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Is the 'Brexit' a nightmare for food companies in the UK?

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A worker inspects a bottle of Johnnie Walker whisky at the Diageo-owned Shieldhall bottling plant in Glasgow, Scotland. (Reuters)

On Thursday, British citizens voted to leave the EU—in a historic referendum known as the Brexit—throwing many industries into economic uncertainty, including one of the U.K.’s biggest moneymakers: food and drink.  

Nearly 20 percent of all manufacturing activity (more than Great Britain’s automotive and aerospace industries combined) falls under the umbrella of the Food and Drink Federation, which employs around 400,000 people across 6,620 businesses, adding about 21.9 billion pounds ($29.18 billion) to the British economy each year.

Now, with the Brexit vote, this industry making up nearly 9 percent of the United Kingdom’s GDP could be at the mercy of the 27 remaining member countries of the EU.

Can the food industry’s labor force sustain itself without a free flowing immigration policy? Will Britain have to create complex new trade deals around the globe?  And will Britain’s food and drink manufacturers be able to control product authenticity in the future?

Here’s what at stake when it comes to the Brexit and food.

Immigration and the food industry workforce

One of the issues at the heart of the vote was the decision over immigration as foreign-born workers have continued to move into many lower-skilled occupations formally occupied by Brits.  

A significant number of laborers working in the restaurant industry—about 30 percent-- were not born in the UK. Those workers, including many European migrants willing to work for lower wages, may not have the same freedom to work and live in a post-Brexit U.K.

It remains unclear whether the occupation of these low-skilled jobs resulted in the Brexit passing -- or whether British citizens even wanted these jobs and resented EU immigrants for taking them. What is clear is for those in the winning camp of “leave” is that Britain was unable to control immigration because current freedom of movement laws gives other EU citizens an automatic right to live and work in the country.

However, according to the Food and Drink Federation, 109,000 new recruits are needed by 2022 to meet the skills needs of the food and drink sector. The 27 remaining member countries of the EU post-Brexit may not allow fluid legal immigration to fill these lower skilled occupations in the food preparation trade.  

The authenticity of British cuisine

The European Union’s Protected Designation of Origin (EU POG) gives legal protection to its member countries, ensuring the authenticity of manufactured foodstuffs to the country of origin.  

In 2002, when the Greeks wanted to make sure only feta made in Greece would be allowed to use the word “feta” in its descriptor, the EU POG helped legally  enforce Greece’s intellectual property over the 8,000-year-old cultural food product.

Under the EU POG, 73 British foods including Anglesey Sea Salt, Melton Mowbray Pork Pie, Scottish Wild Salmon and Scottish Farmed Salmon-- even Scotch Whisky-- cannot be labeled and sold by another country.

But without the POG, consumers may have to wonder whether that Scotch really came from Scotland. 

“The implications (of Brexit) are huge,” David Frost, chief executive of the Scotch Whisky Association, told The Telegraph. “We can make Scotch whisky only in Scotland and our brands are indissolubly linked with it. 35,000 jobs depend on the industry.”

Pre-Brexit, if an Italian manufacturer wanted to make Scotch, the EU-- not Britain itself—would mandate a cease and desist order, or even an entire blockade in the importing and exporting of the phony whisky.

But now, it remains unclear whether the market will now become flooded with fake imitators of signature British food and drink like a bad Louis Vuitton knock-off on Canal Street in New York City. Great Britain’s regulatory agencies alone may not have as much power to prevent phony foods as the EU.

British foods around the world

 Historically, the U.K. has relied on the collective weight of the EU to open and strengthen its trade.

In 2012, when Columbian authorities redefined alcoholic beverages, certain types of Scotch whisky would have carried exorbitant tariffs in the country, making it difficult to sell. The EU stepped in and, as a direct result Columbia changed their definition, making it easier for Scotland to export its signature spirit throughout Latin America.

This type of EU trade involvement has helped the value of Scotland’s whisky exports almost double over the last decade, growing from 2.24 billion pounds in 2004 to 4.26 billion pounds last year.  That accounts for 85 percent of Scotland’s food and drink exports, according to the Scotch Whisky Association-- and a quarter of Great Britain’s.  

Prior to Brexit, as a key member of the EU, the interests of Britain’s consumers and businesses were always held into account prior to the EU acting.  Now, post-Brexit, it is unclear whether Britain will have the same stature and due deference when the EU makes their decisions.

Without the EU, will Britain be able to replicate its current access to markets throughout the world?

Julie Palmer, a regional managing partner at the U.K. consulting firm Begbies Traynor, isn’t so sure.

In April, Palmer told The Telegraph, “The U.K.'s exporting industries are already under significant financial pressure and can ill afford any potential risk to the 50 percent of British exports that go into the EU.”  

Sery Kim is a food and travel writer based in Washington, D.C. You can follow her adventures on Instagram @missserykim or on her blog www.AdventuresInSery.com.