Slowing economies and firm pound hit whisky exports

Whisky exports to China have been affected by anti-extravagance measures introduced by Beijing. Picture: Getty

Figures published yesterday by the Scotch Whisky Association (SWA) show that exports of Scotch totalled £1.77 billion in the six months to the end of June, down 11 per cent from £2bn in the same period of 2013.

The SWA said that, following a decade of fast growth, the demand for Scotch was levelling off in some markets.

“While Scotch whisky exports to some key markets, such as France and Taiwan, increased in the first six months of 2014, the overall trend was downwards with economic headwinds and uncertainty having an impact,” it said.

A decline was reported in many major markets in Asia and the Americas, including Brazil, China, Mexico, Singapore and the US.

The SWA said “a mixture of reasons” were to blame: anti-extravagance measures in China, economic slowdown in some markets and a stronger pound all took their toll, while some markets were affected by de-stocking among importers.

The organisation, whose 51 members account for more than 90 per cent of Scotch produced and sold, said whisky remained popular in all those markets and long-term prospects were good.

It said: “There is confidence in the long-term future of Scotch, with many projects for new distilleries under way, and up to £2bn of capital investment in Scotland committed by producers.”

There were some bright spots for distillers in yesterday’s figures. Exports to France grew by 3 per cent to 86 million bottles, making it the biggest market by volume, and by 6 per cent to £211m to put it in second place, behind the US, in terms of value.

Exports to the United Arab Emirates rose 26 per cent to £54m, with that area acting as a distribution hub for parts of Africa, Asia and India. The SWA said growth of 31 per cent in the “difficult” Indian market was particularly welcome and shows the potential opportunities there.

Single malt Scotch whisky, highly valued in the UK but relatively small in export terms, enjoyed a boost. The value of exports was up almost 6 per cent to £285m as international consumers experimented with more expensive and unusual forms of whisky.

SWA chief executive David Frost 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 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. That is why 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.”

Following a decade of solid growth, whisky represents around 85 per cent of Scottish food and drink exports and nearly a quarter of the British total. The industry’s exports are worth £135 a second to the UK trade balance.

The numbers have been down on occasions at the half-year stage before, but have picked up as sellers stocked up ahead of Christmas.

The last full-year drop was in 2004, when exports dipped 5 per cent to £2.3bn. Since then exports climbed steadily to reach £4.3bn in 2013.

Scotland’s cabinet secretary for food, Richard Lochhead, said: “Scotch whisky is an iconic product, though I recognise it is not immune from wider current  economic difficulties across the globe.

“I welcome the industry’s confidence in the long-term future of Scotch whisky, and its continued commitment to £2bn of capital investment in Scotland.”