Exports for Scotch Whisky returned to growth last year, following a slight decrease in previous years. 

The news comes as the value of single malts exceeded £1bn for the first time.

Scotch Whisky exports as a whole increased last year by four per cent to more than £4 billion, meaning Scotch remained the biggest net contributor to the UK’s balance of trade in goods.

In 2016, without the impact of Scotch Whisky, the UK trade in goods deficit would have been 2.8 per cent larger at almost £139bn.

The industry itself now accounts for over a fifth of the UK’s total food and drink exports and continues to lead the way for the rest of Scotland’s food and drink sector.

Our ‘national drink’ now makes up 73 per cent of total Scottish food and drink exports.

The Scotch Whisky Association (SWA) has released a report analysing the reasons for the resurgence of exports and the outlook for the future.

“Challenges as well as opportunities”

The SWA say that while the industry is optimistic about renewed demand for Scotch, there are “challenges as well as opportunities” on the horizon, including the seismic changes that Brexit brings to an increasingly competitive global marketplace.

The weakness of sterling, for example, had a significant impact on exports in the second half of last year.

This short-term positive currency impact should be seen in the context of continuing uncertainties around Brexit in the longer term.

Categories

The SWA added that all categories of Scotch Whisky grew last year but that Bottled Blended Scotch Whisky is still by far the biggest with 69 per cent of all Scotch volumes and values exported in 2016.

Growth of the category – which has traditionally always been the largest –  saw its value (by 1.4% to £2.75bn) increase last year for the first time since 2012.

The biggest performing category was without a doubt single malt, according to the Association, exports for single malts are growing at a faster rate than that of Scotch overall, with it now making up just over a quarter of the total value of Scotch exports.

Markets

The popularity of Scotch around the world continues to grow according to the research with demand coming from “a diverse range of markets”.

In terms of regions, the European Union remains the top destination for exports, worth around £1.2bn of the total.

North America is the second largest, taking exports worth more than £1bn, followed by Asia with shipments of £768m.

In terms of value, the US remains number one, growing by 14 per cent to £865m.

There was also increased demand from a number of larger European markets, including Spain, the fourth biggest market, up almost 10 per cent to £167m; Germany, the number five market, up 13 per cent to £164m and Poland, up 19 per cent to £63m. This reflects some improved economic performance and continued growing popularity of Scotch across parts of Europe.

Other increasingly significant markets include India which saw a rise of £97m to see it become the ninth biggest market for Scotch.

However, the SWA believes it has scope to grow even further should the current 150% import tariff be reduced. The Association say they are encouraging the UK Government to pursue a Free Trade Agreement (FTA), including measures to cut the tariff, with India as priority after Brexit.

They are also calling on the Government to secure existing EU trade deal benefits, such as the South Korea FTA and the Colombia/Peru agreement that have created a more level playing field for Scotch in those markets.

In conclusion

The SWA say that due to this being an uncertain time for all business with a UK General Election on 8 June and Brexit negotiations getting underway, and that even though they expect demand for Scotch Whisky to continue to grow in markets around the globe, the industry needs support from “governments at home and abroad”.

An example given by the SWA as to where the government have already disappointed the industry in this matter, was the near 4 per cent increase on spirits duty excise announced in the spring UK Budget.

The SWA would also like to see an overhaul of the domestic excise system when the UK leaves the EU.

Brexit

The industry has set out five key objectives for Brexit:

• As open a trade policy as possible, securing existing EU trade deal benefits and developing an ambitious agenda of new and refreshed FTAs.

• Robust legal protection of Scotch Whisky in the UK, EU and global markets.

• Business certainty and consistency by transposing EU single market legislation of relevance to Scotch Whisky into UK law.
• Scoping out opportunities where a distinct UK approach could benefit domestic industry

• A domestic tax and regulatory agenda that delivers a platform for international growth.

Julie Hesketh-Laird, Scotch Whisky Association acting chief executive, said: “With Scotch Whisky exports returning to growth and rising to more than £4 billion, and Single Malts exceeding £1bn for the first time, we’re feeling optimistic about the future. Demand is rising in mature markets, such as the USA, and newer markets, including China.

“This confidence is reflected in the number of new distilleries – 14 have been opened in the last few years and we know of about another 40 in at various stages of planning.

“However, we have to be alert to the challenges, as well as the opportunities, of Brexit and political changes in the UK and across the globe. Industry success can’t be taken for granted and we need both the UK and Scottish Governments to work in partnership with us to deliver a business environment – at home and overseas – that supports sustainable growth.

“At home, for example, we are calling for a ‘sector deal’ for Scotch as the new UK industrial strategy develops, recognising our economic significance to communities across the country. And we have clearly set out our objectives for Brexit to support jobs and growth in the industry in an increasingly competitive global market.”

About The Author

Sean Murphy

Driven by a passion for all things drinks-related, Sean writes for The Scotsman extensively on the subject. He can also sometimes be found behind the bar at the world famous Potstill bar in Glasgow where he continues to enhance his whisky knowledge built up over 10 years advising customers from all over the world on the wonders of our national drink. Recently, his first book was published. Dubbed Gin Galore, it explores Scotland's best gins and the stories behind those that make them.

Let us know what you think

comments