Scotland vote worries its No. 3 industry: Whisky

Lack of certainty about Scotland’s currency, interest rate levels and membership in the European Union—which eliminates trade barriers in its largest market—all compete for the top of the list of worries.

Mike Younger, one of the few Scotch executives who will speak to the media, is finance director for Macleod Distillers, makers of Glengoyne Single Malt. He is solidly in the “no” camp. “I’m nervous,” he said, “because the results could be quite difficult for business.”

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Scotch whisky is the third-largest contributor to Scotland’s GDP after the oil industry and financial services. And it acts as perhaps the No. 1 ambassador for Scottish culture. Nine out of 10 bottles are sent overseas.

Katie Slaman | CNBC An employee works the production line at the Ian Macleod distillery in Scotland.

Katie Slaman | CNBC
An employee works the production line at the Ian Macleod distillery in Scotland.

Scotch can only be made in Scotland, just as Champagne can only be made in the Champagne region of France. In Scotland, it’s officially called Scotch Whisky (no “e” at the end!).

According to the Scotch Whisky Association, last year Scotland exported $6.5 billion of Scotch—a significant number for a place with only 5 million people. Scotch accounts for 20 percent of Scotland’s exports.

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And precisely because it is an export, Scotch is particularly vulnerable to the unknowns that will come about if the Scots vote yes for independence.

David Williamson is the spokesperson for the Scotch Whisky Association. Officially, the group is not taking a side, but Williamson said that “At the moment, the consensus within the Scotch industry is that the potential risks outweigh the advantages.”

“We’ve survived wars, revolutions, economic bubbles, and other things, so we’ll still be here, that’s the certainty of this debate.”-David Williamson, spokesperson, Scotch Whisky Association

Back on the factory floor of Macleod, Younger said he’s worried because he thinks credit will become less available, and more expensive, in what will be a much smaller country, “simply because the full scale of the Scottish banking system at that point will be much smaller and less well defined and less capable than the much richer system that we have across the UK in its entirety.”

The potential rise of trade barriers is another concern. Currently, Scotland, as part of the United Kingdom, is part of the European Union, and faces no trade barriers in member states. The leaders of the “Yes” campaign have promised that Scotland would remain in the European Union, but just today, Spain said it would block Scotland’s membership.

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With the UK “we get an embassy network that lobbies hard for us our behalf when we face problems. The UK is very good at that work at the moment, has a very strong diplomatic network. The Scottish government is suggesting less than half of that footprint of embassies around the world, so that’s a potential risk as we try and secure fair access to our export markets.”

Katie Slaman | CNBC Barrels of Scotch whisky at the Ian Macleod distillery just outside Edinburgh, Scotland.

Katie Slaman | CNBC
Barrels of Scotch whisky at the Ian Macleod distillery just outside Edinburgh, Scotland.

The association has already met with the leaders of the Yes campaign “looking for reassurance” that their concerns will be taken strongly into consideration.

Williamson says that ultimately there will always be Scotch. “We’ve survived wars, revolutions, economic bubbles and other things, so we’ll still be here, that’s the certainty of this debate,” he said. “But we need to work with the government in the future to make sure it continues to grow.”