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Vote remain, Diageo CEO urges workers

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The boss of Diageo, the world’s biggest producer of Scotch whisky, has written to the company’s near-5,000 UK employees urging them to vote to stay in the European Union.

Diageo CEO Ivan Menezes
Big decision: Ivan Menezes says Diageo does not want new trade barriers

In a letter sent this morning to the company’s 4,773 UK employees – the majority of them in Scotland – Diageo chief executive Ivan Menezes urges everybody to vote in Thursday’s referendum.

In words that echo the position of the Scotch Whisky Association (SWA), Menezes says remaining in the EU will be better for Diageo and Scotch whisky as a whole, thanks to access to the European single market and the benefits of trade deals negotiated by the EU with the rest of the world.

He also highlights the free trade agreement recently concluded between the EU and Vietnam, which will eliminate that country’s 45% spirits import duty over the next seven years.

‘If we leave the EU, our products will revert to paying 45% import duty until the UK is able to negotiate its own trade agreement – this will have an impact,’ he adds.

‘The EU has so far concluded, or is negotiating, over 50 of these global agreements, many of which provide significant commercial benefits for Diageo.’

Renegotiating trade access to EU and other markets would be ‘a huge and uncertain undertaking’, Menezes says. ‘As a business we rely on our ability to trade with increasing freedom all over the world, and do not want new trade restrictions.

‘Even if the UK is ultimately successful in all its negotiations, they would take years to conclude and their terms may not be as good as those which exist today. It makes little sense for us to risk this uncertainty.’

The full text of Ivan Menezes’ letter to all Diageo’s UK employees:

Dear Colleagues,

As you all know, on 23rd June the UK will vote in the referendum on whether to leave or remain in the European Union. It's a big decision, with implications for us all so, whatever your view, I hope you will take time to vote next Thursday.

Understandably, some of you have been asking what would be best for Diageo, so I wanted to share with you why I believe that it will be better for Diageo (and the Scotch whisky industry) for the UK to remain within the EU.

There are two main reasons:

First, remaining in the EU gives us easy access to the European single market – that’s 500 million people on our doorstep to whom we can sell our brands without much red tape.

Second, remaining in the EU means we benefit from free trade agreements negotiated by the EU with other countries. This allows us to operate on a level playing field with local products and brands from other spirits exporting countries like Australia, Canada and the United States.

To bring this to life, the EU recently concluded a free trade agreement with Vietnam. Over the next seven years this will eliminate 45% import duty on spirits exported into Vietnam. If we leave the EU, our products will revert to paying 45% import duty until the UK is able to negotiate its own trade agreement – this will have an impact. The EU has so far concluded, or is negotiating, over 50 of these global agreements, many of which provide significant commercial benefits for Diageo.

Renegotiating the UK’s access to our European countries and beyond would be a huge and uncertain undertaking. As a business we rely on our ability to trade with increasing freedom all over the world, and do not want new trade restrictions. Even if the UK is ultimately successful in all its negotiations, they would take years to conclude and their terms may not be as good as those which exist today. It makes little sense for us to risk this uncertainty.

Clearly this is a personal choice but this is why I believe it’s better for the UK, better for Diageo and better for the Scotch whisky industry that we remain in.

Best wishes,

Ivan

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