David Frost
As I travel around Latin America, first as a diplomat and now as CEO of the Scotch Whisky Association, I have been struck not just by the visibility and prestige of Scotch Whisky but by the way it has become part of the Latin American lifestyle. From the Blended Scotch mixed with coconut water to keep cool in Recife in Brazil, to the Single Malt poured over ice in a cool restaurant in the Polanco district of Mexico City, Latin America has emerged as a key region for Scotch Whisky exports.
£460 million of Scotch Whisky is now exported to the region. That’s one bottle in every six exported. Indeed, Scotch Whisky is now a third of all Scottish exports to Latin America. This has happened because a new aspirational, millennial consumer has emerged in growing cities like Bogota and Sao Paulo, as has a broader Latin American middle class, expanding by 50% according to the World Bank. Indeed it is predicted that there will be 450 million people with household incomes over $15,000 by 2020. Clearly, as recent economic turbulence in Brazil and Venezuela demonstrates, there will continue to be volatility. But the trends are clear and they are good for Scotch Whisky.
Scotch Whisky’s growth shows what others could achieve too. It is an opportunity for other Scottish exporters - from consumer goods to technical know-how - to look again at the region. That’s why, as part of the Scotch Whisky industry’s commitment to collaborate with other exporters to boost Scotland’s economy, we are partnering with Canning House - the premier Latin American forum in the UK - to host a Scotland-Latin America Business Forum in Edinburgh this week.
This Forum is a chance to hear from senior diplomats, business representatives, and regional experts on developments across the region. The opportunity is clear, with economies like Mexico and Colombia delivering sustained growth over a long period. But there are also challenges, and low commodity prices, political volatility and economic difficulties are well known. But it is a region that demands a long-term view. Over time, GDP growth and favourable demographics will deliver good export prospects in the future. Scottish business should be ready to take that opportunity, to stay the course through turbulent times, and to invest in brands and markets.
To make that happen, Latin America itself needs to keep becoming more open and market-oriented. The most successful countries in recent years – for example Mexico, Colombia, Chile – have trod this path. Recent EU free trade agreements with Colombia and Peru, as well as a plan to update a similar agreement with Mexico, point the way to a more level playing field. We also welcome the recent signs of new thinking in Brazil and Argentina about the EU-Mercosur trade negotiations and this would be a really major prize.
In all this, the Scotch Whisky industry is playing an active role. We are working to tackle trade barriers in Colombia and Brazil and to improve the legal protection of “Scotch Whisky” across the whole region. And, at the same time as the Forum, the SWA will be joining EU Commissioner Phil Hogan on a visit to Colombia and Mexico.
Latin America is a good example of the need for a long-term perspective. Scotland has historic connections to the region, with Scottish engineers for example helping build the first railways. But it hasn’t always built on them. It is time to change that and this week’s Business Forum is a chance to start.
David Frost is chief executive of The Scotch Whisky Association
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