The Scotch Whisky Association (SWA) has released new figures indicating that exports in the first half of 2023 continue to contribute to the UK economy. As consumers worldwide increasingly opt for higher quality products like Scotch Whisky, which, like other spirits, are typically served in smaller quantities compared to other alcoholic beverages, the export value remains strong.
In H1 2023, the value of Scotch Whisky exports remained steady compared to the same period in 2022, a year that witnessed record-breaking exports as markets expanded and restocked following the pandemic. The export value for H1 2023 reached £2.57 billion, experiencing just a 3.6% decline from 2022. However, during this period, the volume of exports decreased by 20%, equivalent to 630 million 70cl bottles.
This trend reflects the global shift among consumers towards premium spirits, particularly within the Scotch Whisky industry, where there is a growing demand for premium Blended Scotch Whisky, Single Malt, and Blended Malt Scotch Whisky. While consumers are consuming fewer units of alcohol, this premiumization trend contributes to the UK economy through increased production, investment, and exports. Additionally, it benefits the domestic economies of export markets by generating excise tax and other related costs.
By value, the United States remains the largest export market for Scotch Whisky, while France has reclaimed its position as the largest export destination by volume. India also serves as a significant high-volume export market with 72 million bottles exported in the first half of 2023. To further propel growth in this vital market, the Scotch Whisky Association is advocating for a UK-India Free Trade Agreement that addresses trade barriers, including a 150% tariff. If phased removal occurs, it could result in Scotch export values to India exceeding £1 billion within five years.
However, the SWA cautions the UK government against taking the success of the Scotch Whisky industry for granted, especially given the recent 10.1% increase in excise duty and the widening tax gap between spirits and beer/cider. These factors have placed distillers at a competitive disadvantage. Consequently, the future growth potential of the industry, including exports, job creation, and investment across Scotland and the UK supply chain, hinges on a collaborative partnership with the government. A supportive domestic regulatory environment is crucial for driving sustainability initiatives and achieving Net-Zero.
To lay the foundation for future growth, three immediate priorities emerge. Firstly, no further tax increase should be implemented in the upcoming autumn budget. Secondly, a comprehensive free-trade agreement with India must be established to reduce the 150% tariff on Scotch Whisky. Lastly, regulations should be geared towards supporting the industry in realizing its full potential, recognizing that supporting Scotch Whisky equates to endorsing a high-quality, domestically produced product that generates greater economic benefits per serve compared to other alcoholic categories.
