Business

Diageo can 'manage through' Brexit without disruption in the north

The Diageo production facility plant at Marshall's Road in east Belfast. Picture by Cliff Donaldson
Gareth McKeown

DRINKS giant Diageo has moved to dismiss suggestions it could close its east Belfast Guinness packaging facility if a hard border is introduced post Brexit.

Just last month Diageo Ireland's country manager Oliver Loomes argued that a hard border would be “very unwelcome”, but said it would hit suppliers more than the business itself.

He warned small businesses and farms that supply Diageo with milk and barley for its liqueur and beer would face “enormous disruption” and very significant additional costs that could cost jobs.

Diageo has operations north and south of the border and has more reason than most to fear a return to custom posts.

The company, which owns Guinness and Baileys, makes 18,000 border crossings a year and there are fears a hard border could lead to delays and additional cost to its operations in Ireland.

Roughly 13,000 crossings are made transporting Guinness between the St James Gate brewery in Dublin and the east Belfast packaging facility on the Marshalls Road and then to Dublin for worldwide shipping. A similar process is also carried out with Baileys at Diageo's production facility in Mallusk.

Seamus Leheny from the Freight Transport Association (FTA) said a hard border would spell bad news for Diageo operations in Ireland.

"As the UK will be outside EU Customs Union, its highly likely unless a special deal is done for Northern Ireland that the Rule of Origin will apply therefore for every load going to and leaving the Belfast plant would require a certificate of origin or an EUR1 form," he said.

"These forms cost £24.30 each, then we have administration burden for the company and potential checks on the border. The FTA recently conducted a study on such border delays for a truck and estimates the cost of delay would be £3.21 per truck per minute in the event of a delay.

"And my fear is that, because of potential administration costs and delays, the current supply chain model that Diageo currently has in place for the canning of Guinness on the island of Ireland could become unviable due to costs and reliability of transport times therefore become it may because more reliable and cost effective to keep all processing within the Republic of Ireland. The same would also apply to Baileys," Mr Leheny added.

Asked if it would re-consider its operations in east Belfast and Mallusk as a result of a hard border being implemented, a spokesman from Diageo said: "We are confident we can manage through Brexit without any significant disruption to our business and operations in both Northern Ireland and the Republic.”

Just last week Diageo Northern Ireland reported pre-tax profits of £2.7m for the year to last June, a fall of almost £300,000 from 2015 and a drop in turnover from £122m to £111m.

However, Guinness sales across the island of Ireland were up four per cent on the same 12 month period.

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