The word ‘Scotch’ is synonymous with whisky and in most instances, people interchange them without clearly realising what Scotch means. Scotch whisky is nothing but whisky that has been distilled and matured in Scotland. However, there is always confusion as to what is Scotch and the term is mostly used to describe any premium whisky. This is because of the novelty value that Scotch whisky had gained over the last 50 years, making it the most premium and desired whisky globally. Hence, Scotch became so popular that when you think of whisky, you instantly think of Scotch whisky. Some commodities are so specialised in certain countries that they become synonymous with those country names. For example, when you think of chocolates, you think of Belgian chocolates as the most desired chocolate,or when you think of premium watches, you tend to think of Swiss watches. Certain commodities are very specific or deeply rooted in certain countries.
To understand the challenges faced by the Irish whiskey industry, it was first important to analyse how Scotch whisky is perceived across the masses. Many are unfamiliar with the fact that whisk(e)y was first produced by an Irish and not the Scots. There have been multiple debates and arguments over this fact between the 2 countries, however, it was finally proven that an Irishman, Pah-Dee was the first to create whiskey out of grain and water in the pre-Christian era.Irish whiskey was leading the spirits market by a gulf especially in the United States (US) until the 1900s. This was when the Irish war of independence took place and the prohibition act was imposed in the States that banned all alcohol consumption and sale. The rigorous acts imposed by Britain on Irish exports further hit Irish distilleries.There was also reluctance on the part of Irish distilleries to be innovative and use column still to create blended whisky with grain and malt as the Scots did. The new blended whisky could be produced at an economical price than single malt whisky and had complex flavour characteristics that appealed to the masses, especially in overseas markets like the US.
The resurgence of Irish whiskey only began in the late 1980s when one of world’s leading distiller Pernord Ricard bought the Irish Distillers who owned the most reputed Irish whiskey brands, Jameson. This brought in heavy investment in the industry and resurrected the sales of Irish whiskey. More international drinks companies started putting their weight behind other Irish distilleries which lead to fast growth in Irish whiskey sales. However, Irish whiskey has always played the catch-up game with Scotch whisky since the mid-1900s, even after it gained massive reputation and became proud inventors of whiskey.It failed to attain the same stature as Scotch even though the procedure to distil both whiskies was highly analogous and both industries followed the highest standards of the craft in whisky production.
The United Kingdom (U.K.) had implemented strict policies and regulations to secure Scotch whisky from being faked or copied by different distilleries around the world. In case of Irish whiskey, no such regulations existed up until April 2019 when the European Commission laid down the policy that awarded Irish whiskey special geographical indication (GI) status. Under this policy, Ireland issued a comprehensive & technical guideline that clearly stated the procedure for producing Irish whiskey, methods involved, ingredients used, and outlined these links to the country of Ireland.The policy was adopted to not only protect Irish whiskey from imitations or enforce actions against misleading versions, but to bring back the reputation that Irish whiskey had before the 1900s and become one of the most sought-after whiskies globally.
Another key observation that could be made from this policy from 2019 was that with imminent withdrawal of the UK from the European Union (EU), the latter was bound to lose on trade it generated with export of Scotch whisky that was already recognised & been granted special status under the European Commission since 1989. This gave Ireland and Irish whiskey an opportunity to stake its claim as the highest quality and most sought after whiskey being produced out of the EU. The policy would put Irish whiskey as a safe-guarded tradable commodity under the bracket of the European Union, hence, it was bound to receive numerous tax rebates not only within the EU but also with countries who are key trade partners of the EU. It not only helped Irish whiskey industry or Ireland, but also boosted the trade for the EU. With Brexit destined to happen soon, the EU would not be able to export Scotch whisky under its umbrella. Hence, it was not a coincidence that the rise of Irish whiskey coincided with the approval of its special GI status under the European Commission.EU trade commission had ample to gain from the approval of this policy which has safeguarded Irish whiskey.
Even though the formal withdrawal of the UK took place in January 2020, it is still under the process of holding and finalizing trade negotiations with the EU. Currently the UK is undergoing post Brexit transition period, which means it will continue with the EU customs and trade rules until 31stDecember 2020. There is a possibility that there is no deal between UK and EU leading to high tariffs & barriers for Irish whiskey in UK. On the contrary, if both parties come to term for a favourable deal, most tariffs are likely to remain unchanged which will benefit the trade of both Scotch and Irish whiskey in UK and outside of it.With the global economy and the world currently battling with the Covid-19 pandemic it is highly unlikely that any deal could be finalised this year which can further push the transition period for up to two years.
Even though the grant of special GI status permitted to Irish whiskey is not even a year old, substantial developments have taken place to understand whether the policy will achieve its goals. As discussed above, one of the main challenges and goals for Irish whiskey has been to reclaim its position as the whiskey of the highest standard vis-a-vis Scotch whisky. With the growing demand for Irish whiskey around the world and the European commission approving the policy to give special status to Irish whiskey, many major countries also granted the special status to Irish whiskey in the latter half of 2019. Likes of Japan, China, Australia, South Africa and lately India have agreed to safeguard & grant special GI status to Irish whiskey. Hence, Irish whiskey being sold in these countries must be authentic Irish whiskey distilled in Ireland that complies with the GI policy guidelines.,This truly signified that Irish whiskey has set a high standard for itself in the whiskey industry and global markets expect it to maintain that standard, hence this policy is being accepted beyond the realm of the EU.
Another development that suggested that granting special GI status has enhanced Irish whiskey’s reputation and demand in the US market (which is also the largest market for Irish whiskey globally) was the exemption of trade tariffs imposed by the US. In October 2019, Trump administration had imposed high tariffs at upwards of 25 percent on numerous EU goods which included Scotch whisky. However, it exempted Irish whiskey given the standard it had maintained in the last decade and the continuously rising demand for the spirit in its market.
The initial signs post the grant of GI status of Irish whiskey have been encouraging. Although, it cannot be inferred that it has been successful in achieving its goals within such a limited time frame. The growing demand for Irish whiskey has brought in support from many countries, but the bigger challenge remains as to how long the growth can continue, especially with the multitude of new whiskies entering the market and gaining popularity like American Bourbon whiskey, Japanese whisky, etc. It was the reluctance in innovation that set Irish whiskey behind Scotch in the 1900s. With such policies that encourage and safeguard Irish whiskey, the future once again looks bright for the industry, but only time will tell.
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