<p>Brexit-induced customs controls on the Irish border may cost Guinness an extra €1.3m ($1.5m) each year, which may result in a higher price for the stout.</p><p>Theresa May’s government is adamant that Britain will leave the single market and customs union, which will restrict post-Brexit trade and migration from the EU.</p><p>If Theresa May’s government succeeds and takes the UK out of the single market, it will be pulling Northern Ireland out with it.</p><p>Ultimately, this may mean that customs controls will return to the Irish border, almost two decades after the Good Friday Agreement in the 1990s abolished such controls and the militarized frontier, easing tensions between the two nations.</p><p>For Irish brands such as Guinness, heavier customs controls, or a ‘hard border’, will have a direct impact on production costs – in the case of Guinness, the company crosses the Irish border twice during the production process.</p><p>Indeed, Guinness is brewed in Dublin, sent to Glasgow where it is canned, and then returned to the Irish capital before being shipped overseas.</p><p>Diageo, owner of Guinness, estimates that a hard border could delay crossings by an extra 30 minutes to an hour due to heavier customs checks, generating additional costs of €100 ($115) per journey.</p><p>Given that the company makes around 13,000 beer-related Irish border crossings each year, this could increase costs of production by an extra €1.3m ($1.5m) annually.</p><p>Baileys is another Diageo-owned brand based in Ireland that would be affected by a hard border. When the crossings for this brand are also factored in, the total cost to Diageo may rise to €1.8m ($2.1m).</p><p>Diageo would have to either absorb these additional costs or pass all or some of the burden on to consumers in the form of higher prices for its Guinness products.</p><p>Ireland, Britain and the EU do not want a hard border, yet there are currently no other clear alternatives. European Council President Donald Tusk has said that a hard Irish border should be avoided, and that “flexible and imaginative solutions are required” instead.</p><p>While this may be a vague statement, technological advancements have the potential to reduce delays at the Irish border. For example, goods could be fitted with electronic tags that can be scanned to see if duties are payable.</p><p>This would make border crossings faster, saving time and money, especially if these checks could be automated.</p><p>Using big data to monitor and manage this information may also allow for a more seamless border crossing experience. However, this technology is not yet in place.</p><p>In the worst-case scenario where a hard border is imposed, large multinationals such as Diageo would be able to cope with the extra costs and may even be able to work around the issue.</p><p>For example, in the near future, Diageo may qualify as a trusted trader due to its international reputation and be given an Authorized Economic Operator (AEO) status.</p><p>Obtaining such a status would give the company preferential treatment over non-qualifying businesses in the form of a faster clearance of goods and less interference by custom controls.</p><p>Even if Diageo did raise the price of their Guinness and Baileys products, these are still powerful brands with loyal customers and so it is unlikely that demand will fall significantly.</p><p>The Irish border problem will create challenges for multinational companies such as Diageo in the short term; however, its financial capital and global influence should help ease it through this future transitionary period.</p>However the same cannot be said for smaller businesses, which may not be able to afford the costs of heavier customs controls, nor be able to qualify as a trusted trader.