Ireland & UK: “Hard Brexit borders” would be bad for Diageo
Good things come to those who wait, the well-known Guinness slogan once claimed.
But that is unlikely to apply in the case of a hard Brexit, which would likely stop the black stuff flowing freely across the Irish north-south border, and result in lines of Guinness lorries queuing in both directions, The Guardian reported on October 20.
“An impact on the border will be an impact on the heartbeat of the economy,” said Oliver Loomes, the Ireland country director for the drinks giant Diageo, which produces two of the world’s best known drinks brands, Guinness and Bailey’s Irish Cream.
The company’s operations on the island vividly illustrate how interlinked the two economies have become.
“We operate on an all-island basis. I think we have one of the most integrated operations of any business in Ireland,” said Loomes, who is responsible for the company’s operations on the island of Ireland and not simply the Irish Republic.
He estimates that there are about 13,000 border crossings a year by Diageo trucks. The introduction of a hard border could delay each truck by between 30 minutes and an hour, making each journey €100 more expensive. That alone would cost €1.3 mln.
Diageo is one of Ireland’s largest food and drink exporters, producing beer and cream liqueur at four sites, two in the Republic and two in Northern Ireland.
The most famous is at St James’s Gate in Dublin, the home of Guinness, and there is a Bailey’s plant in Dublin. In Northern Ireland, there is a packaging plant in Belfast for the beer business and a Bailey’s manufacturing plant at Mallusk near Belfast.
Materials used in manufacturing both products are in constant movement between the plants and across the border. For instance, Guinness brewed in Dublin is canned in Belfast and then sent back to Dublin to be exported around the world.
“St James’s Gate brewery accounts for about 35% of our global beer production but 70% of that production, 1.2 bln pints per annum, is exported out of Ireland to more than 130 markets across the world,” said Loomes.
“We make 6 mln cases of cream liqueurs between the Dublin site and the Northern Ireland site and more than 90% of that 6 mln cases is exported. All of those operations in beer and cream liqueurs in value terms you are talking of more than a €1 bln out of Ireland.”
A crucial aspect of this massive operation is that all raw materials and ingredients are produced in Ireland. “We would purchase goods and materials that go into making beer and liqueurs to the tune of about €270 mln per annum. So we are one of the largest purchasers of high quality agri ingredients in the Irish economy.”
Guinness buys about 140,000 tonnes of barley, or about 14% of the national crop, every year. Bailey’s involves the purchase of 275 mln litres of milk to go into the creation of the cream liqueur. The milk comes from 40,000 cows on 1,500 Irish farms and accounts for nearly 5% of total milk production in the Republic.
The milk and the whiskey from various locations south of the border goes north to the Bailey’s production facility in Mallusk and then to Dublin for export around the world. The glass and packaging also come from both sides of the border.
As well as employing 1,200 people directly, Loomes estimates that Diageo’s purchase of goods and materials support 19,000 jobs in the wider agri and service economy, while its purchases of milk and barley provide livelihoods for around 6,000 farm families.
As well as the economic impact Loomes expressed concern at the impact the reinstatement of a hard border might have on society, given the hugely positive impact of the peace process over two decades.
“Diageo is a great example in Ireland of how the impact in terms of free movement of goods and services across the border would impact negatively on our business and also therefore on the wider economy and the wider communities.”
He is adamant that having that free movement on the island is a key driver of economic growth for Diageo and for the wider economy.
“We would be highly supportive of the efforts of the Irish government, the Northern Ireland administration and the Northern Ireland secretary are placing on retaining the free movement of goods and services. That is absolutely the priority for us at this stage: keeping that border a virtual border.”
20 October, 2016
