Scotch whisky is holding its own despite worldwide political uncertainty and the cost-of-living crisis

Scotland’s National Drink remains wildly popular, with Scotch whisky sold across the globe as well as enjoyed in its home market. Visitors continue to flock to distilleries around the country – from the Lowlands to Speyside and beyond – and new producers are springing up to provide more competition to the big, well-established names.

There are more than 150 Scotch whisky distilleries in operation, the industry provides some £7.1 billion in gross value added (GVA) to the UK economy, the sector employs in excess of 40,000 people, and there are about two million visits each year to distilleries, according to figures from the Scotch Whisky Association (SWA).

However, as with the wider economy, the last year has not been easy for the Scotch whisky industry. There has been political uncertainty in some markets, spirits duty in the UK was increased in the Westminster Budget in October, and on-going cost of living pressures are impacting what consumers are choosing to spend their money on.

In her inaugural Budget, Chancellor Rachel Reeves announced an Retail Price Index inflation increase to alcohol duty, but cut duty on draught products in the on-trade by 1.7 per cent.

The SWA immediately reacted with a statement, with Mark Kent, the trade body’s chief executive, saying: “This duty increase on Scotch whisky is a hammer blow, runs counter to the Prime Minister’s commitment to ‘back Scotch producers to the hilt’ and increases the tax discrimination of Scotland’s National Drink.

He added: “It will damage the Scotch whisky industry, the Scottish economy, and undermines Labour’s commitment to promote ‘Brand Scotland’.”

Looking outside the UK, exports of Scotch whisky in the first half of 2024 fell by 18 per cent compared to the same period in 2023. Export value in the first six months of this year was £2.1bn. In the same period, the volume of exports fell by 10.2 per cent to the equivalent of 566 million 70cl bottles – or 36 bottles of Scotch whisky exported each second, compared to 40 bottles per second in the first half of 2023.

Analysing the figures, the SWA referred to a “volatile international situation affecting global industries and inflationary pressures”.

Some members of the Scotch whisky industry and its supply chain have talked of seeing a slowing in demand in some markets for various reasons. One said that, following many years of growth, the last 18 months have seen a bit of a cooling off. They believe that is down to a slight decline in consumer demand in tricky economic times and a “de-stocking exercise” in some regions after a lot of stock was built up in recent years. But they said they expect to see a recovery by mid to late next year.

Another company spoke of Scotch whisky bottling lines processing less spirit than in previous years as a result of this de-stocking trend.

But Scotch whisky is a long-term industry and continues to invest in the future with great optimism.

In his statement, Kent said: “We are a resilient industry, exporting to over 180 markets, and are experienced in navigating such periods of turbulence, and we are confident of the long-term growth opportunities for Scotch whisky.”

One area in which the sector is making great progress is on its sustainability journey. Producers, and the companies they work with, are taking big steps to ensure they reach ambitious net-zero targets and meet consumer demand for products with genuinely green credentials.

Jennifer Newell, sustainability and production director at Contagious, a creative agency that works on branding, packaging, retail and visitor experiences, activations and education for the global drinks industry, says: “Consumers increasingly base their decisions on a brand’s sustainability credentials, making it essential for sustainability to be at the core of everything the brand stands for and delivers.”

“Whisky brands require a creative partner with expert knowledge of the best sustainable practices at every stage of the brand development, design process, and supply chain – from defining brand values to creating eco-conscious packaging, and designing sustainable physical and virtual environments.”

Diversity is also increasing in the industry, partly thanks to such initiatives as the OurWhisky Foundation, which is featured in this supplement. It is described as the world’s first non-profit organisation dedicated to supporting, recognising and empowering professional women in whisky across the globe. Founded by drinks journalist Becky Paskin, the UK-based organisation works with the global drinks industry to provide diversity and inclusion consultancy and create communities that inspire change.

To sum up, while there may have been a few bumps in the road, the view is that Scotch whisky will continue to perform well and innovation will allow it to remain competitive in the global marketplace.

Scotch whisky exports in the first half of 2024

Top 10 Markets SOURCE: SWA/HMRC

The largest export destinations for Scotch whisky (defined by value) during H1 2024

◆ United States: £421.4m (-3.5% from £436.5m in H1 2023)

◆ France: £158.5m (-32.61% from £235.1m in H1 2023)

◆ Singapore: £128m (-22.3% from £164.7m in H1 2023)

◆ Taiwan: £117.1 (-21.5% from £149.1m in H1 2023)

◆ India: £105.7 (+11.9% from £94.5m in H1 2023)

◆ Japan: £80m (-7.5% £86.5m in H1 2023)

◆ China: £77.9m (-42.4% from £135.1m in H1 2023)

◆ Germany: £63.5m (-30.3% from £91m in H1 2023)

◆ UAE: £61.3m (+0.1% from £61.2m in H1 2023)

◆ Spain: £61.1m (-24.9% from £81.4m in H1 2023)

Whisky: Saluting continued success in troubling economic times

Scotch whisky exports in the first half of 2024