Scotch suffers 11% drop in exports

Scotch whisky has seen a decline in exports worth £220million in lost sales, with some markets receding by nearly 50%.

Trade to Latvia, which has close route-to-market links with Russia, dropped by nearly a third (Photo: Wiki)

While Scotch Whisky exports to some markets, such as France and Taiwan, increased in the first six months of 2014, the overall trend was downwards, with “economic headwinds and uncertainty” being blamed by the Scotch Whiskey Association (SWA).

Figures published on Monday (22 September) by the SWA, the trade body that represents over 90% of Scotch producers, show that exports of whisky in the first half of the year were £1.77billion, down 11% from £1.99bn in the same period of 2013.

Exports to Singapore, the third largest value market for the spirit, were slashed by 46% and 47% in value and volume respectively, while Scotch’s biggest valued market, the US, dropped by £63.3million – a 16% decline on last year.

There is also decline in many other major markets in Asia and the Americas, for example China, Brazil and Mexico.

The well-documented anti-extravagance measures in China have been hitting the trade hard, while economic slowdown in some markets, a stronger pound sterling and de-stocking have also been blamed.

Importantly, there was also a huge recession in exports to Latvia, a route-to-market hub for products going on to be sold in Russia, showing the impact of Russia’s crackdown on western goods.

The Latvian market declined by nearly a third in value, down from £33.5million last year to £22.8million.

The anti-extravagance measures in China have also proved damaging to Scotch exports

However with projects for new distilleries under way, and up to £2bn of capital investment in Scotland committed by producers, the hope is that the long-term prospects for the spirit will improve.

Exports to France grew by 3% to 86 million bottles, making it the biggest market by volume, and by 6% to £211m to put it in second place, behind the USA, in terms of value.

Exports to the United Arab Emirates (UAE) were up 26% to £54m, with that area acting as a distribution hub for parts of Africa, Asia as well as the important Indian market, where growth of 31% has been welcomed.

David Frost, Scotch Whisky Association chief executive, said: “We are confident that Scotch Whisky will continue to grow in the long-term as markets stabilise and new ones, such as emerging economies across Africa, open up. However, it is clear that in the short-run that there are economic headwinds affecting exports.

“The latest figures also act as a reminder that the success of Scotch Whisky can’t be taken for granted. We need support from government to beat down trade barriers and help us access new markets overseas.

Mr Frost also hinted at the trade’s commitment to discussions on the future of Scotland after its recent independence referendum, which saw 55% of the electorate voting to remain in the UK but with further powers granted to Edinburgh from Westminster.

“We are determined to play a full part in the forthcoming debate about further devolution, so that it enables a supportive business environment to ensure the future success of Scotch Whisky,” he said.