Top 10 Scotch whisky markets by value: 2020

It’s been a turbulent year for the drinks industry, not least Scotch. Total exports have fallen to their lowest level in a decade thanks to the combined impact of Brexit, the ongoing global pandemic and a 25% hike on exports to the US. But how are its biggest markets faring?

Releasing its annual figures on export markets, the Scotch Whisky Association (SWA) warned that the industry is facing a “lost decade of growth” due to the impact of Covid and closure of the on-trade. Coupled with the ongoing uncertainty over tariffs into the US, and the need to adapt to new rules governing exports to the EU, it is unsurprising that many of the industry’s top markets have shrunk this year.

Global exports of Scotch whisky fell by more than £1.1bn (23%) to £3.8bn during 2020, while volumes decreased by 13% to 1.14bn, representing the lowest export figures in a decade.

Overall, exports fell in 127 of 179 global markets, with exports by value now at their lowest level since 2010 when £3.48bn worth of whisky was exported.

“These figures are a grim reminder of the challenges faced by distillers over the past year, as exports stalled in the face of the coronavirus pandemic and US tariffs,” said chief executive of the Scotch Whisky Association, Karen Betts. “In effect, the industry lost 10 years of growth in 2020 and it’s going to take some time to build back to a position of strength.”

Of its top 10 markets, the biggest declines were seen in Spain, Japan, Singapore, Germany and the US, to which distillers are still reeling from the impact of a 25% tariff imposed in October 2019 over a long-running dispute over aviation subsidiaries between the UK, EU and US. That alone has resulted in a 32% decrease in the value of exports to the US, once heralded as the industry’s first billion pound market. A suspension of this tariff, announced earlier this month will be welcome relief to distillers keen to repair the damage caused, but it will leave its mark for some time yet.

Despite the majority of markets reporting a general trend of decline over 2020 there has been some positive growth, with Australia, China and Latvia all making strong gains. These first two markets both made their debut in the top 10 this year, while Mexico and India are notably absen. (Both remain top 10 markets for Scotch by volume, however, with India the 3rd biggest market with 131m bottles after the US, and Mexico in 7th with 42m – representing a 28% and 18% decline compared to 2019 respectively).

So, following a tumultuous year, click through for a look at 2020’s biggest Scotch export markets by value…

NB: Data sourced from the Scotch Whisky Association

Australia

Value of exports: £113m
Percent change:-3.17% (vs. £117m in 2019)

Scotch exports to Australia have been growing steadily for several years now, but 2020 marks the first year that the market has made it into the top 10 most valuable markets, signalling its growing importance going forward.

Scotch exports to Australia totalled £113m in 2020, which although a 3.17% drop on 2019’s total, was still enough to edge into the top 10 with Mexico and India both dropping out to make way.

That success is likely to continue should the UK’s negotiations for a free trade deal with Australia prove successful. Talks for a deal began in June 2020, with the next phase of discussions set to take place in February 2021. Assuming an agreement is reached, trade relations with Australia and the outlook for Scotch can only get brighter.

China

Value of exports: £107m

Percent change: +20.4% (vs. £89m in 2019)

China is not only a huge market for Scotch, but one of the biggest markets for spirits in the world. It’s a hugely important market and, like Australia, made its debut in the top 10 in 2020. While the majority of the biggest Scotch whisky export markets declined over the course of a year defined by a pandemic, exports to China increased by 20.4% – one of only two top 10 markets to post a double-digit increase (the other being Latvia).

Taking a wider picture, the value of Scotch exports has grown from less than £10 million in the early 2000s to £107 million in 2020, and with the largest population on earth (1.4 billion), the potential to grow further is mind-boggling.

One factor supporting its success has been the fact that import tariffs to China are currently just 5%. However access to the market and navigating its complicated distribution channels, not to mention multiple language barriers, can make exporting to China complicated. But for those who persevere the rewards are great.

Japan

Value of exports: £114m

Percent change: -22.1% (vs. £147m in 2019)

Scotch exports to Japan dropped by 22.1% in 2020, accounting for £114m worth of Scotch. Looking ahead it’s hoped exports will not only recover to their pre-2020 levels, but receive a boost thanks to the signing of a UK-Japan free trade deal. The UK–Japan Comprehensive Economic Partnership Agreement (CEPA) was the first deal that the UK struck post-Brexit as an independent trading nation, and was signed in October 2020 following the opening of negotiations in June the same year.

The deal is expected to give trade between the two countries a £15 billion boost, and also includes a strong commitment from Japan to support UK in joining the Trans-Pacific Partnership (TPP), one of the world’s biggest free trade areas, covering 13% of the global economy and more than £110 billion of trade in 2019. This will in turn help strengthen trade ties between the UK and 11 Pacific countries.

“Japan is a top-ten market for Scotch whisky, with consumers who understand the rich heritage and quality of Scotland’s national drink,” said Ian McKendrick, International Director at the SWA, ahead of the signing. “Exports of Scotch Whisky to Japan were worth £147m in 2019, and we hope that the UK-Japan FTA negotiations will help to further develop the market in the years ahead. In doing so, there is an opportunity to show the benefits of tariff-free trade and strong legal protection.”

Spain

Value of exports: £109m

Percent change: -40.0% (vs. £180m in 2019)

Together with Germany, France and Latvia, Spain is among the European Union’s biggest markets for Scotch. Overall, exports to the EU totalled £1.26 billion in 2020, with these four countries accounting for around £800 million worth of exports. Overall, exports to the EU’s 27 member states, the industry’s largest regional export market, fell by 15%, but it was Spain that was seemingly hardest hit.

Spain’s export value dropped by 40% to £109m – the biggest decline reported by any of the top 10 markets. This decline was of course caused by the combined impact of Covid, with the closure of hospitality and travel restrictions having a knock on effect on travel retail and on-trade sales.

It follows news in September 2020 of further protections for Scotch whisky in Spain, with the Scotch Whisky Association (SWA) signing a General Protocol for Action with the Spanish Civil Guard – a law enforcement body covering customs duties and tax matters throughout Spain. The agreement will help to further strengthen the protection of Scotch whisky in Spain and sets out a process for the two countries to work together to prevent the illegal marketing and sale of spirit drinks in Spain. Provision is also included for suspect samples from Spain to be sent to Scotland for testing by the Scotch Whisky Research Institute.

6. Germany

Value of exports: £139m

Percent change: -24.9% (vs. £185m in 2019)

Germany dropped from fifth to sixth place in 2020, as the value of  Scotch exports to this market fell by 24.9%.

While the outlook for Germany isn’t quite as bad as in fellow EU member state Spain, a double digit decrease is significant. Like much of the world, Germany has suffered from the closure of its hospitality trade, with Scotch impacted along with the rest of the drinks trade.

Nevertheless, it remains the third biggest market for Scotch in the European Union, and is notable for its importance as a global hub for the re-export of Scotch to other countries.

5. Latvia

Value of exports: £176m

Percent change: +23.6% (vs. £142m in 2019)

Of the four biggest EU member markets for Scotch, Latvia has proven itself to be surprisingly robust. Given the challenges of a year defined by a global pandemic, and Brexit bubbling in the background, Lativa reported an impressive 23.6% increase in the value of Scotch exports in 2020 – the biggest rise by any of the top 10 markets.

Latvia’s impressive result has seen it climb four places – from 9th in 2019 – making it the fifth biggest market for Scotch whisky by value in the world in 2020.

4. Taiwan

Value of exports: £182m

Percent change: -11.5% (vs. £205m in 2019)

Taiwan stands firm in fourth place this year, despite the value of exports to this market dropping by 11.5%. Any other year, that might sounds like a big drop, but by 2020’s standards it’s fairly modest.

Scotch has been building a strong position in Taiwan for the past decade, with the spirit gaining formal trademark protection in 2016. Prior to this ruling, producers were legally able to produce whisky and label it as Scotch, despite it being made outside of Scotland.

A second trademark was also given in Taiwan to protect the Chinese characters that spell out ‘Scotch Whisky’.

3. Singapore

Value of exports: £247m

Percent change: -17.6% (vs. £300m in 2019)

A hub for travel retail, Singapore saw the value of Scotch exports fall by 17.6% in 2020, as international travel all but dried up. That equates to a £53m shortfall compared to the trade that Singapore had been enjoying pre-pandemic.

As the pandemic begins to abate, it is hoped life will return to normal and that exports will begin to recover, especially within travel retail channels. This will no doubt be supported by the signing of a free trade deal between Singapore and the UK.

In December 2020, the UK signed a free trade agreement with Singapore, which has been in effect since January 1, 2021. The deal covers a trade relationship worth more than $22bn (£17bn) and largely mirrors an existing deal between Singapore and the European Union (EU). The agreement removes tariffs and gives both countries access to each other’s markets. Duties will be eliminated by November 2024, the same timeline as the pact between the EU and Singapore.

The agreement became the UK’s first deal with a member of the Association of Southeast Asian Nations.

2. France

Value of exports: £375m

Percent change: -13.1% (vs. £432m in 2019)

Considering the losses in other markets, France came off relatively unscathed in 2020, recording a modest (by 2020 standards) decrease of 13.1% and retaining its position as the second biggest market for Scotch in the world.

While the value of Scotch exports to France has fallen, as with many markets, France remains the biggest market for Scotch by value, and by some margin.

A total of 176 million bottles of Scotch were exported to France in 2020, representing a 1.5% uplift compared to the 173m bottles in 2019. It’s nearest competitors in volume terms is the US, which totalled 112m bottles – a 12.3% decline on 2019.

1. USA

Value of exports: £729m

Percent change: -31.8% (vs. £1,069m in 2019)

The US remains the biggest market for Scotch by value, but what was once a billion pound market has taken a battering this year. A 25% tariff was imposed upon numerous UK and EU imports into the US, including Scotch whisky, in October 2019 over a dispute between the EU, UK and US governments over subsidies granted to Airbus and Boeing.

Prior to this, in 2019, the US market was worth £1.07bn (making it the industry’s first billion pound market) accounting for a fifth of all global exports. Since then, exports of Scotch to the US have fallen by 32% to £729m in value during 2020, a drop of £340m compared to 2019, and accounting for around one third of total global export losses.

Earlier this month a four month suspension of tariffs was announced, which will come as welcome relief to many exporters, but the damage will take some time to repair. In a joint statement, the US and the UK said they have agreed to a four-month tariff suspension to “ease the burden on the industry and take a bold, joint step towards resolving the longest-running dispute at the World Trade Organization”.

Chief executive of the Scotch Whisky Association, Karen Betts, said: “The tariff on single malt Scotch whisky exports to the US has been doing real damage to Scotch whisky in the sixteen months it has been in place, with exports to the US falling by 35%, costing companies over half a billion pounds.

“So today, everyone in our industry – from small companies to large – is breathing a sigh of relief. Suspending these tariffs – stemming from a transatlantic trade dispute that had nothing to do with us – and a return to tariff-free trade with the US means livelihoods and communities across Scotland will be protected. It means that companies can now really focus on recovery – on building back the American market as well as on building back global exports hit by the coronavirus pandemic.”