The Scotch whisky industry has grown export volumes for the first time in three years during the six months to June, and expects a further tailwind to performance from the post-Brexit weakness of sterling.
Global export volumes rose 3.1 per cent despite “continued economic and political volatility in some markets,” the Scotch Whisky Association (SWA) says in a report out today.
The equivalent of 533 million bottles of whisky were shipped overseas, up from 517 million in the first half of 2015 – the first growth in volumes since the opening six months of 2013.
Since then the industry has been hit by a slowdown in many emerging markets, including a clampdown by the Chinese government on gift-giving to senior mandarins and other authorities.
The customs value of overseas shipments was down just 1 per cent to £1.7 billion in the latest period from £1.71bn, which the trade body said was “another clear sign of improvement”.
That drop was much smaller than the 3 per cent decline in value in the first six months of last year. Single malts, blended Scotch and bulk exports all reported increased volumes compared with a year earlier.
David Frost, chief executive of the SWA, said: “The first half of 2016 was marked by an improving Scotch Whisky export performance, suggesting a strengthening in global consumer demand compared to the last couple of years.”
Frost said that the uncertainties of the Brexit vote will create challenges for exporters, but that “in the short term, however, the weakness of sterling since (the vote) is likely to boost export competitiveness”.
Today’s report says the worldwide market for single malts continued to grow, with export value increasing 6 per cent to £431m and volume up 3 per cent to 49m bottles. Single malts now represent a quarter of total shipment value, with exports more than doubling in value over the past decade.
The SWA said there were “promising signs” in the sector’s largest market by value, the United States. Exports lifted 9 per cent in value to £357m, with both single malts, up 22 per cent, and bottled blended Scotch whisky, up 6 per cent, enjoying growth.
Exports to the potentially massive market of India jumped 28 per cent to £43m, with the SWA urging the UK government to “prioritise discussions with India” as it developed its post-Brexit trade strategy. Currently, India levies an exorbitant 150 per cent basic customs duty on Scotch imports.
In all, ten of Scotch whisky’s top 15 markets recorded volume growth, with particularly strong performances in France, Holland and Poland.
On the wider economic picture, Frost said: “Given the continued international uncertainty, we also look to government to make every effort to put in place a competitive domestic tax and regulatory environment, supporting a key home-grown industry.”