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Scotch whisky contributes £7.1bn to UK economy

16 January 2024 By Arabella Mileham

Scotch whisky helped to boost the UK economy by £7.1 billion, according to a new economic report, but the Scotch Whisky Association (SWA) called on the government to remove the “multiple” barriers to growth.

This marked a 29% increase in gross value added (GVA), a measure of an industry’s contribution since 2018, when the last economic impact report was published, it said.

The report noted that between 2018 and 2022 there was a 10% increase in maturing stock of Scotch whisky, while ten new distilleries opened, taking the total to 148.

Overall, the Scotch Whisky’s Economic Impact 2022 report argued that the industry generated 3% of Scotland’s total GVA, including £6.3 billion GVA across the economy, with around £3.4 billion of that directly generated by production.

It also currently supports 66,000 jobs across the UK, 41,000 of which are in Scotland, accounting for 77% of Scottish food and drink exports and 26% of UK-wide food and drink exports, representing 2% of all UK goods exports, the SWA said.

Scotch whisky was found to be the second most productive sector in Scotland, ranked behind energy, including renewables, accounting for around 82% of total spirits output. According to the Scottish Annual Business Statistics (SABS), Scottish spirits represented 85% of total UK spirits turnover but 92% of GVA.

The report noted that exports of Scotch whisky have increased by 31% between 2018 and 2022, to a record £6.2 billion, according to HMRC/SWA analysis.

Is also noted that the industry has invested £2.1 billion in capital projects between 2018 and 2022 and the industry supported around 24,000 more jobs across the UK than a decade ago.

However, while the numbers were “key”, they “only tell a small percentage of the story”, the report said. Despite the continued investment to drive growth, employment and productivity – with new CapX projects totalling over £2 billion – it pointed out there the room for further growth was being hampered.

“Scotch whisky continues to face multiple barriers, including the highest spirits duty rate in the G7, key infrastructure in Scotland in need of investment, and trade deals – including with India – still to be finalised. These challenges combined with rapidly increasing competition from premium spirits in global markets puts future investment, growth and jobs at risk without government support,” the report said.

Mark Kent, chief executive of the SWA, said the Scotch whisky industry has “once again proven its economic significance to the UK domestically and on the world stage”, and the figures highlighted “the importance of backing a key sector for productivity, exports and employment”.

He noted the resilience of the sector amid a turbulent five years, which had seen retaliatory tariffs in the United States, a global pandemic and the knock-on economic pressures, and called on the government to support the industry and enable businesses to continue to invest in the UK economy.”

Scottish Secretary Alister Jack said he welcomed the report, calling the sector’s contribution to the economy as of “vital importance” to Scotland, and the whole of the UK and said the government “wholeheartedly” supported the industry.