Post date: Friday, 2nd December 2011

Growing thirst for whisky exports


In China and Brazil – two of the powerhouses among the BRICS nations – it would appear they are toasting the success of their high-growth economies with a regular dram or three of Scotch whisky.

Thanks to yet another surge in demand for the fiery spirit in the recession-free countries, and a rise in the popularity of it across much of Asia, sales overseas in the last nine months have increased by 23% compared with last year.

So great, in fact, is the thirst for Scotland’s most famous product that some distilleries and producers may run out of supplies, according to the Scotch Whisky Association, which has just released its quarterly figures.

Ian Curle, the SWA's newly appointed chairman, and chief executive of the Edrington group, producers of The Famous Grouse, said the success overseas had been driven by the growth in consumers who see the drink as a prestigious symbol of their wealth and status, in preference to indigenous spirits.

The final overseas sales value of whisky, which helps support 10,300 direct jobs and 35,000 suppliers' jobs, could be as much as £10bn. The best-selling brand is Johnnie Walker, made by Diageo, with 20% of the market.

Curle added: "The industry's in excellent health at present. Scotch is truly iconic. It's extremely well positioned, largely due to investment and also down to developing economies' growing middle class wealth and aspiration."

During a visit to Brazil – where sales rose a staggering 50% - Scotland Secretary Michael Moore welcomed the increased imports of Scotch whisky. In a meeting with the country's trade minister, he pushed for reduced tax on imported spirits.

He said: "The numbers tell the story of a growing demand for Scotch whisky here in Brazil. But from the people I've met here and the changing demographics of this country, I am very confident that the potential for future sales is much greater.

"That's why I raised the issue of tax on whisky with the Brazilian trade minister at our meeting in Brasilia.

"He is a man with a fine appreciation of our national drink and he has committed himself to looking again at the issue, in a creative way, to seek a solution. I look forward to following this up with him when he visits the UK in the spring."

The association calculated that the rate of sales meant the whisky industry was earning £125 every second for Britain's balance of payments, making it the "stellar" export performer and the most successful of all "fast moving" products made in the UK.

Richard Lochhead, the Scottish rural affairs secretary, commented on the export figures: "Our whisky sector is an international success story with more and more discerning drinkers across the globe enjoying a dram and a little bit of Scotland.

"We have great ambition for exports from Scotland. Other industries should be learning from the continuing investment of the Scotch whisky industry. The Scottish government does not take this investment for granted and we fundamentally recognise the contribution that Scotch Whisky makes to Scotland - in jobs, tourism and culture."

The most remarkable aspect of the latest figures is that they don’t even include Christmas and New Year sales. Once they are factored in the industry will be on course to shatter last year's £3.4bn export record.

However, the SWA warned that whisky's success was threatened by the Scottish government's proposals to introduce a minimum price for alcohol next year, which could be set at 50p a unit, leading the SWA to consider supporting court action to prevent it becoming law. Curle said minimum pricing in Scotland would make it far harder for the industry to argue against high tariffs and price controls in its overseas markets.

Curle said the association's export success gave him "great joy" but said it had been driven largely by challenging and dismantling tariffs in its fastest-growing markets, such as India and Brazil, and by vigorously promoting free trade.

He claimed some countries, such as France and South Korea, were proposing price controls on alcohol  to protect their domestic producers, while others, such as Mexico, retained high import tariffs.

"Many of these countries have large domestic industries which are under threat by this premium category and they don't all play fair. If they're given an opportunity to introduce a new level of tax and point at something happening in our own backyard, we wouldn't put it past them to use those mechanisms," he said.

The city of Recife in Brazil is believed to have the highest per capita consumption of whisky in the world.

The value of exports to the USA remained the highest of any country, at £430m.

France was the country that received the largest volume of Scotch whisky imports, at 39.4 million litres of pure alcohol.

Singapore is in the top four by volume and value, though it is often a trading post for onward export, much of the whisky going to China.

The next major goal is to achieve a breakthrough in European Union trade talks with India, the world's biggest whisky market, which has 150% tariffs on imported whisky. 

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