Whisky Business: Scotch Whisky exports take a hit
Morning Wire’s monthly look at trends in the world of Scotch Whisky.
Scotch Whisky is one of the UK’s most successful sectors, but it’s facing increasing headwinds from challenges both at home and overseas.
According to the Scotch Whisky Association (SWA), the value of Scotch exports topped £5.6bn in 2023, supporting 66,000 jobs across the UK and contributing an overall economic contribution of £7.1bn annually.
However, following a bumper year in 2022, exports shrank last year. Insiders attributed the contraction to a normalisation of demand following the pandemic. Compared to 2019 levels, exports of Scotch whisky remained 14 per cent higher at the end of 2023. Volume was up three per cent.
Unfortunately, the decline recorded in 2023 continued into 2024. The SWA recorded a 18 per cent decline in export value during the first half of 2024. The value of shipments to France the second-most valuable market for distillers plunged by nearly one-third to £158.5m.
The value of exports to China also fell off a cliff, down 42.4 per cent to £77.9m. Overall export volumes declined 10.2 per cent. Amid this backdrop, there’s growing unease about the sector’s future. The recent UK Budget and US presidential election have done little to dispel those fears.
Changes to alcohol duty in the Budget mean the tax on a bottle of whisky will now be above £12 – the highest in the G7, according to Diageo.
The hike followed the most significant duty increase in 40 years last year. Meanwhile, the sector is waiting to see if Donald Trump will place further tariffs on imports to the US. In his last term, Trump levied a 25 per cent import tariff on single malt Scotch whisky. The tariff was only in place between October 2019 and March 2021, but it’s estimated to have cost producers £600m in lost exports.
Still, investment continues to flow into the sector. Three new Campbeltown distilleries have gained approval since 2023, while giants Diageo, Brown-Forman, and Bacardi have all put forward plans this year to invest tens of millions of pounds in their Scotch distilleries.
Bacardi’s £15m expansion of its Aultmore distillery doubled production, while Diageo’s plans for Talisker could see a substantial output uptick.
Scotch Whisky recommendations
Waterford Heritage: Goldthorpe
A rich Irish whisky that uses Goldthorpe barley, the first time the variety has been used in drinks production in over 100 years. The distillery’s exploration of heritage barley varieties, combined with Ireland’s terroirs, create a unique and complex drink.
Glengoyne Teapot Dram Batch No.10
Matured exclusively in first-fill European and American oak sherry casks and bottled at 59.4% ABC, the palate delivers “rich and velvety caramel sauce with dates and spices reminiscent of Christmas.”
A twist on the traditional Glen Moray Speyside style. The whisky is matured in ex-Cognac flasks, which adds a richness and depth of flavour. Sweet and woody, with notes of dried fruit, nuts and spice, it’s a perfect winter warmer.