Scotch Whisky Exports remain strong despite H1 drop

“There are three kinds of Lies: Lies, Damned Lies and Statistics” is a quote attributed to Mark Twain, who himself attributed it to Benjamin Disreali – yet there is no record of the former British Prime Minister ever having uttered these words. The origin of the quote itself is just as murky as the use and interpretation of many statistics today.

On 12 September 2024 the Scotch Whisky Association (SWA) released figures which confirm that global exports of Scotch Whisky have fallen in the first half of 2024 by 18% compared to the same period in 2023. Whilst some commentators have sought to raise concerns, the SWA remains confident in both the resilience of the industry and its long-term growth opportunities. The SWA suggests that Scotch Whisky is simply experiencing the internation headwinds suffered by other premium global exports during this period. Perhaps a little perspective is required to place these figures into proper context.

 

Scotch Whisky Growth

How one chooses to reflect on the current trade figures can often depend on the chosen comparator and how far back one is willing to look. For example consider the following:

• 2024 – 18% reduction on 2023 (for H1). 2023 (full year) also saw a 19% reduction from the export value in 2022.
• 2022 – considered by most to be the high watermark of scotch whisky export with a value of GBP6.2 billion. The main contributory factor is considered to be the effect of re-stocking post pandemic.
• 2019 (last full year pre-pandemic) – export value of GBP4.9 billion, which figures may be commensurate (or thereabouts) to 2024. The figures in 2019 were themselves (i) a 56% increase over 10 years from 2009; and (ii) a 116% increase over 15 years from 2004.

In the 15 years leading up to the pandemic, scotch whisky exports had seen steady and sustainable year-on-year growth . There has been a characteristic “dip and spike” from 2020 to 2022 as global trade swayed from almost complete cessation, a continued period of lockdown to re-stocking in 2022. 2023 and 2024 appear to have seen a readjustment from high point of 2022, that having been said the H1 figures for 2024 appear to be on a par with pre-pandemic levels . According to the SWA, H1 2024 still represents the 4th highest export totals since records began.

There seems to be good grounds for sharing the SWA's confidence in the resilience of the industry as it emerges from the effects of Covid on global trade and tackles the further headwinds evident in 2024 and beyond.

 

International Trade, Headwinds in 2024 and beyond.

One of the most (over) used phrases during the pandemic was the “new normal” which we were all having to adjust to, sadly there is nothing either “new” or “normal” about the seemingly everchanging global challenges which have arisen and continue into the latter half of 2024.

There is almost universal agreement (from investment banks to the UN) that the current global trade conditions are “challenging” and include (by way of example) geopolitical conflicts; political change, with almost half the global population going to the polls in 2024. These political shifts can see investment uncertainty. Other key factors impacting global trade include: supply costs; cost of living pressures; industrial and monetary policies and protectionism – to name but a few.

Against this backdrop almost 90% of all scotch whisky is exported to around 168 countries. By volume the single largest market is India (showing growth in H1 2024 of 17.3%), and by value the largest export market remains the USA. Exports of scotch whisky to both the USA and India have, in recent years, been impacted by trade tariffs – whilst an accommodation has now been reached with the US, it is hoped that a long-awaited UK-India trade agreement would serve to further boost this significant market.

The scotch whisky industry has strong and highly developed export markets across the globe, these international markets will continue to provide the future revenues to be received for the vast majority of the whisky being distilled and matured in Scotland.

 

The Future - Strength of the Industry

Just as one set of trade figures can be misleading, similarly putting too much focus on one set of company results can be, likewise, problematic.

That having been said, on 27 September 2024, the distiller William Grant & Sons Limited reported (for the year to 31 December 2023) a turnover of GBP1,96 million, with a profit after tax of GBP444 million – these figures being an increase of 11.9% and 34% respectively on the figures to 31 December 2022. The company highlighted that these figures were achieved “despite the volatile macro-environment” described above. The company highlighted that long-term thinking is a core value of the business and continues with investment in their people and brands.

Scotch whisky is, by its very nature, an industry which is suited to long-term planning. It is reassuring to see major distillers and brand owners, such as William Grant & Sons, adopting such long-term strategies and putting them at the core of their values and their business.

The story of the growth of scotch whisky exports over the past 20 years is one of steady and reliable growth. The underlying strength of the industry has enabled it to recover to pre-pandemic levels and with a strong focus on long-term future planning there are reasons for confidence for that steady and reliable growth to continue.