Raise a glass to Scotch whisky

The Herald Business - - Straight Talking - IAN MCCON­NELL

GLASS half-full or half-empty? That was one ques­tion which came to mind in the wake of publi­ca­tion of the lat­est Scotch whisky ex­por t statis­tics.

On t he o ne hand, the Scotch Whisky As­so­ci­a­tion pro­claimed that the in­dus­try’s ex­ports had risen by 1% to a record £4.27 bil­lion in 2012. On the other, the vol­ume rather than value of overseas sales of Scotch was down 5%.

The value of Scotch whisky ex­ports had leapt by 23% in 2011, and this was al­ways go­ing to present a dan­ger that news of a more mod­est ad­vance last year would be greeted with all the en­thu­si­asm of a hang­over.

Maybe it is be­cause the Scotch whisky in­dus­try has proved so re­ces­sion-proof that the half-full or halfempty ques­tion even arises.

Re­flect­ing on the in­dus­try’s 2012 ex­port per­for­mance, it is pretty im­pres­sive.

To man­age to build at all upon the 23% leap in ex­ports in 2011 is no mean feat, es­pe­cially in the cur­rent eco­nomic en­vi­ron­ment.

And deeper anal­y­sis of the ex­port fig­ures un­der­lines this point.

There were very sharp falls in Scotch whisky ex­ports to Spain, Por­tu­gal and Greece, coun­tries in which con­sumers have been pick­ing up the tab for the eu­ro­zone debt cri­sis. Ex­ports of Scotch whisky to Spain dropped 25% to £195.3 mil­lion last year. Sales to Por­tu­gal fell about 25% to £34m. Ex­ports to Greece fell around 30% to £49m.

The value of Scotch whisky ex­ports to France tum­bled by 19% to £434m. France is Scotch whisky’s sec­ond­largest ex­port mar­ket by value, be­hind the US, and the big­gest by vol­ume.

The SWA high­lighted the fact that the pat­tern of ex­ports to France had been “dis­torted” by ex­cise tax in­creases in 2012, which had prompted a “stock­ing-up” of Scotch whisky in 2011.

Yet, in spite of th­ese ma­jor re­verses in ex­ports to France and south­ern Europe last year, dis­tillers still man­aged to achieve a new an­nual record for the value of Scotch whisky ex­ports.

And they did so by mak­ing the most of op­por­tu­ni­ties around the globe.

The likes of Mex­ico and Venezuela proved lu­cra­tive ter­ri­to­ries for Scotch whisky dis­tillers last year, as did Rus­sia. Scotch con­tin­ues to en­joy a stel­lar per­for­mance in Asia, with ex­ports to the distri­bu­tion hub of Sin­ga­pore ris­ing and di­rect ship­ments to China also in­creas­ing. Scotch pro­duc­ers saw use­ful progress in Tai­wan.

Scotch whisky dis­tillers ob­vi­ously have a key ad­van­tage over other man­u­fac­tur­ers north of the bor­der. Their prod­uct must be made in Scot­land, so in that sense they are not ex­posed to the chill winds of in­ter­na­tional com­pe­ti­tion from low-cost ter­ri­to­ries.

How­ever, that should not take away from the fact that the Scotch whisky in­dus­try is a shin­ing ex­am­ple, in terms of its success in sell­ing into emerg­ing mar­kets, while main­tain­ing growth in ma­ture overseas ter­ri­to­ries. The strength of t he per­for­mance of Scotch whisky in the US mar­ket-place through­out the global down­turn has been a real sur­prise.

There are few ex­am­ples of such im­pres­sive in­ter­na­tion­al­i­sa­tion from a Scot­tish base, although the oil and gas ser­vices sec­tor would be an­other.

We must not un­der­es­ti­mate the im­por­tance of ei­ther of th­ese sec­tors to the over­all Scot­tish econ­omy at a time when the head­winds, par­tic­u­larly from the Coali­tion Government’s on­go­ing fis­cal aus­ter­ity pro­gramme but also from trou­bles in some ex­port mar­kets in the eu­ro­zone, make it dif­fi­cult for many com­pa­nies in the UK to stand still, let alone make progress.

It still looks touch-and-go whether or not the UK econ­omy recorded its third re­ces­sion since 2008 in the first quar­ter of this year. Chan­cel­lor Ge­orge Os­borne’s vi­sion of a “Bri­tain car­ried aloft by the march of the mak­ers” has shown no sign of be­com­ing a re­al­ity.

But the Scotch whisky in­dus­try, and oil and gas ser­vices com­pa­nies, big and small, based north of the bor­der, have cer­tainly been do­ing their bit to try to nar­row the UK’s yawn­ing global trade deficit. The SWA has cal­cu­lated that the Scotch whisky in­dus­try con­trib­utes £135 per sec­ond to the UK bal­ance of trade.

The SWA high­lighted £2bn of cap­i­tal in­vest­ment planned by the Scotch whisky in­dus­try over the next three to four years. New dis­til­leries are be­ing built, by large play­ers and in­de­pen­dents in the sec­tor.

Drinks gi­ant Di­a­geo has just un­veiled plans to in­vest £50m in a new dis­tillery at Teaninich near Al­ness in the far north east, in Ross-shire as part of a wider £1bn in­vest­ment in its Scotch whisky busi­ness.

The value of Scotch whisky ex­ports has risen by 87% in the last decade. Nearly half of the last decade has been blighted by the eco­nomic fall-out from the global fi­nan­cial cri­sis, which started un­fold­ing in 2007.

So, in terms of this in­dus­try’s ex­port per­for­mance, the Scotch whisky glass would surely be best viewed as full – and charged for a cel­e­bra­tory toast.

The whisky in­dus­try has in­creased sales in Asia, South Amer­ica and Rus­sia in the past year

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