spiritsNEWS September 2022

Editorial by Ulrich Adam, Director General of spiritsEUROPE

On Thursday, we unveiled our Annual Trade review 2002 “a spirit of recovery” in front of over 100 attendees from the European Commission, Council, European Parliament, industry & the press. Our good export performance in 2021 - +24% in value compared with the previous year - was cause for celebration.

2021 finally marked the start of a much-needed recovery, with restrictions on hospitality starting to ease and the gradual return of international travel. The other good news to report was of course the suspension of tariffs imposed on spirits as part of unrelated EU-US trade disputes – Airbus/Boeing first, and then steel & aluminium – which supported the recovery of our exports to our first market, the US. We now need this suspension to be made permanent. The shift towards more premium products – the idea being to drink less, but better, and the emergence of e-commerce – a trend accelerated by the crisis, and perhaps one of the only positives from the last 2 years – were the other drivers of this recovery. Consequently, our exports in 2021 slightly surpassed their pre-crisis level, with an overall value of €8.41 Billion. In a few cases, we even managed to do better than in 2019, such as in China, where we’re getting closer and closer to the target of €1 Billion.

However, the outlook for the future is unfortunately a far more mixed one: yes, we have reasons for hope, but can also see clouds on the horizon. Drastic increases in energy & raw material prices, rising inflation, supply chain disruptions and the effects of the war in Ukraine are already being felt by both producers & consumers across Europe – and in other parts of the world. This will have a negative impact on production costs, but also on consumer demand.

At the same time, geopolitics continues to dominate trade, and whether we like it or not, tensions continue to flare up. We are glad that the transatlantic relationship is now in much better shape than it was 18 months ago, but we witness the risk of growing tensions with other trading partners with huge concern.

Against this challenging economic background, our sector needs new export opportunities as well as stability in our relations with major trading partners. Diversification will play a critical role in our future resilience as a sector. We need the EU to invest in establishing closer economic ties & removing market access barriers in emerging markets which present significant potential for EU exports – Mercosur countries, India, ASEAN & sub-Saharan Africa.

Regulatory cooperation & the use of diplomacy should be privileged to avoid potential barriers & resolve existing ones, and to mitigate potential sources of disagreements and disputes. Last but not least, cooperation between the EU, member states & industry should be reinforced to address existing barriers & open new opportunities for EU exporters, paving the way for the diversification we all need. Lest we forget, an open trade policy is not only an economic imperative: it is the best way of sharing best practices & encouraging the uptake of more sustainable processes & robust standards – not by imposing our norms on others, but by facilitating dialogue with trade partners and allowing EU companies to make a positive contribution in all markets in which they operate.     

It was reassuring to hear Michael Scannell, the Deputy Director General at DG AGRI, share our analysis of the situation and support the recommendations presented in our publication, in particular on the importance of promoting and protecting Geographical Indications, the need to make EU-US retaliatory tariffs suspension permanent and the necessity to support trade diversification through the speedy ratification of FTAs – and the negotiation of new ones.

A lively panel discussion, moderated by Darya Galperina from Pernod Ricard, Chair of our trade committee, focussed on the critical role of the trade policy in supporting trade diversification & helping spirits producers make the most out of growth opportunities to support the fragile recovery. We received expert advice from distinguished speakers from the Spanish Permanent Representation of the EU, the EEAS, the OECD, Business Europe and FEVS, who all shared the analysis that diversification is a must at a time of significant geopolitical tensions & volatility.

In these unpredictable times, tensions can arise quickly and trade conditions degrade without much advanced warning. While Business will certainly try to play its part, trade & promotion policies have a key role to play in supporting industry’s resilience and mitigating shocks and tensions. This is where diversification comes in.

Importantly, we need these diversification efforts to be a joint product of business & government collaboration. Businesses are the ones who trade and best placed to assess where the greatest opportunities & needs lie, but they need the support of authorities to ease their path & remove protectionist obstacles. This is the reason why the partnership between the EU, member states & industry is so important. Or put in the words of Luisa Santos, Deputy Director General at Business Europe: “In a crisis, it is essential that businesses aren't just imposed rules or restrictions, but that they are trusted!”.

Director General*

*In his capacity as permanent representative of SPRL ADLOR Consulting

STAY CONNECTED: Keep up-to-date with spiritsEUROPE’s activities via our Twitter & Newsletter