Scotch whisky sales fall 5% amid ‘high taxes’

Most people do not know how much tax they pay on whisky. Picture: Jon Savage

A report published by the Scotch Whisky Association (SWA) reveals that the number of 70cl bottles of Scotch released for sale in the UK last year fell 4.78 per cent per cent to 83.3 million – down from 87.5m in 2013.

Since 2009 the UK market for Scotch has shrunk by 9.5 per cent from 92m bottles, according to figures released earlier this year by Her Majesty’s Revenue and Customs (HMRC).

The trade organisation believes that the 78 per cent duty tax on whisky, which is one of the major drivers of the Scottish economy, has contributed to its decline. Scotch whisky accounts for about 75 per cent of Scotland’s food and drink exports, and nearly a quarter of the UK total.

The industry adds value of £5 billion to the UK each year and supports more than 40,000 jobs, including a high number in rural communities where other industries are scarce.

David Frost, SWA chief executive, said: “Scotch Whisky is a massive export success for the UK so it’s obviously disappointing to see this decline in volumes in our domestic market.

“In next week’s Budget the Chancellor has the perfect opportunity to support an important UK industry. He should cut spirits duty by 2 per cent. This move would also benefit consumers and public finances.”

He added: “In last year’s Budget, the Chancellor highlighted Scotch Whisky as a ‘huge British success story’. We hope this year too he will show his support for this world-class manufacturing industry.”

In last year’s Budget, the alcohol duty escalator was scrapped and duty on spirits was frozen. However, the industry has argued that a duty cut this year would assist growth across the entire Scotch whisky industry.

According to a survey carried out by the SWA, two out of three people in the UK are unaware they pay almost 80 per cent of tax as a share of the price of an average bottle of Scotch. However, when they are told the level of tax, 84 per cent describe it as unfair.

British drinkers contribute a quarter of all excise duty paid on spirits in the European Union. In contrast, French and German consumers pay 15 per cent and 14 per cent of total EU spirits taxes respectively, with Spanish consumers contributing only 5 per cent of spirits tax revenues.

The decline has also been seen in the export market, where falling demand in key regions such as Asia took their toll on the industry. Sales of Scotch whisky abroad dropped by 11pc to £1.99bn in the first half of the year, figures released in September revealed.

However, exports of the drink to the US were worth almost £820m in 2013, a record high.