The value of Scotch whisky exports fell sharply amid “volatile” geopolitical and economic conditions in the first half of the year, as industry chiefs warned Prime Minister Sir Keir Starmer that the sector “cannot be taken for granted”.
New figures released by the Scotch Whisky Association (SWA) today show the value of exports tumbled by 18% or £463.2 million to £2.1 billion compared with the first six months of 2023, with only India recording a rise among the top five markets.
The value of exports to India, seen as a major long-term hope for the industry, surged by 11.9% to £105.7m, with India now the industry’s largest market by volume, following growth of 17.3% to 85 million bottles in the first half.
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But the value of shipments to France – the second-most valuable market for distillers – plunged by nearly one-third to £158.5m.
Exports to the US, the industry’s most lucrative market, fell by 3.5% to £421.4m and there were major falls in the value of shipments to Singapore and Taiwan, tumbling by 22.3% to £128m and 21.5% to £117.1m respectively.
There were also a steep drop in the value of exports to China, by 42.4% to £77.9m, reflecting the recent difficulties which major distillers have highlighted in the market as economic growth has slowed.
Meanwhile, the volume of exports fell by 10.2% in the first half to the equivalent of 566 million 70cl bottles.
The SWA said the industry continues to feel the impact of the 25% import tariff levied on single malt Scotch whisky by the Trump administration, in force between October 2019 and March 2021, which it said has cost the industry £600m in lost exports and market share. Trump has signalled he will introduce import tariffs should he win November’s US presidential election.
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Closer to home, the distillers’ body urged the Prime Minister to reduce the tax burden on the industry at the Budget on October 30, following the “damaging” domestic impact of the 10.1% duty increase imposed by the previous UK Government in August last year.
Mark Kent, chief executive of the SWA, said: “The Prime Minister has promised to ‘back Scotch producers to the hilt’. These figures are a reminder that the success of Scotch whisky cannot be taken for granted and requires government support to ease the industry through short term volatility.
“We are a resilient industry, exporting to over 180 markets, and are experienced in navigating such periods of turbulence, and we are confident of the long-term growth opportunities for Scotch whisky. But it is clear that the first half of 2024 has been challenging, as for other premium global exports. This has not come as a surprise given the volatile international situation affecting global industries and inflationary pressures which have fed through to consumers across global markets.”
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Mr Kent added: “The UK Budget on October 30 is the first opportunity for the new Labour government to show it truly supports Scotch. Last year’s double-digit tax hike on Scotch whisky in the UK, the largest in 40 years, has already lost HM Treasury almost £300m in tax revenue. Beginning to reverse the damage by cutting duty on Scotch whisky will boost public finances and bolster the industry through this challenging period. “In addition, the H1 figures clearly show that our biggest market, the US, has not fully stabilised following Covid and the damage caused by the 25% tariff on single malt in the US. The permanent elimination of this tariff, going beyond the current five-year suspension, would remove uncertainty, give the industry increased confidence and allow our full focus to be on growing in this highly competitive spirits market.
“It is welcome that the UK Government has picked up negotiations on a UK-India trade agreement. Exports to India have been a bright spot in the first half of 2024, despite the current 150% tariff being a brake on future growth. Securing a deal which reduces the tariff would be a major boost to the industry and help to mitigate the impact of a slowdown in other global markets.”
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