Out-going Scottish whisky chief in investment call

THE out-going head of the whisky industry’s trade body has warned distillers that they need to be “more bullish” with their investment plans to meet the surging overseas thirst for Scotland’s national drink.

Gavin Hewitt, chief executive of the Scotch Whisky Association (SWA), believes whisky exports will double in value to more than £8.5 billion by 2025 thanks to demand from the growing “aspirational” middle-class in Africa and Asia. But Hewitt, who has overseen a near-doubling of exports in his ten years at the SWA, warned distillers need to invest more cash in production to keep up with demand.

He hailed the hundreds of millions of pounds being pumped into distilleries by groups including Diageo, Pernod Ricard and Edrington.

Hewitt told Scotland on Sunday: “That investment gives me a lot of confidence and it is obviously going in the right direction. But, if anything, I don’t think we are being bullish enough.

“If I’m right in expecting a hell of a lot of extra demand for exports from Asia to Latin America in future, I don’t think as it stands it is enough to keep up with the potential demand down the road.”

Hewitt said that the demographics in key overseas markets for Scotch were highly favourable, with drinkers desiring the cachet of western luxury products such as malt whiskies as a status symbol.

“According to official figures there are roughly 500 million middle-class people in Asia at the moment,” he said. “By 2030 that is expected to have rocketed to 3.2 billion. So we have got huge likely population growth in Asia in exactly the class of drinker we target.

“The spirits industry believes Africa will be the Asia of the 2020s, with huge potential for greater exports.

“South Africa is almost a mature country for the Scotch industry. But now there is all to go for in the likes of Ghana, Ethiopia, Nigeria and others.

“They are moving away from the tradition of drinking their local stuff, and whisky is increasingly the spirit of choice.”

Last year, Diageo – Scotland’s biggest whisky maker and the owner of brands including Bell’s, J&B and Johnnie Walker – unveiled a £1bn investment in distilleries and stock, including a £50 million “super-distillery” near Alness and £30m to double the size of its Mortlach site.

Arch rival Chivas Brothers – which is owned by French spirits giant Pernod Ricard and which makes Ballantine’s, Chivas Regal and The Glenlivet – is building a plant on Speyside at a site of the former Imperial distillery.

Last month, Edrington – which owns labels including Famous Grouse, Highland Park and The Macallan – announced it will spend £100m replacing its distillery and visitors centre on the Macallan estate on Speyside.

Smaller distilleries at various stages of planning or construction include the Adelphi distillery in Ardnamurchan, Annandale, Kingsbarns distillery in Fife and an Isle of Harris distillery.

Hewitt will be succeeded as SWA boss in the new year by David Frost who, like Hewitt, is a former diplomat.

During Hewitt’s tenure, exports have jumped to £4.27bn in 2012 from £2.37bn in 2003. A further record year is expected in 2013 despite some volatility in emerging markets such as China.

“I am confident 2013 will be another record,” he said. “I am confident the industry will have doubled again by 2025.”