Scotch whisky has been such a huge growth story in recent years that a slowdown or blip was inevitable at some point.
While Scotch remains a massive contributor to British export success – worth £135 a second to the trade balance – it is also tied to overall economic well-being.
Figures published today show that, while more bottles are being sold, the value of those sales has flattened. In fact, they were marginally down last year to £4.26 billion against the record 2012 figure of £4.27bn.
Whisky producers have not been helped by austerity measures which have included a clampdown on business entertaining in Asia. This, and a slowdown in growth in the region, has taken a huge chunk out of last year’s sales. China is down by 30 per cent and there have been other falls in Japan, South Korea and Taiwan.
The industry will be grateful, therefore, that improving economies in the West and South America are helping offset the decline in these previously fast-growing markets. Hence the flatlining in the overall figure.
Europe is something of a mixed bag. The French have rekindled their appetite for Scotch after a year when sales fell because of a tax hike, while there is anecdotal evidence that the Polish market has rocketed as Poles living in Britain have picked up a taste for it and taken it back home where it is proving a popular alternative to vodka.
Sales in Poland have grown steadily since it joined the European Union and the Scotch Whisky Association (SWA) believes it is because of a desire for upmarket products that comes with growing prosperity. Sales have generally done better in the stronger economies of Northern Europe while debt-ridden southern Europe tells a different story. Spain was down 8 per cent.
Also driving growth have been the ongoing talks with emerging markets to end discriminatory taxes that penalise Scotch. Recent trade agreements in South and Central America have resulted in some big increases in sales.
Although the SWA is not publishing forecasts for this year, there is an expectation that recovering economies and a return to growth in Asia will see the figures resume their upward motion. The industry is certainly confident about the future, with some 20 new distilleries in the pipeline.
Bolland gets a breather in M&S revival battle
THE market was taken a little by surprise by better-than-expected figures for women’s clothing at Marks & Spencer.
A 0.6 per cent rise in like-for-like sales in the fourth quarter won’t be a cause for putting out the bunting and is so small that it counts for barely any growth at all. Even so, it represents a minor triumph against the recent trend and is a sign that perhaps the new team behind the revamped designs is getting things right.
Equally important is that it will give under-pressure chief executive Marc Bolland some much-needed breathing space as he continues to defy his critics and naysayers.
Investors will take some comfort from these figures, and Bolland will get more time to push on with his plans.
But profits are expected to be down when the company reports annual figures next month and he will need to show that the last quarter was more than just a pause in the slowdown and the start of a return to sustained growth.