Scotch Whisky Exports Hit Record Revenue

Scotch whisky exports hit a record £4.3 billion (US$6.5 billion) in 2012, an increase of 87 percent in the last 10 years.

Rising demand for Scotch whisky from both mature and emerging markets saw the value of exports grow for the eighth consecutive year. Scotch whisky leads the way for British food and drink in overseas markets—forming about 80 percent of Scottish food and drink exports and a quarter of UK food and drink exports.

Defying continuing global economic pressures, the total value of Scotch whisky exports grew by 1 percent last year to reach £4.27 billion (US$6.5 billion). Scotch whisky is now worth £135 (US$205) a second to the UK balance of trade.

Falling sales in Southern Europe were more than matched by growing exports elsewhere. The French market was distorted by excise tax increases in 2012 which led to a “stocking up” of Scotch whisky in 2011 before their introduction.

With increasing consumer knowledge of Scotch whisky around the world, demand grew for single malt and premium blended Scotch whisky. Single malt exports have risen over the last 10 years by 190 percent from £268 million (US$407 million) to £778 million (US$1.2 billion).

The USA remains the top market by value for Scotch whisky with exports breaking through the £700 million (US$1.1 billion) barrier for the first time to reach £758 million (US$1.2 billion) in 2012. Demand from the USA is expected to increase as consumer confidence grows and many people trade up to premium brands.

The growth of Scotch whisky exports in Russia, a market estimated to be worth in the region of £200 million (US$303 million), boosted shipments to Latvia and Estonia. Direct exports to Latvia were up 48 percent to £79 million (US$120 million) and to Estonia they were up 28 percent to £69 million (US$105 million). Due to route-to-market networks, much of those exports are shipped onto Russia.

Asia continues to grow in importance with exports to the distribution hub of Singapore up 7 percent to £339 million (US$515 million). Exports to Taiwan increased 7 percent to £165 million (US$250.6 million) and direct shipments to China experienced growth of 8% to £72 million (US$109.4 million).

A successful outcome to on-going negotiations between the European Union and India on the Free Trade Agreement (FTA) would reduce the onerous 150 percent import tariff. The tariff, combined with local state taxes, places Scotch as a considerable disadvantage and penalises Scotch whisky drinkers in India. Despite such trade barriers, exports to India increased by 17 percent to £62 million (US$92.4 million) last year.

In South America, Scotch whisky is one of the UK’s fastest growing exports to Mexico, increasing by 14 percent to £92 million (US$$140 million) in 2012. The expanding markets of Colombia and Peru have been given a further boost as a result of the FTAs ratified by the European Parliament last December. Once ratified, the Association Agreement with Central America will benefit regional exports.

Gavin Hewitt, chief executive of the Scotch Whisky Association, said:

“Scotch Whisky continues to lead the way for UK food and drink exports. A combination of successful trade negotiations, excellent marketing by producers, growing demand from mature markets, particularly the USA, and the growing middle class in emerging economies helped exports hit a record £4.3 billion last year.

“We deliver a remarkable £135 a second to the UK balance of trade. We are contributing massively to the government’s wish for an export-led recovery.

“There is confidence in the future of the industry, illustrated by the £2 billion capital investment that Scotch Whisky producers have committed over the next three to four years. New distilleries have opened and older ones brought back to use to meet rising demand.”

There was a decline in the volume of Scotch whisky exports of 5 percent to 1.19 billion 70cl bottles in 2012 from 1.26 billion the previous year, reflecting increased demand for more expensive, premium Blended Scotch whisky and the growing popularity of Single malts.

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