HMRC figures show 36.7 million bottles were released for sale in the first six months of 2017 – down from 37.7m in the same period last year.
The 2.6 per cent fall follows Chancellor Philip Hammond’s decision to increase spirits duty in the spring Budget by 3.9 per cent, meaning tax now makes up 80 per cent of the cost of a bottle of Scotch. Of an average bottle sold at £12.77, more than £10 goes straight to the Treasury.
Scotch Whisky adds £5 billion annually to the Scottish economy, is worth more than £4bn in exports and supports more than 40,000 jobs across the UK. The UK is the fourth biggest market for the product, after France, the US and India.
Trade body The Scotch Whisky Association (SWA) runs a ‘Drop The Dram Duty’ campaign calling on the Chancellor to give “fairer tax treatment” to spirits in his November budget. Karen Betts, SWA chief executive, said: “Philip Hammond’s damaging 3.9 per cent spirits duty hike has hit UK demand for Scotch and seen less money going to the Treasury.
“The Chancellor should use his November Budget to Drop The Dram Duty and boost a great British success story. Cutting tax would send a strong signal that the government believes in a world-famous UK manufacturing industry which supports 40,000 jobs and plays a key role in Scotland’s economy.”
Charandeep Singh, spokesman for the Scottish Chambers of Commerce, said: “The Scotch Whisky Association is right to highlight the damaging effect that the hike in spirits duty has had on Scotch sales within the UK.
“Keeping Scottish industries competitive, particularly those which embody the vision of an international trading nation, must be a priority for the UK government. ”
He added: “We urge the Chancellor to review the tax on spirits duty to ensure that the Scotch whisky industry continues to be a leading force of the UK food and drink sector on the international stage.”
HMRC figures also show the tax take from spirits has fallen since the spring increase. Spirits revenue was down more than 7 per cent in the first financial quarter of 2017/18 to £697 million from £751m last time.
A Treasury spokeswoman said 90 per cent of Scotch whisky is exported, meaning no alcohol duty is paid on these sales. She added: “We recognise the importance of the Scotch whisky industry. In the UK, tax on a bottle of Scotch is 90p lower now than it would have otherwise been, thanks to duty freezes.”