Diageo: This is not the time to impose tariffs
As a key date looms next week with regards to threatened extra US tariffs on Scotch imports, Ivan Menezes, the chief executive of Diageo, the largest producer, says that the industry is doing its utmost to stop them being imposed by the Trump administration.
“We are working very hard with the UK, the EU and the US to deescalate the tariff threat on spirits,” he said when announcing Diageo’s annual results on 4 August.
“This is an aerospace dispute [over alleged subsidies to Airbus hurting Boeing] and the core message – and this is very strongly communicated by the US drinks industry as well – is that at a time like this when the hospitality industry which accounts for one in ten jobs around the world needs to recover, penalising the alcohol industry is only going to hurt small businesses right across the world.”
Menezes said: “I am confident, I am hopeful…the Scotch Whisky Association, the companies in America, the wholesalers, the retailers, are all making the point that this is not the time to be hurting a huge jobs creator that is under a lot of pressure.”
He admitted that Diageo had shipped extra stocks to the US before Trump imposed his first round of tariff penalties on whisky. “But clearly the Scotch whisky industry has clearly taken a hit,” he said.
Dan Mobley, Diageo’s director of corporate affairs, said: “Those that are hurting the most at the moment are the smaller or medium sized [Scotch] companies that predominantly or only produce single malts.
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“They don’t have the broad base that larger companies do and they are really hurting. The SWA estimates that US$200m worth of exports year on year are being lost as a result of the US tariffs hit and obviously with every month that passes that number will grow.”
Discussing the fragile backdrop to world trade in general, Menezes said: “One of the things coming through the period we have gone through with Covid-19 is that governments around the world have a far greater appreciation of the importance of the hospitality sector and in many cases the importance of the tax and duty revenues that are provided to states and governments.
“As an industry we are at the table with our voices to get the recovery going across the world. Getting the on-trade and the hospitality sector going is really important. This is not the time to be putting new taxes and barriers on a sector that is really struggling and needs to be revived to help the overall economy.
“We are conscious of it [the looming threats to world trade], the industry is very conscious of it and the broader sector including retailers, wholesalers bars and restaurants are all really working to get their voices heard by governments around the world.
