Figures released by His Majesty’s Revenue and Customs has revealed that exports of Scotch whisky have nosedived during the first half of 2024.
HMRC data shows that exports were down 18% in terms of value compared to the same period last year. Exports in the first half of 2023 reached £2.57 billion compared to just hitting £2.1 billion earlier this year, amounting to a drop of £463.2 million.
The volume of Scotch exports has also been affected. Approximately 566 million 700ml bottles were sold, which is a 10.2% drop on last year. For context, this roughly related to 36 bottles being exported every second in 2024 versus 40 bottles per second in 2023.
Unfortunately the figures seem to follow a pattern from the previous year. Following a record breaking year in 2022 - when total exports for the calendar year exceeded £6 billion in value for the first time - , there was a 20% drop in volume and 3.6% fall in value in the first half of 2023 compared to the previous year.
Chief Executive of the Scotch Whisky Association Mark Kent has called on the government to support the Scotch whisky industry through this difficult period: “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.”
He continued: “We are a resilient industry, exporting to more than 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.”
In terms of next steps, Kent and the SWAS have highlighted a few key area in which the Labour government can offer assistance.
The first relates to the United States. America remains the largest global market for Scotch whisky in terms of value. Growth remains strong following the uncertainty of a few years ago when Scotch was subject to a 25% tariff between October 2019 and March 2021. This cost the industry and estimated £600 million during that period.
Thankfully a five year suspension was placed on the tariff, however the issue has not been fully resolved. The SWA are calling on the government to protect Scotch’s status in this vital market.
Kent explained that permanently removing the tariff “would remove uncertainty, give the industry increased confidence and allow our full focus to be on growing in this highly competitive spirits market.”
India is another significant market for Scotch whisky. Going against the global trend, export volume to the country actually increased by 17.3% during the first half of the year in spite of the restrictive 150% tariff Scotch whisky faces there.
Ongoing negotiations regarding the UK-India Free Trade Agreement are predicted to include a phased reduction this tariff, which could be worth an estimated £1 billion to Scotch whisky exports over five years. However the deal is yet to be completed and the SWA urges the government increase their efforts.
Kent and the SWA welcome the news that the negotiations are continuing, stating that “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.”
Moving away from exports, the SWA have doubled down on their recommendation that the current government reverses the double digit tax hike introduced last October. It has been reported that the tax rise on spirits led to a decrease in whisky sales, costing the Treasury £300 million in revenue.
Supporting the Scotch industry domestically will be one way to mitigate the negative effects of falling exports. As Kent explains, “beginning to reverse the damage by cutting duty on Scotch whisky will boost public finances and bolster the industry through this challenging period.”
While the news of plummeting exports in terms of both value and volume are alarming, it’s worth keeping in mind what we’re comparing this data with. As ever, context is key. The record breaking figures from 2022 were extraordinary sales from an extraordinary time. They were an unprecedented boost as the global markets came out swinging following the worldwide Covid-related lockdowns.
So with that in mind, it might be worth considering where sales were before the pandemic. According to the SWA, in 2019 exports had a value of £4.9 billion, meaning that the 2023 year end figures of £5.6 billion were an increase on the last typical year before covid struck.
It’s also worth remembering that, as Mark Kent said, the Scotch whisky industry is a resilient one. Hopefully if the SWA’s advice is heeded, it won’t be not too long before the downward trajectory steadies itself before exports are on the up again.
