Whisky galore but not as much as last year

Weaker economic conditions and political volatility in some markets saw the value of Scotch Whisky exports decline 7% to £3.95 billion in 2014 from £4.26bn the previous year, according to new figures published this month. 

The Scotch Whisky Association (SWA) said Scotch Whisky has enjoyed strong global growth over the last decade, with total value of exports up 74% since 2004 and Single Malt up 159%. But the SWA reported challenges in several markets last year, with the volume of exports also down slightly by 3% to 1.19bn 70cl bottles.

The overall picture, following several years of record-breaking growth, was consolidation in many developed markets and underlying strong growth in most emerging markets. Political volatility affected this picture in places and some fluctuations were driven by changes in stock levels rather than by underlying consumer demand.

Growth was seen in a range of important markets, such as Taiwan where exports jumped 36% to £197 million, partly on the back of the growing popularity of Single Malt Scotch. Exports to India were up 29% to £89m, despite the 150% import tariff.

Exports to the USA, the biggest market for Scotch, fell 9% by value to £748m. However, customs export figures did not tell the whole story, as consumption figures released earlier this year by the US Distilled Spirits Council show the market shrank by only just over 1%. Single Malt sales volumes were up 6.3%. This suggests the fall in exports in 2014 was due partly to stock adjustments - as high inventory levels of Scotch are drawn down to meet consumer demand, rather than buying new stock - as well as to an increasingly competitive spirits market.

Global exports also performed better in the second half of last year - down 4% - than in the first six months when they fell 11% in value compared to the same period in 2013, suggesting longer-term fundamentals are sound.

The picture was encouraging in Europe last year:

• Exports to France, the biggest market by volume and second biggest by value, were up 2% to £445 million and 3% to 183m bottles. The French market is stabilising after Scotch, and other imported drinks, were hit by a tax increase in 2012. 
• Exports to Spain were up 1% by volume for the first time in several years.

There was a mixed picture in emerging markets, partly as a result of political and economic volatility. Exports by volume to Mexico grew 5% to 42.8m bottles, while value fell by 10% in that market. There was a similar trend in Brazil, with volumes flat but value down 20%. The important hub market of the United Arab Emirates continues to boom, with exports up 27% by value.

Alongside Taiwan and India, there were other positive developments in Asia:

• Exports to Thailand were up 16% to 27m bottles.
• Japan was up 8% in value to £64m, the first increase since 2011. 
• South Korea was up in value to £117m, the first increase since 2010. South Korea was given a boost by a Free Trade Agreement (FTA) with the EU in 2011 which phased out the import tariff. 

However, exports to the major regional hub of Singapore fell by 39% in value to £200m. This was partly down to the ongoing austerity campaign in China, the final destination for a lot of Scotch shipped from the UK to Singapore. Direct exports to China, the 26th largest market by value, fell 23% to £39m