Top 10 biggest Scotch markets 2016

This year saw both the value and volume of Scotch exports increase for the first time since 2011, following years of decline, while single malt exports crossed the £1 billion mark for the first time.

Exports of Scotch whisky increased by both volume and value in 2016, the first time since 2011.

It marks a major milestone in the turnaround of Scotch, which has been in the doldrums since 2013, declining year-on-year. Only last year did the Scotch Whisky Association (SWA) report that Scotch exports during the 2015 calendar year were showing signs of “slowing”, despite still being in decline.

Now, after nearly five years of decline, Scotch seems to be back on the up. In 2016, exports of Scotch whisky increased in value by £153 million to more than £4 billion (£4,008,927,149), and by volume to the equivalent of more than 1.2bn bottles – an increase of 5% and 4.8% respectively.

It was the first time since 2011 that both value and volume of Scotch exports recorded positive annual growth rates, and the first time ever that single malt exports exceeded £1bn with the market rising by almost 12% in value during 2016.

SINGLE MALT SUCCESS

Described as its “stand-out performer”, more than 113m bottles of single malt Scotch was exported last year, with volumes increasing by 10% and the value of these shipments rising 11.8% to reach a new record of £1.02bn.

Although single malt now represents just 9.3% of all Scotch whisky exports, the category accounts for 26% of the total by value.

According to the SWA, the main source of sales growth for Single Malt exports was the US, which accounted for an additional £48m worth of shipments.

Despite the success of single malt, bottled blended Scotch whisky remains the biggest category, accounting for 69% of all Scotch volumes and values exported in 2016. The value of this category increased for the first time since 2012 in 2016, rising £1.4% to  £2.75bn.

“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,” said Julie Hesketh-Laird, acting chief executive at the SWA. “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.”

While the category’s return to growth offers a positive outlook for the future of Scotch, Hesketh-Laird noted uncertainty ahead that could affect the industry, with Brexit presenting one of the most significant challenges.

“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.”

With this in mind, we have rounded up the world’s biggest Scotch whisky markets by value, according to the SWA’s Scotch Whisky Exports Review 2016…

INDIA

Value £: £97m

% change: 13.8%

Volume bottles: 94m

% change: 18.4%

The SWA has already identified India as a key growth market for Scotch post-Brexit, flagging it as one of most important countries to to strike a trade deal with after the UK leaves the EU.

Late last year the SWA stated: “Brexit poses challenges and uncertainty but also brings opportunities if the UK can secure favourable bilateral trade deals with key export markets. India, for example, is a growing market for Scotch but we are being held back by a 150% import tariff. EU talks with India have proved challenging for a decade now and we hope the UK will now take a fresh approach to securing an ambitious trade agreement.”

AUSTRALIA

Value: £100m

% change: 11.7%

Volume bottles: 29m

% change: -4.3%

Australia was among a clutch of fast-growing whisky markets highlighted by the SWA, despite losing some volume in 2016, which was offset by an 11.7% growth in value, demonstrating a trend toward premiumisation with value growth far outstripping volume.

Australia is another market that the trade body is eyeing for a possible free trade deal amid Brexit negotiations.

MEXICO

Value: £111m

% change: -3%

Volume bottles: 58m

% change: 1.2%

Mexico has been a steadily growing market for Scotch, but was one of the few markets to see its value drop.

The EU currently holds a free trade deal with the country, which Scotch undoubtedly benefits from. Uncertainty remains as to whether these deals could simply be transferred to the UK post-Brexit by each country, but it seems likely that  such deals would need to be re-struck by the UK independently of the European Union.

This could complicate the export of Scotch to Mexico in the future.

UNITED ARAB EMIRATES

Value: £131m

% change: 6.8%

Volume bottles: 28m

% change: 2.8%

GERMANY

Value: £164m

% change: 13%

Volume bottles: 53m

% change: 13.1%

SPAIN

Value: £167m

% change: 9.6%

Volume bottles: 64m

% change: 9.5%

Again, Spain saw its value increase with volume, demonstrating steady growth in this established market.

Last year, Pernod Ricard credited Spain with helping to boost its sale of Scotch and gin, led by a strong performance by its Chivas Scotch brand.

TAIWAN

Value: £175m

% change: -4%

Volume bottles: 20m

% change: -11%

Taiwan was the only top 10 market to decline by both value and volume in 2016, but remains the 4th biggest market for Scotch with the value of exports to this market totalling £175 million.

Of the markets that saw volumes decline in 2016, the majority were able to maintain higher values, demonstrating a trend toward premiumisation. Taiwan was an except to this pattern.

“While there were a considerable number of markets growing in 2016, there were still others which tempered overall growth,” said the SWA. “For those markets which declined in volume in 2016, the majority held on to a disproportionately high value of the market – ie while volumes dropped, value did not drop to the same degree such as Brazil or Taiwan.”

SINGAPORE

Value: £225m

% change: 6.4%

Volume bottles: 41m

% change: 11.3%

A recognised delivery and transit hub, Singapore saw its volumes and value of is exports increase by 11.3% and 6.4% respectively in 2016, although it’s important to note that much of this would have been destined for other markets.

Latvia for example, while not one of the top 10 markets, recorded growth of almost 30% in volume terms due to transshipment of Scotch to Russia.

While its Scotch is not exclusively consumed by the Singaporean market, making it difficult to ascertain the strength of Scotch here, it is nevertheless a very important market, providing a gateway to many other markets in Asia.

FRANCE

Value: £426m

% change: -2.2%

Volume bottles: 190m

% change: 7.8%

France was one of the few markets to experience a decline in the value of its exports in2016, dropping by 2.2%, which was nevertheless offset by a 7.8% growth in volumes. This suggests that unlike many markets in the top 10, a trend toward premiumisation is not as dominant.

USA

Value: £856m

% change: 14.2%

Volume bottles: 119m

% change: 2%

With an export value of almost double France, but significantly far less by volume, the USA is by far and away the  biggest Scotch market by value.

The USA recorded a 14% increase in value to £856m while volumes increased at a more conservative rate of 2%, confirming the continued premiumisation in the market.

Much of its value is driven by the popularity of single malt whiskies, with the US adding £48m worth of Single Malt to the category in 2016.Globally, the US accounted for an additional £106m worth of Scotch exports – equivalent to 69% of the overall growth in total values exported.

While single malt has been the primary driver of the American market, there was also an 11% growth in the value of bottles blended Scotch Whisky, accounting for an additional £56m in exports, which compared to the £48m added to the market by single malt whiskies.