Scotch whisky exports rise by 31%
From January to June this year (2021), sales of scotch whisky to overseas customers rose by just under a third (31 per cent) compared to the same six months of 2020. Surprisingly, sales grew faster between this April and June than during Q2 of 2019, a record year in itself.
However, this year’s Q1 and Q2 total figures still fell short – by around a tenth – from the quarterly records of 2019. That year, the full value of exports was £4.9 billion, compared to £3.8bn last year (2020). Though reduced, consignments amounted to 1.14 billion 70-centilitre bottles, around seven-eighths of the quantity shipped in 2019.
Suspension of US tariffs
Although the USA remains the biggest scotch export market, total sales to customers on the other side of the Atlantic fell by around a third (34 per cent) in 2020 because of import tariffs. Consequently, last year saw the most subdued trading in a decade.
Understandably, distillers are looking for glimmers of recovery after a disappointing 2020. Some of the promising signs seen during the first half of this year followed the lifting of the notorious 25 per cent on single malt whiskies, levied in autumn 2020 during the last few months of the Trump presidency. This March, the new Biden administration announced the suspension of the import tax from June.
Brexit effects
Apart from the COVID-19 pandemic and cross-border travel considerations, exporters faced additional challenges early this year. Not least, the UK’s departure from the European Union presented some initial difficulties.
Gradually, the situation improved. Trade channels reopened, although distillery companies had to adjust to additional administration requirements for shipments to mainland Europe.
Still, due to lockdown restrictions and post-Brexit adjustments, trading was not as high as hoped throughout the winter quarter of 2021. Fortuitously, sales orders and export shipments bounced back during the spring.
China
This half-year, scotch exports to China surpassed the value achieved in the same period of 2019, some £89 million. In contrast, sales to Chinese customers during the six months to the end of June 2021 have already reached £91 million.
Financial pressures
The outgoing chief executive of the Scottish Whisky Association, Karen Betts, commented on the combined effect of taxation measures and inflationary pressure within the sector. While general operating expenses had risen as expected, transport and distribution costs had increased dramatically over recent months.
On an encouraging note, Betts described the slow recovery in exports as a step in the right direction. However, she emphasised that distilleries were waiting for an announcement in the coming months regarding tax treatments of scotch whiskey compared to duty on other types of alcohol.
Also, she pointed out, trade negotiators should call into question the disproportionately high tariff of 150 per cent levied by India on imported scotch. Naturally, Scottish producers perceive the trade tax as a glaring inequality.
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