just-drinks ran its second Brexit survey in October

just-drinks ran its second Brexit survey in October

The impact of exchange rate fluctuations following the UK's vote to leave the European Union remains a major concern for the future, according to the latest survey of the global drinks industry by just-drinks.

Industry confidence remains low amid growing uncertainty over how long it will take for the full implications of the so-called Brexit to play out, although responses to the October poll were marginally more positive than those to the same survey carried out three months earlier. Asked to measure their level of confidence in the industry's short-term (three months to a year) prospects on a scale of 1 to 10 (1=no confidence, 10=very confident), respondents returned an average confidence rating of 5.8 in October, compared to 5.6 in July.

For a similar question on medium- to long-term confidence (three to five years), the average rating in October was 5.9, marginally up on the 5.8 recorded three months earlier.

But, any positive sentiment remains fragile at best: some 45.5% of people reported that their confidence in the drinks industry's short-term prospects had reduced over the past three months – just over 10% said 'significantly' reduced – compared to a figure of 55.3% in July.

The picture was similar in terms of medium- to long-term confidence: 45.2% of respondents to the October survey said this had fallen, versus 53.7% in July.

On both measures, most of the remaining respondents reported no change in confidence levels; only 12% reported increased short-term confidence (up from 7.4% in July), and 12.5% voiced improved confidence in the industry's longer-term prospects (11.3% in July).

It appears likely to be some time before the full implications of Brexit are clear, judging from the survey. While 23.5% of respondents to July's poll reckoned this process would take less than a year, that figure had fallen to 14.4% by October.

By contrast, 85.6% of those surveyed in October expect clarity to arrive in two years or more, versus 76.5% in July; and some 43.1% now think it will take five years-plus, up from 39.2% in July.

Asked to assess the major challenges and opportunities following the Brexit vote, chief concerns centred on volatile exchange rates following Sterling's post-Brexit slump.

While several respondents highlighted the likely benefits of a lower pound for exports – for sectors such as Scotch whisky, in particular – others voiced concerns about the impact on the cost of imports, as well as on input costs from overseas.

Trade deals and taxation are also big concerns. "The greatest threat to the global industry is for the decades of excise tax and other barriers to trade reduction to be reversed, and the trend to protectionism be rekindled," wrote one respondent.

Another flagged the potential for the UK to broker "better, more flexible, less restrictive" trade deals around the world, but added: "[The] biggest challenge will be trying to negotiate these deals without the large leverage of Europe."

The knock-on effect of June's Brexit vote on other countries was also addressed, with some worried that the risk of further fragmentation of the EU might jeopardise future corporate investment. But, some respondents were more optimistic, with one writing: "I really don't see a major challenge. The producer has control over marketing their products and that will determine success or failure.

"Not being part of the EU is political – ie I am not going to stop drinking Johnnie Walker Black because of this political decision."