Scotch whisky industry leaders have hailed a landmark move to tackle counterfeiting that could help reverse an alarming slump in sales in a key export market.
Brazil has granted protected status to Scotch after lobbying by the UK Government, which reckons the decision will provide a big boost for the drive to promote Brand Scotland in the country.
The new protection is expected to help stop bootleg products being labelled as Scotch Whisky and provide more exporters with confidence to supply products to Brazil.
The Department for Business and Trade reckons it could help secure a £25 million increase in exports of Scotch to Brazil over five years.
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That may sound like a relatively small amount for an industry that exports billions of pounds worth of products annually. However, Scotch Whisky Association (SWA) chief executive Mark Kent made clear the trade body saw the move by Brazil as significant.
"As the first foreign product to be granted Denomination of Origin status in Brazil since 2019, Scotch Whisky now sits beside Tequila, Cognac and Champagne with special legal protection,” said Mr Kent.
“This is fundamental to ensure that millions of Brazilians can have confidence in the quality and history of what they're buying.”
Mr Kent said the achieving of Geographic Indication status for Scotch in Brazil was 'Brand Scotland' in action.
“Removing trade barriers and securing legal protections for Scotch Whisky is critical to the industry's success,” he noted.
Whisky exporters could do with a boost amid indications that the boom powered by rapid economic development in countries such as Brazil is coming to an end. The surge in inflation fuelled by the recovery from the pandemic and Russia’s war on Ukraine has led to cuts in consumer spending around the world.
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SWA figures show the total value of Scotch Whisky exports fell by 9.5% last year, to £5.6bn, from £6.2bn in 2022.
The pressure on sales was seen clearly in Brazil which was a top 10 export market in 2023 in terms of volumes.
The number of bottles of whisky exported to Brazil fell by 54% to 43 million from 93m. The fall took the volume of exports to Brazil to 1% below the level recorded in 2019 before the pandemic.
The total value of Scotch Whisky exports to Central and Southern America fell by 45% to £408m in 2023. This was the sharpest fall in any regional market.
Central and Southern America accounted for 7% of global Scotch exports last year.
Spirits giant Diageo has provided further evidence of the scale of the challenge faced by the industry in Latin America in recent months.
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In November shares in the Johnnie Walker producer plunged after it highlighted a materially weaker performance outlook in the Latin America and Caribbean market, which it said accounted for 11% of net sales.
Forecasting a 20% fall in first half sales revenues in the region, Diageo noted: “Macroeconomic pressures in the region are resulting in lower consumption and consumer downtrading.”
It said those factors were slowing down efforts to reduce the excess of stocks that built up in the region in prior periods.
However Business & Trade Secretary Jonathan Reynolds said: “Scotch Whisky is one of Scotland’s finest products and is in high demand across the globe.”
He said the move by the Brazilian authorities would give Scottish distillers the confidence they need to export to one of the world’s largest economies without having to compete with fake knock-offs and pale imitations.
“Businesses who export more are better off, and removing trade barriers like this will unlock more global markets and drive economic growth across the UK,” observed Mr Reynolds, who visited Glengoyne Distillery near Glasgow yesterday.
The Scotch Whisky Association has urged chancellor Rachel Reeves to reduce the tax burden on Scotch Whisky and spirits in the October budget.
It has claimed that the 10.1 percent increase in excise duty imposed by the former Conservative Government last year hit the industry hard while fuelling inflation.
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