Really? What do you mean by that?
Well, at the risk of sounding like Ben Elton and starting this column with a “little bit of politics,” it’s hard not to be overwhelmed by how far the drinks, hospitality and retail sectors are being battered left, right and centre by the political decisions taken by successive governments that are ultimately out of their hands. It leaves businesses and individuals feeling a bit like the steel ball in a pinball machine being sent in all directions by the latest government policy announcement.
My word you have really gone full Ben Elton on us. Why are you so upset now?
Take a quick look at the headlines that have dominated the drinks press for the last few years and you are bombarded with ever-depressing news of Brexit regulations, increased red tape, the new duty rate system and now those three scary letters - EPR and PRNs - and the massive fallout that has now beset the drinks industry trying to manage and work out the costs for packaging waste. That’s before we get our teeth stuck into increases in national insurance contributions, the ever-fluctuating energy markets, and the overall increased cost of just doing business at all.
But have we not always had to try and navigate our way around whatever new government policy there is?
We have to some extent, but arguably never to the position that companies now find themselves in. Listen to Andy Talbot, managing director of Off-Piste Wines, who recently said: “For the first 20 years of my career there were not political forces directly impacting on how our business is run. Now we are seeing unprecedented change where it is not clear what the government wants to achieve.”
He is not alone. Gone are the days when companies were ultimately responsible for every decision they made. Where management teams could sit down, set out their business strategy, fix their targets and be pretty assured they could work out how to reach them. Not any more. The “political interference,” as Talbot calls it, has become so intense that business negotiations between producers, importers and retailers are being done with one finger in the air. They don’t know what the business - or political - parameters will be once those deals are in motion because of the political interference now affecting them. Drinks suppliers, for example, are having to guesstimate what the likely cost of EPR is going to be for every product they are supplying into the market. Making firm decision-planning nigh on impossible.
So what about the geo politics you are so keen to talk about?
I am not keen at all, but it is the enormous elephant in the room, with a not so nice orange glow to it. All thanks to the global impact that President Trump’s tariffs are having on every economy in the world. The fact the initial reaction to the tariffs by the world financial markets was worse than during Covid, and a global pandemic, shows the turbulent times we are in. It is a massive sigh of relief to the international, globally connected drinks industry that the tariffs have been part suspended, but the blanket 10% ruling already draws a new line in the sand for everyone to do business behind.
Here’s how one US drinks industry analyst, Martin Liptrot, puts the situation: “Chaos and uncertainty prevail. Lies are truths. Black is white. Wrong is right.”
It’s not just tariffs that Trump is ripping up the political rule book for. His politically motivated objection to diversity and inclusion programmes is resulting in some major US firms shutting down or “reworking” their DEI initiatives. The all-powerful Constellation Brands is sadly one of them. Its chief executive, Bill Newlands, blamed the “increasingly polarised and highly charged environment” and the “legal landscape related to social and political issues” had “shifted” so much that it had no choice but to stop funding DEI schemes. Its decision will no doubt give cover for many other US drinks companies to follow suit.
But surely you can’t spend all your time fixated on President of the United States and the state of the Dow Jones Index - you have your own business to run?
That’s the very point. How can you actually “run” your business when its very future relies on a stable world economy to operate in? Or if you want to look closer to home, how can you run a successful and profitable drinks business when every major announcement of the Chancellor of the Exchequer moves the economic goalposts to such a degree you have to rip up your trading strategy and start again? The situation has got so bad that even our most diplomatic trade body chiefs have broken ranks in recent months when talking about government policies and the “assault” on the drinks industry, be it around the new “unworkable” ABV-driven duty system, or “badly managed” EPR scheme or “hammer blow” hikes to national insurance.
Can you throw us some crumbs of comfort?
Well, there aren’t many to be thrown around, but as in all tumultuous times there are those who see opportunity when everyone else sees doom and gloom. The chance to find and offer solutions and new ways of working and to see this as a time to change and adapt. Quite what those new ways of doing business are will bubble to the surface in the weeks and months to come. But whatever solutions they come up with will have to be politically as well as business astute.
