What Implications Will The UK’s Brexit Vote Have On The Global Beverage Sector?

In a referendum held on Thursday, 23 June 2016, voters in the UK decided to leave the European Union. The full effect of the UK’s departure will be difficult to predict. One of the…

In a referendum held on Thursday, 23 June 2016, voters in the UK decided to leave the European Union. The full effect of the UK’s departure will be difficult to predict. One of the most notable short-term implications has been the marked devaluation of the British pound, while the need to negotiate trade agreements – and the uncertainty that this creates for everyone – looms in the longer term.

The scale of change that results from this decision will have critical implications for the beverage sector, given the UK’s role as both a major importer (e.g. wine) and a major supplier (e.g. scotch). With this high level of uncertainty, many beverage companies are rightfully concerned and are actively developing contingency plans. They will find that there are a number of short- and long-term strategic alternatives that can mitigate risks and help them to take advantage of new, attractive opportunities. These options include shifting sourcing, M&A, shifting geography for production/value-add, pipeline loading, hedging and shifting market focus.