When Is Irish Whiskey Not Irish Whiskey? Maybe After Brexit

(Bloomberg) -- Irish whiskey might be about to get caught in the Brexit wars.

For 400 years, Bushmills, distilled close to the banks of the River Bush in Northern Ireland has viewed itself as Irish whiskey. Now, some people across the border in Ireland say it risks losing that tag after Britain leaves the European Union.

“I can’t imagine that they’d wish to describe themselves as British whiskey or Ulster whiskey or anything else of the sort,” Irish Prime Minister Leo Varadkar said in parliament last week. “That of course is a matter for negotiation.”

Read more on the impact of Brexit on the drinks industry

The whiskey question is a microcosm of the complexities facing Britain and the EU, as they seek to forge a new post-Brexit trade relationship. The EU protects Irish whiskey made on both sides of the border as it does champagne in France or parma ham in Italy. The worry is whether that will continue after the U.K. exits the bloc.

In the final EU-U.K. agreement, it’s “vital” that protected spirits produced in Northern Ireland continue to be labeled product of Ireland, according to the Alcohol Beverage Federation of Ireland, which represents drinks companies.

Undermining Value

“If a product is branded Irish Whiskey but then is labeled as ‘Product of U.K.’ that can cause huge confusion and undermine its value, especially in foreign markets, ” said Patricia Callan, director of the industry group. “That needs to be resolved.”

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The EU closely guards its geographical indicator system, whereby names capture the origin and reputation of a product. So for example, a Slovakian distiller can’t sell its produce as Irish whiskey just as a Spanish wine maker can’t make champagne.

Name checked in James Joyce’s Ulysses, Bushmills is viewed as a quintessentially Irish brand, despite being owned by Mexican Tequila maker Jose Cuervo.

Premium Product

That’s allowed Bushmills to benefit from renewed demand for Irish whiskey. Sales in the U.S. surged 13 percent to just under $900 million last year, according to the Distilled Spirits Council. Most of that growth flowed from the so-called super-premium sector, where a 9 liter case costs more than $200.

“Irish whiskey branding adds premium value, ” said Callan. “That has to be protected.”

Yet Bushmills’s Irish designation could be threatened by Brexit, Martin Kenny, a lawmaker with Ireland’s opposition party Sinn Fein, told parliament last week.

“Every whiskey that is produced on the island of Ireland is designated as Irish whiskey,’’ said Kenny. “After Brexit, it will no longer be possible to call Bushmills Irish whiskey.”

Bushmills disputes this.

“Bushmills will continue to be described as an Irish whiskey as it is has been been for over 400 years,” Colum Egan, master distiller at the whiskey maker, said in response to questions. Bushmills declined to comment further.

Sticking Point?

The issue may be solved by the EU and U.K. agreeing to respect each other’s protected food and drink products after Brexit. Alternatively, it could emerge as a sticking point if the U.K. decides that not protecting various EU products could help it do trade deals with other nations, according to Mujtaba Rahman, managing director at Eurasia Group in London -- if one those countries wanted to sell the U.K. a drink called champagne, for example.

“There will also be tough discussions over the question of whether the U.K recognizes the existing stock of geographical indications, such as parma ham, feta cheese, champagne, which are a key offensive trade interest of the EU,” said Rahman. Doing so, though, would “in the future, risk constraining U.K. trade policy towards ‘new world’ countries.”

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