Irish Booze Rules Show British Brewers What Brexit May Bring

(Bloomberg) -- Northern Irish brewer William Mayne is about to get an early taste of Brexit’s implications.

Mayne, 25, produces beers with names like ‘Small Axe’ and ‘Brainwashed’ in distinctive, brightly-colored cans. New labeling rules being considered in Ireland to lay out the risks associated with alcohol might mean he has to tone down that characteristic branding in his closest potential export market -- across the border.

“Because we are so agile and used to small printing runs, the new legislation is more of an annoyance than a complete barrier to trade,” said Mayne, who has just started selling his Bullhouse Brewery beers in Ireland. “Where I can see the future difficulties are in differentiating our products from bland, mass-produced, cheap beers. Our branding is fairly distinct.”

The alcohol question illustrates wider concerns facing British exporters should the U.K. move away from European Union rules after it exits the bloc. Warning of spiraling costs, the Confederation of British Industry is cautioning against a “bonfire of regulation,” while Irish-U.K. trade could shrink by almost 10 percent because of red tape demanded by Brexit, Ireland’s central bank said this month.

The proposed labeling requirements in Ireland means “producers and distributors that supply products to Ireland will have to create labels specifically for the Irish market, which will be costly and logistically difficult,” said Patricia Callan, director of the Alcohol Beverage Federation of Ireland, which represents drinks companies.

Trade Barriers

For British firms as a whole, the issue could be replicated across thousands of products after Brexit if the U.K. changes domestic rules to make a dramatic break from the EU after it exits the single market.

Ireland’s unilateral labeling proposal is not a done deal. The European Commission has raised concerns that it could hamper drinks exports to Ireland, and suggested it may breach EU law, the drinks industry said. In response to questions, the Irish Health ministry pointed to “strong support from the public for more alcohol labeling.”

“The aim is to provide consumers information on alcohol products regardless of the manner of purchase whether in a shop, in a pub or online,” the ministry said.

Irish Prime Minister Leo Varadkar’s government wants labeling that details health risks including each drinks’ calories and possible links to diseases including cancer. The warnings would take up a third of the label.

Protectionist Measure

For a majority of Northern Ireland’s alcohol producers, the Republic of Ireland is a key export market, according to Hospitality Ulster, which represents the industry in the region. The organization said the 40 micro brewers and small craft distillers would be especially vulnerable to the extra costs flowing from Ireland’s proposals.

The Northern Ireland drinks industry’s exports to the Republic of Ireland stood at 135 million pounds ($180 million) in 2015, the most recent year for which figures are available. That’s more than a third of the total sales by the sector, which includes soft drinks.

Sammy Wilson, a lawmaker with Northern Ireland’s Democratic Unionist Party, accused the Irish government of seeking to freeze out competitors to protect local producers.

"This is obviously the intention of the regulation and is another example of the underhand tactics used by the Irish government to restrict trade while waving the flag for the European single market,” Wilson told the Belfast Telegraph.

For now, exporters are bracing for the likelihood they’ll have to comply with the changes if and when they are imposed.

“Labeling is always an issue and we come across this when we step up exports where we have to add more text in to comply,” said Bernard Sloan, who runs the Whitewater Brewery, about 40 miles from the border. “For Republic of Ireland I believe it’s inevitable that we’ll have to do this. It’s ridiculous that individuals jump on a ‘danger to health’ bandwagon to up the ante on labeling.”

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