One year into my role, leading the Scotch whisky industry’s trade body, I now understand how carefully and assiduously that global reach has been built and cultivated. It was fierce competition and rising taxes in the 1880s that first forced the industry’s entrepreneurial characters, JM Barrie’s “Scotsmen on the make”, into global markets. Today, it’s the Scotch whisky companies’ hard work, willingness to understand other countries and other cultures, and ability to collaborate both at home and overseas that keeps them in those markets and sees the industry continue to thrive.
Understanding the industry’s bold international outlook and its collaborative instincts is also key to understanding its resilience. The 180 global markets in which Scotch is sold act as a hedge. Scotch whisky is astoundingly popular across Asia, in North America, throughout Europe and in Australasia. When the chips are down in one market – because of local competition, discriminatory taxes, or for some other reason – Scotch will be flying in another.
Innovation over the years, again conducted collaboratively – such as the start of collective malting in the 1960s – has also kept the industry fit to face the challenges of an unpredictable world. Sure, the industry has contracted in lean times – notably during the First and Second World Wars – but in doing so it has protected its ability to bounce back. And, right now, the industry is thriving. Last year saw 9 per cent growth in the value of global sales. This year will see the opening of the industry’s 130th distillery.
That the industry is strong now is important as we look out at an uncertain near-term. Brexit, which has dominated so much of my first year in the industry, will undoubtedly be challenging. Scotch whisky companies, large and small, are all global traders. And the rules under which we trade, both with Europe and the rest of the world, look unusually uncertain. Change seems inevitable and promises disruption. Alongside so many other business voices, we find ourselves asking for clarity and, so far, answers have been slow in coming.
That said, we are relatively flexible traders. In our many markets rules do change and we have to adapt. So the industry is shoring up demand across all our markets, from those likely to be impacted by changes to those that will be least affected. In the best traditions of the industry, we are collaborating on how we might mitigate the costs and other impacts of change, with the intention of being as strong exporters, if not stronger, five years from now as we are today.
As we focus on the challenges and how to mitigate them, it’s important that the industry and the UK and Scottish governments work together, as closely and collaboratively as possible. We need both governments to communicate clearly, regularly and openly and to behave pragmatically. We need to know well in advance what any changes will be, so we can properly plan and prepare. And we need our governments to think carefully about our future relationship with Europe and as carefully about our future relationship with markets beyond Europe.
Scotch whisky supports thousands of jobs across the four corners of Scotland, and communities from the Hebrides to the Central Belt. Local traditions and craft are a fundamental part of the industry’s past and its future. Our people, our places and our international outlook have made Scotch the stand-out export success that it is. We all have every interest in ensuring it remains this way.
Karen Betts is chief executive of the Scotch Whisky Association