Whiskey Makers Hope New Free-Trade Plans Go Down Smoothly

on 13/04/11 at 10:27 am

Industry

As international trade negotiators work to hammer out new agreements, global drinks giants Diageo PLC (DEO, DGE.LN) and Brown-Forman Corp. (BFA, BFB) are hoping they are on track to tap new Scotch and whiskey markets.

Despite more than 600 global protectionist trade barriers, Scotch and whiskey consumption has almost doubled since the turn of the century to become a $28.6 billion-a-year industry, according to IBISWorld industry research. And, while talks between governments can take years, there is hope this could be the year to see results.

Brands like Diageo’s Johnnie Walker Scotch and Jack Daniel’s Tennessee Whiskey from Brown-Forman have faced steep import tariffs and advertising restrictions in some countries that discriminate in favor of domestic labels, and talks between U.S. and European officials and their counterparts in emerging markets look set to level the playing field.

The U.S. and South Korean governments are currently engaged in trade negotiations that would immediately eliminate a 20% import duty on bourbon and Tennessee whiskey sales. Meanwhile, the European Union has been engaged in long-running talks with India to reach a free-trade agreement that would reduce lofty import levies and make foreign-branded spirits more competitively priced for India’s burgeoning middle class.

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