Raise a glass to Scotch whisky
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