Whisky industry urges free trade to boost exports

By Michael Stones

- Last updated on GMT

Ambitious trade deals are needed to stop Scotch whisky sales hitting the rocks: SWA
Ambitious trade deals are needed to stop Scotch whisky sales hitting the rocks: SWA

Related tags Scotch whisky Whisky

Sinking whisky exports underline the need for the next government to press for more open markets and ambitious Free Trade Agreements (FTAs), urges the Scotch Whisky Association (SWA).

The plea comes after the value of Scotch Whisky exports hit the rocks last year, tumbling by 7% to £3.95bn. The volume of exports also fell by 3% to 1.19bn 70cl bottles.

Falling exports were blamed on weaker economic conditions and political volatility in key markets.

The decline brings to an end 10 years of strong global growth, with the total value of exports up by 74% since 2004 and single malt up by 159%.  Sales in many developed markets was consolidating, while political instability plagued sales in some regions with the strongest sales potential.

SWA chief executive David Frost said the results showed the industry’s success cannot be taken for granted. “The long-term fundamentals remain strong, with consumers in emerging markets wanting to buy Scotch Whisky as a high-quality and authentic product with a strong reputation and clear provenance,” ​said Frost.

Cannot be taken for granted

“This drives the strong investment in Scotch Whisky production in Scotland and the significant interest in entering the sector.”

But unlocking the industry’s growth potential depended upon trade talks to free up potential export markets, said Frost. “We must continue to argue for more open markets and ambitious trade deals that tackle barriers to market access.”​ 

The SWA highlighted existing FTAs, such as the EU agreement with South Korea, which had boosted growth, it claimed. There was also big potential to boost exports following agreements with countries including: India, the USA – through the EU-US Trade & Investment Partnership – and Vietnam.

Buying less Scotch

  • World: down 7% to £3.95bn
  • US: down 9% by value to £748M
  • Singapore: down 39% by value to £200M

EU-US Trade & Investment Partnership

The EU-Vietnam FTA deal is due to be signed this year, with further agreements expected with Canada, Colombia and Peru.

Export destinations showing growth last year were Taiwan and India. Sales in Taiwan soared 36% to £197M, reflecting the growing popularity of single malt Scotch. Exports to India were up 29% to £89m, despite the 150% import tariff.

Sales in the hub market of the United Arab Emirates continued to boom, with exports up 27% by value.

US sales, the world’s biggest market for Scotch, were less impressive, with exports down 9% by value to £748M.

But figures from the US Distilled Spirits Council revealed earlier this year the market shrank by only just over 1%. Single malt sales volumes were up 6.3%. “This suggests the fall in exports in 2014 was due partly to stock adjustments – as high inventory levels of Scotch are drawn down to meet consumer demand rather than buying new stock,”​ said the SWA.

Another factor was the increasingly competitive spirits market.

Whisky exports to France, the biggest market by volume and second biggest by value, rose by 2% to £445M and 3% to 183M bottles.

Exports to Spain were up 1% by volume for the first time in several years.

Buying more Scotch

  • Taiwan: up 36% to £197M
  • India: up 29% to £89M
  • France: up 2%, by value, to £445M
  • Spain: up 1% by volume
  • United Arab Emirates: up 27% by value
  • Thailand: up 16%
  • Japan: up 8% by value to £64M

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