'Lost decade of growth' as tariffs and Covid hit Scotch Whisky exports hard

Global exports of Scotch Whisky fell by more than £1.1bn during 2020, according to figures released today by the Scotch Whisky Association (SWA). The export figures are the lowest they have been in a decade, as the combined impact of Covid-19 and the 25% tariff in the United States hit distillers hard. 

In 2020, the export value of Scotch Whisky exports fell 23% by value to £3.8bn. The number of 70cl bottles exported fell by 13% to the equivalent of 1.14bn.

The value and volume of exports to most of Scotch Whisky’s top 10 markets fell as countries went into lockdown to combat the spread of Covid-19 during 2020. The closure of hospitality and travel restrictions impacting airport retail globally saw export values fall in 70% of Scotch Whisky’s global markets compared to 2019. Exports to the EU 27, the industry’s largest regional export market, fell by 15%. 

But it is the continued impact of tariffs on exports of Single Malt Scotch Whisky to the United States that has caused the most significant losses. The United States is Scotch Whisky’s most valuable market, valued at over £1bn in 2019 when it accounted for a fifth of global exports. In 2020, exports of Scotch Whisky to the US fell by 32% to £729m, a loss of £340m compared to 2019, and accounting for around one third of total global export losses.  

The industry has repeated calls for more support for Scotch Whisky distillers in upcoming UK budget on 3 March.  Export losses to the US are in large part a result of the 25% tariff on Single Malt that the industry is forced to pay, because of a continuing dispute between the EU, UK and US governments over subsidies granted to Airbus and Boeing.  Given the tariff has arisen as a result of UK government aerospace policy, the SWA is calling on the Chancellor to cut spirits duty to mitigate the significant damage being done to the industry.

Commenting on the figures, Chief Executive of the Scotch Whisky Association Karen Betts said:  

"These figures are a grim reminder of the challenges faced by distillers over the past year, as exports stalled in the face of the coronavirus pandemic and US tariffs. In effect, the industry lost 10 years of growth in 2020 and it’s going to take some time to build back to a position of strength.

“In these challenging times, what’s so disappointing is the damage being caused by US tariffs.  The US has been, for decades, our strongest and most valuable market, but Scotch Whisky is now losing considerable ground there.  These tariffs were avoidable had the UK, EU and US governments and the European and American aerospace industries been less intransigent.  That governments and companies have allowed their dispute to continue while the livelihoods of real people, and the future of one of Scotland’s oldest industries, are put at stake reflects badly on them.

These figures are a grim reminder of the challenges faced by distillers over the past year, as exports stalled in the face of the coronavirus pandemic and US tariffs. In effect, the industry lost 10 years of growth in 2020 and it’s going to take some time to build back to a position of strength.

Karen Betts, SWA

“The Scotch Whisky industry has now paid over half a billion pounds in tariffs – which are a form of tax – on behalf of the UK government because of the subsidies that the government granted to the aerospace sector in breach of World Trade Organisation rules. So we are calling on the Chancellor to support Scotch Whisky distillers by reducing our tax bill in the UK. Rishi Sunak can do that by cutting spirits duty in next month’s budget. That will help to mitigate the damage being done to Scotch Whisky and help to reassure distillers that the UK government wants to support Scotch Whisky in riding out the current storm and returning to growth when possible.”

Notes to editors   

2020 Export Summary

• Export value of Scotch Whisky in 2020 was £3.8bn, down £1.1bn compared with 2019
• Export volume of Scotch Whisky in 2020 was the equivalent of 1.14bn 70cl bottles, down 12.6% compared with 2019
• Exports have fallen in 127 of 179 global markets
• Exports by value are now at their lowest level since 2010 when £3.48bn was exported

US Tariffs impact

• Scotch Whisky exports to the US were valued at £1.07bn in 2019 – the industry’s first billion pound market
• In 2020, exports of Scotch Whisky to the US fell by 32%, or £340m
• Since the 25% tariff was imposed in October 2019, Scotch Whisky exports to the US have fallen 35% or £542m
• Compared to Scotch Whisky, other spirits categories, including tequila, mezcal, Cognac and American whiskey, performed positively in the US market during 2020, according to a report released by the Distilled Spirits Council of the United States (https://www.distilledspirits.org/wp-content/uploads/2021/01/FINAL-AEB-2021-PPT.pdf)
   

Top 10 Markets   

The largest export destinations for Scotch Whisky (defined by value) in 2020 were:  

1. USA: £729m - 31.8% (£1,069m in 2019)  
2. France: £375m -13.1%               (£432m in 2019)  
3. Singapore: £247m -17.6%               (£300m in 2019)  
4. Taiwan: £182m -11.5%               (£205m in 2019)  
5. Latvia: £176m +23.6%               (£142m in 2019)  
6. Germany: £139m -24.9%               (£185m in 2019)  
7. Japan: £114m -22.1%               (£147m in 2019)  
8. Australia: £113m -3.17%               (£117m in 2019)  
9. Spain: £109m -40.0%               (£180m in 2019)  
10. China: £107m +20.4%               (£89m in 2019)  

The largest export destinations for Scotch Whisky (defined by volume, 70cl bottles) in 2020 were:  

1. France: 176m bottles               +1.5%    (173m bottles in 2019)  
2. USA: 112m bottles               -12.3% (127m bottles in 2019)  
3. India: 95m bottles               -27.8% (131 m bottles in 2019)  
4. Brazil: 45m bottles               +5.7%    (43 m bottles in 2019)  
5. Japan: 45m bottles               -26.2% (60 m bottles in 2019)  
6. Germany: 43m bottles               -14.3% (50 m bottles in 2019)  
7. Mexico: 42m bottles               -17.9% (51 m bottles in 2019)  
8. Latvia: 39m bottles               +11.9% (35 m bottles in 2019)  
9. Poland: 37m bottles               +14.6% (33 m bottles in 2019)  
10. Spain: 36m bottles               -26.1% (57 m bottles in 2019)  

Regional data

In 2020, Scotch Whisky exports by global region (defined by value) were:

European Union:                         £1,256bn            -15.1%               (33% of global exports)

Asia and Oceania:                       £998m                -19.4%               (26% of global exports)

North America:                           £904m                -29.6%               (24% of global exports)

LatAm and Caribbean:                 £260m                -31%               (7% of global exports)

Africa:                                          £137m                -22.0%               (3.6% of global exports)

MENA:                                        £121m                -49.4%               (3% of global exports)

Western Europe (non-EU):                     £93m                   +11.5%               (2% of global exports)

Eastern Europe (non-EU):                        £35m                   -4.8%               (1% of global exports)

For further information please contact the SWA Press Office on pressoffice@swa.org.uk