What can food & drink sector learn from Scotch whisky success?

Craft Beer Clan have learned lessons from the whisky industry. Picture: Shutterstock

In Spain, they mix it with cola. In China, it’s cold green tea that’s added to the glass. And in Brazil, Scotch aficionados reach for some coconut water to enliven their dram.

No matter how whisky is drunk, Scotch has been one of the UK’s biggest export success stories over the past decade. The number of bottles sold overseas has grown by 10 per cent from 1.05 billion in 2006 to 1.16bn last year.

The value of Scotch sales has also soared, climbing by 56 per cent from £2.479bn to £3.855bn over the same period, as drinkers “trade-up” from their entry-level tipples to more-expensive single malts and premium blends.

Despite both the value and volume of exports falling in 2014 and 2015, the fundamentals of the industry are so strong that distillers are investing hundreds of millions of pounds to boost production, anticipating further rising sales.

But what can the rest of Scotland’s food and drink industry learn from the success of our national drink? How can smoked salmon producers, shortbread bakers, craft ale brewers and langoustine catchers replicate the amber liquid’s achievements?

Last November, the Scotch Whisky Association (SWA) and Scotland Food & Drink launched their “export collaboration charter” to help food and drink businesses to learn lessons from the whisky industry.

Whisky currently accounts for around 80 per cent of Scotland’s food and drink exports and so the country needs to diversify the range of products it sells abroad if it wants to hit the industry’s target of growing foreign sales from £5.1bn in 2014 to £7.1bn in 2017.

The benefits for food and drink companies are clear to see – find out how the whisky industry has succeeded and then apply those lessons to their own businesses. But what about the distillers – why do they want to share their secrets?

“We don’t see it as sharing secrets – it’s more about sharing our successes and our experience, which has been built up over decades or even the past century,” explains Rosemary Gallagher, head of communications at the SWA.

“We want to help other industries because we want to help the Scottish and British economies. If the economy is doing well and if exports are doing well then the whole country benefits and Scotch whisky benefits in the end as well.”

In February, the SWA held two events to share experiences. The trade body teamed up with Canning House – an organisation that runs debates on Hispanic business, economics and politics – to hold a conference in Edinburgh to discuss opportunities in Latin America, with speakers including Nestor Osorio Londoño, Colombia’s ambassador to the UK.

A second event covered opportunities in China and heard from: James Brodie, a manager at the China-Britain Business Council; Tom Duke, the intellectual property attaché at the British embassy in Beijing; and Lindesay Low, senior legal counsel at the SWA.

While learning lessons from the whisky industry can bring broad economic benefits – such as boosting exports and creating jobs – there are also advantages on a company-by-company basis. With food and drink being served together on the dinner table, the possibilities are extraordinary.

“There’s a lot of emphasis put on food and drink matching now, so if people try one Scottish product and they’re encouraged to try it alongside a Scotch whisky – perhaps oysters and whisky, for example – then it does get people thinking about different ways to drink whisky,” says Gallagher.

“Someone who wouldn’t normally try whisky on its own may then decide to try it with food and that might lead them on to try other whiskies too.

“It also encourages people to come to Scotland as well. If people are trying Scotch whisky and really good Scottish produce then it might encourage them to come to the country.”

Gallagher says the SWA is working with Scotland Food & Drink to run whisky tastings alongside its events. The association is also compiling a database of whisky experts who are prepared to share their time and expertise with other companies as part of a mentoring service.

One company that has already learned lessons from the whisky industry is the Craft Beer Clan of Scotland, which exports the beers produced by 32 breweries and the gins and other spirits made by 14 distilleries. The business was set up by Simon Hannah, managing director of Glasgow-based wholesaler JW Filshill, former Harviestoun Brewery chief executive Chris Miller, and ex-Diageo director David Moore.

The team built on its own experience by bringing on board whisky writer and consultant Charlie MacLean and former Diageo pair JongWoo Kim and Joe Tcheng.

“When we set up the business two-and-a-half years ago, we decided to spend our first three years investing in China and south-east Asia,” explains Miller.

“In many of those countries, consumers are already aware of Scotch whisky, whether that be premium blend or single malt, and they certainly recognise and understand its provenance.

“A lot of the people who we speak to when we attend the whisky festivals and we’re promoting craft beer to sit alongside Scotch whisky know the map of the country, they know the regions and some of them who are real enthusiasts know about named distilleries too. We’re trying to land on that runway that’s been laid down by single malt and premium blend.

“On the business side, there’s more we can learn about how the whisky companies operate. The big boys – the likes of Diageo, LVMH and Pernod Ricard – have their own joint-ventures in these markets and so you look at them in awe of their scale, not just in the range of their products but also how they manage them logistically and import them into the market and distribute them through their own businesses. They have resources and scale – we’re a generation away from that, realistically.”

The Craft Beer Clan of Scotland is also bringing whisky and beer even closer together. It has teamed up with craft brewer Williams Bros to form the Clan Brewing Company, which is producing a range of beers and then ageing them in whisky casks, featuring spruce ale in Islay casks, imperial stout in lowland, red rye ale in Speyside and golden ale in Highland. The first beers are going on sale in Asia, with the Whisky Shop stocking them in the domestic market.

After the UK voted to leave the European Union, the need to grow Scotland’s exports became even more urgent. Tools such as the export collaboration charter could provide ways of boosting trade, whether the UK is in the single market or not.

“Brexit will affect what everyone is doing when it comes to exports,” Gallagher points out. “We can discuss with other food and drink sectors how we can help them to tackle Brexit.

“Not many organisations have the same legal and trade experience that we have in the SWA, having been part of a lot of free trade agreements and having travelled to overseas markets. People can learn a lot from the expertise that we’ve built up over the years.”

IN NUMBERS

£3.855bn – the value of Scotch exports in 2015

1.16bn – the number of bottles exported in 2015

£280,000 – the highest price paid for a bottle of Scotch at auction

1.6m – the number of people who visited Scotch distilleries in 2015

£50m – the amount spent by visitors at distilleries in 2015

175 – the number of countries to which Scotch is exported

34 – the number of bottles of Scotch that are exported each second

£120 – the amount that Scotch exports earn each second

118 – the number of distilleries licensed to produce Scotch

20m – the number of casks maturing in Scotland

Source: Scotch Whisky Association

• This article appears in the Autumn 2016 edition of Vision Scotland. An online version can be read here. Further information about Vision Scotland here.