UK: Post-Brexit uncertainty to affect brewing industry among others

While US brewery stocks have seen a slight stabilisation, steadying itself along with the rest of the market, British breweries may not enjoy the same fortune, despite a slight rally with the pound sterling in the wake of last month’s landmark decision to leave the European Union, the Drinks Business reported.

Should Article 50 be activated by Westminster, it will spark an exceedingly uncertain two years for the UK, and this affects the beer industry, too, according to Forbes.

With the Sterling low, and likely to stay that way for some time, English beer will be cheap to buy to the rest of Europe. However, a new tariff structure could bring down the cost of some imports into the UK while it raises the prices for others.

As part of the free trade agreement, EU members aren’t required to pay tariffs on goods that come from inside the EU. Once Britain makes its exit, it will be free to drop the EU-mandates that they had currently been adhering to. That means good coming from outside the EU could be reduced or even scrapped of tax altogether, while goods from within the EU may now be charged for.

The EU will almost definitely place tariffs on British goods, meaning EU brewers looking to buy British hops for example, will have to pay a higher cost. This will have a knock on effect across the rest of the market as an American or Australian retailer will have to meet the higher cost in order to keep up with the price of the ingredients.

But there is also the possibility of British beers falling behind. With the Euro remaining stable against the dollar trading should remain largely the same.

03 July, 2016