UK Wants to Bottle India-Bound Scotch Whisky in Europe. What About Wine?

Indian media are covering a sticking point in Free Trade Agreement negotiations. The UK wants the freedom to bottle export shipments ‘in transit’. Robert Joseph wonders whether wine companies might consider this kind of model - despite its environmental implications.

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Whisky bottle and map
Whisky bottle and map

In the 1960s and 1970s, wine drinkers in the UK and other export markets learned to look for the words mis en bouteille au chateau or domaine-bottled  on the labels of premium French bottles. In those days, anything shipped in bulk was considered potentially dubious. What other wines might the London or Brussels merchants have added to the tank?

This fear of adulteration in export markets persists, and local rules still make it illegal for producers in Alsace and the Republic of Georgia, for example, to ship wine in bulk beyond the borders of their region.

But times have changed. The arrival of globalisation that requires wines to be transported across thousands of kilometres of oceans, Flexitanks, sophisticated bottling plants and environmentalism have all favoured bulk shipping. Today, the UK imports around two thirds of its wine in this way.

Bulk spirits

Spirits are shipped in bulk too. Single malt scotch has to be bottled in Scotland, but it is currently legal to ship blended whisky in bulk to markets like France, South Africa and New Zealand.

This trend has not met with universal approval. In South Africa, for example - a wine-producing country with particularly high levels of unemployment - there are complaints about the loss of bottling line jobs resulting from the shift to exporting in bulk. Some smaller brands, too, worry about the loss of control and/or margins that in-market packaging may imply.

There is nothing new in the concept of bottling 'in transit'. London-Bottled claret was routinely shipped to the US and, before Brexit, the UK had developed a role as an EU bottling hub for Southern Hemisphere and US wines, but, with the exceptions of small shipments of private label wine to Hong Kong and Dubai, Britain-to-Poland was as long-distance as most businesses were considering.

Bottling 'in transit'

According to a recent article in the Indian publication Mint, however, British officials negotiating a  free trade agreement (FTA) with India are advocating bottling potentially large volumes of whisky in a third country that may be a very long way from the final market.

An unnamed, and presumably Indian, ‘person aware of the current round of negotiations’ told Mint that… “for reasons related to cost, logistics, and ‘premium-ness’ of the products…. The UK side wants… ‘bottling in transit’. The product will be exported from the UK to a third country—it could be… in the EU—where it will be bottled”. This, they said, could “happen in one or two ways. Either they just repack it from a barrel to smaller bottles, or it may even involve dilution and some addition of ingredients.”

In other words, scotch whisky would be shipped in bulk to a plant on the European mainland, where it would be bottled – possibly after some dilution or blending – before being transported in bottle to India. The environmental advantages of this model over bottling in the UK or India are not clear, especially as it would involve crossing the Channel and a potentially long journey by truck. Besides, the UK’s biggest bottlers are extremely environmentally aware and, in some cases, close to carbon neutral.

Saving money?

Indian consumers might, it is suggested, trust the integrity of a European bottler more than one in their country - hence the reference to 'premium-ness' - but another key advantage, according to an – again unnamed – ‘expert in free trade talks’ quoted by Mint, would apparently be cost, when compared to packaging in the UK.

Britain, the expert suggested “is facing a labour shortage post-Brexit, and the preferred place for bottling would be Eastern European nations where labour costs would be competitive, unlike in western Europe”. Wine professionals familiar with the sophistication of the UK plants might wonder at how much money would be saved, once the spirit has been transported halfway across a continent, but the government negotiators and presumably lobbyists for the whisky producers presumably know better.

The most sensible explanation would be that Diageo, the whisky-producing giant, that already has ‘maturation and packaging facilities in Ireland and Italy’ wants the freedom to use one of these – or a future facility in Eastern Europe - for exports to regions outside the EU. And the UK government is simply pleading that case. If so, it will be interesting to hear their defence of the negative environmental implications of the move.

The Indian market for scotch whisky might seem to have little to do with the wine industry, and it is possible that the third-country concept is, as the Mint article implies, peculiarly attractive to post-Brexit UK. But India is a huge whisky market, with 2019 imports from Scotland that were worth over £160m. So, setting aside those environmental concerns, maybe there is a commercial opportunity for cheap Eastern European bottling hubs. And if they can fill whisky bottles, why not wine?



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