India leads UK's Scotch whisky exports boom

Britain's Scotch whisky exports increased in the first half of 2018 to GBP 1.97 billion, a 10.8 per cent rise in the value of exports against the same period last year, with a surge in demand from India leading the upward trend.

According to an analysis of Her Majesty's Revenue and Customs (HMRC) data published by the Scotch Whisky Association (SWA) this week, exports to India increased by 44.4 per cent to over GBP 56 million followed by China, which was up by 34.8 per cent to GBP 36.3 million. 

The customs figures also show the volume of exports of the exclusive drink from Scotland increased by 5.6 per cent to almost 558 million bottles.

The SWA welcomed the "double-digit" growth rates but also urged for tax relief and support for the industry post-Brexit.

"Scotch whisky is a luxury spirit, crafted with care in Scotland, and enjoyed all over the world in established markets like the EU [European Union] and emerging markets like India and China," said SWA chief executive Karen Betts.

"As the UK leaves the EU, the industry wants to continue to trade with the EU as easily as it has while being able to pursue growth opportunities globally. But in order to flourish overseas, the industry needs support at home. Competitive tax rates are crucial, enabling producers to start up, scale up and invest for growth, such that they continue to be the dynamic job creators, employers, tax generators and exporters that they are," she said.

The SWA highlighted that at present GBP 3 in every GBP 4 spent on Scotch in the UK is collected in tax by the UK's Treasury department in tax. The association warned that the industry needs support at home if Scotch whisky is to sustain growth in the long term. 

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With the UK budget under two weeks away, the SWA is calling for a duty freeze on Scotch whisky.

"The industry believes this tax burden is too high and is more likely to stifle growth than nurture it. That is why we are calling on the Chancellor to freeze duty on Scotch whisky in the autumn budget," Betts said.

According to the analysis, single malts continue to grow in popularity, with exports up 14.4 per cent to GBP 550 million in the first six months of the year. Single malts now make up 28 per cent of the value of all Scotch shipped overseas. Exports of blended Scotch whisky grew too, rising 8.9 per cent to an export valuation of GBP 1.26 billion.

The US remains the largest export market by value at over GBP 400 million, with France largest by volume at almost 90 million bottles. 

The EU remains the biggest regional destination for Scotch, accounting for 39 per cent of the volume of Scotch whisky exports and 31 per cent of their value.

The SWA said this underscores the importance to the Scotch industry of the UK achieving a smooth exit from the EU and the real downsides of a "no deal" Brexit, which, it claims, could have an impact on growth in this developed regional market.