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With Scotch whisky heavily reliant on the European Union, and the U.K. one of the most important export markets for California wine, the drinks industry is dealing with a strong tide of uncertainty in the wake of the shocking Brexit decision. When U.K. voters decided last week to exit the E.U. by a 52%/48% margin, spirits and wine players in the U.K., U.S. and E.U. were suddenly faced with the daunting prospect of having to operate under an entirely new framework for trade.
Not surprisingly, industry trade groups on both sides of the pond expressed unease with the U.K.’s decision to leave the E.U.
The Scotch Whisky Association (SWA), which says that 90% of its production is exported (with nearly 40% going to the E.U. and another 10% to the U.S.), had previously stated that membership in the E.U. was crucial to the category’s future health amid declining shipments. While saying in a statement that “the process of leaving the E.U. will inevitably generate significant uncertainty,” SWA chief executive David Frost responded to news of the exit last Friday by reaffirming support for the U.K. government as it transitions to an independent entity while urging consideration to all parties involved in negotiating access to the E.U. and other export markets. “There are serious issues to resolve in areas of major importance to our industry and which require urgent attention, notably the nature of future trade arrangements with both the single market and the wider world,” he said.
Meanwhile in the U.S., the Distilled Spirits Council expressed disappointment with the referendum’s outcome, citing trade statistics from 2015 in which U.S. exports to the U.K. reached almost $231 million—with the U.K. the top market for U.S. spirits exports. “As the result of a 1994 treaty, the vast majority of spirits exports and imports between the U.S. and the E.U. have entered both markets duty-free,” said Christine LoCascio, senior vice president of international trade, in a statement. The U.S. trade group also said it would continue working with both governments to ensure the duty-free access for U.S. spirits remained in place.
Uncertainly also abounds for the U.S. wine industry. The U.K. has long been the number-one export market for U.S. wine, and the category continues to enjoy solid growth there. In 2015, the U.K. accounted for nearly 30% of total U.S. wine exports, and the category enjoyed double-digit growth in the market.
Spain’s González Byass has acquired a majority stake in Chilean winery Veramonte for an undisclosed sum. Formerly controlled by Veramonte founders the Huneeus family, the winery comprises two winemaking facilities and 600 hectares of vineyards spanning Chile’s Casablanca, Colchagua and Apalta Valley regions. According to González Byass, the acquisition of Veramonte will enhance the capabilities of its U.S. distribution operations, with Veramonte president Agustin F. Huneeus taking on a counseling role for González Byass in the U.S. Meanwhile, the Huneeus family says it will retain more than 2,700 hectares of land in Casablanca, including some vineyard holdings, and will focus on building a luxury wine portfolio in the U.S. Huneeus also recently unloaded The Prisoner and related wine brands to Constellation for $285 million.
Veramonte—which, in addition to its namesake brand ($10), produces the Neyen ($50), Primus ($20) and Ritual ($18) wine labels—shipped a total of 117,500 cases to the U.S. in 2015, marking a 7% decline in volume on the year prior, according to the Chile National Customs Service. For the 26 weeks ending May 21, the winery’s flagship Veramonte brand was down 10.9% in Nielsen channels, to roughly 10,400 nine-liter cases. Veramonte’s brands join Bodegas Beronia, Cavas Vilarnau, Finca Constancia and Finca Moncloa, among others, in the González Byass portfolio, as well as D.O. Rías Baixas-based winery Pazos de Lusco, which the company acquired in March.
•Spirits industry veteran Jon Potter has been named chief marketing officer of Boston Beer Co., a new role at the company, effective in August. Potter is currently managing director, Chandon, at Moët Hennessy USA, and prior to that served as MHUSA’s CMO and EVP, brands. Before joining Moët Hennessy, Potter was CMO of Diageo North America. At Boston Beer, Potter will oversee marketing for a portfolio that’s faced its share of challenges lately. The craft beer pioneer’s revenue declined 5% to $189 million in the first quarter, as increased craft competition hit its core Samuel Adams brand and a cider category slowdown resulted in a decline for the formerly fast-growing Angry Orchard label.
•Oregon’s Pelican Brewing is debuting a Latin-inspired lager, Pelicano Extra, next month. Billed as a 5.1% abv sessionable beer paying homage to Latin American lagers, Pelicano is brewed with 6-row malt, 25% flaked corn and Tettnang hops. Previously available only on draft, Pelicano is set to roll out in six-packs, 22-ounce bottles and as part of Pelican’s new mixed 12-pack across the company’s distribution territory of Oregon, Washington, Idaho, Nevada, Utah, Hawaii and Vermont. Founded in 1996, Pelican currently produces about 18,000 barrels annually, up from 3,500 barrels in 2013.
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