of Aberdeen-based House of Botanicals, said he had spent the past 10 weeks trying to get a pallet of gin and botanical bitters worth £30,000 at retail prices to Finland without success.
“We haven’t managed to move anything business-to-business since January 1 — it’s incredibly frustrating. We’ve shipped alcohol for years with no problem since 2009, but now everything is getting held up because of paperwork,” he said.
Emma Churchill, the head of the UK government’s Border Delivery Group, told MPs last week that UK-EU trade flows had “held up exceptionally well” since the transition period expired on December 31.
But Powell of the British Distillers Alliance said it was “totally false” to suggest trade was flowing anything like normally when it came to alcohol.
Powell blamed a shortage of customs agents for the delays. He explained that all alcohol shipments had to be cleared through customs in the EU and UK before being entered by a registered consignor into an Excise Movement Control System (EMCS) for bonded onward shipment to customers, who had to pay the duty before the goods were released.
Powell said that even when distillers and freight forwarders did get the hang of paperwork, the system would continue to be slow and costly. “You could say these are ‘teething problems’, but the reality is that you have triple handling of goods that used to go back and forth across Europe under a simple, uniform system.”
Other sectors are also reporting disruption to trade with the EU, particularly smaller exporters who do not ship enough product at a time to fill a whole lorry container.
Mixing shipments from different suppliers in one load, a practice known as groupage, means paperwork problems with one can delay or even block transport for them all.
A DFDS lorry in the Scottish Highlands © Kay Roxby/Alamy
Tom Gibson of public body Quality Meat Scotland said the issue had left many smaller exporters with “no route to market for their EU customers”.
He told a Scottish parliament committee last week: “It is systemic: this system was never designed for the situation we are in right now, it was really designed for sending containers halfway round the world.”
DFDS, a leading shipper of fresh and live seafood, said it had been able to restore next-day deliveries of seafood to France, but there was now a much earlier cut-off time for orders and the process was more complex than before Brexit.
“Our costs have rocketed and, of course, we have to pass those on to our customers,” said Eddie Green, head of cold chain at DFDS.
Georgina Wright of Norwegian-owned salmon farmer Mowi UK, told the same Scottish committee that there were “fundamental” problems with the post-Brexit trade regime. “We are coping, we are exporting but . . . the new normal is not acceptable.”
There are fundamental problems with the post-Brexit trade regime, said Georgina Wright of salmon farm operator Mowi UK © Bloomberg
Many distillers softened the initial impact of the post-Brexit trade regime by stockpiling in the EU last year, but James Porteous of Edinburgh-based Electric Spirit said time was running out to resolve the problems.
“January is an incredibly quiet month for the drinks production industry, but now that orders are beginning to come in from customers in the EU, it’s going to start causing massive issues unless there’s a concerted effort to get groupage shipments up and running at previous capacity,” he said.
The government said it was working closely alongside the drinks industry to trade with the EU with as little disruption as possible. “We are confident the sector is well positioned to benefit from the expansive trade deals we are striking and that businesses are adjusting well to the new rules,” a spokesperson added.
Source: Economy - ft.com
