Comment - Scotching Rumours that the Whisky Boom is on the Wane
There's still plenty to cheer for Scotch producers
Is the fabled Scotch whisky boom subsiding?
New figures released earlier this week have revealed that export volumes of Scotch in 2012 were down by 5% on 2011. Sales by value, meanwhile, were only up slightly, by 1%. The Scotch Whisky Association (SWA), which collated the figures, offered a positive sheen on the numbers, as you would expect.
The drop-off in volumes appears to be due, primarily, to our old friend Europe. France, Scotch's biggest export market by volume, was hit by a 25% drop in volumes, although this was due to a hefty tax rise last year, which meant suppliers stocked up beforehand in 2011. Spain meanwhile, the fourth largest volume market, reported a 20% fall. The southern Europe country's general economic woes as part of the Eurozone crisis appears to be more than partly to blame.
Overall, Scotch's export volumes have been a movable feast in recent years: Up by 19% in 2011; down by 2% in 2010; flat in 2009, down by 5% in 2008. “Volumes do fluctuate, with things like duty increases and legislation,” says the SWA's Rosemary Gallagher.
So, is there cause for concern? Well, for the time being, at least, I'd have to say 'no'.
Sales by value have been consistently rising. In fact, they've been on the up for the last eight years. This clearly reveals the trend for growing premiumisation in the category. Single malt exports, for example, have rocketed by 190% in the last ten years.
The other stark reason that reveals the category's generally rude health is, of course, the investment being made by global producers throughout Scotland. Just today, Diageo announced the latest chapter in its plans as part of a GBP1bn investment programme in Scotch production - including the building of a new GBP50m (US$75.5m) malt whisky distillery.
Its old sparring partner, Pernod Ricard, also announced its own major investment programme last year, through its Chivas Brothers unit, and plans for a new distillery for 2015. Last week, I witnessed first-hand the work being done by the company to resurrect its Glen Keith distillery, due to re-open at the end of this month. Further evidence of investment came in the form of an impressive, revamped exhibiton space for visitors to the Glenlivet distillery.
A major private equity group also appears to be interested in getting its hands on Loch Lomond Distillery, it emerged this week.
For producers, opportunities in emerging Asian and South American markets are still very much front-of-mind. Africa is also offering pockets of excitement, where exports to countries such as Angola and Nigeria are soaring, albeit off a relatively low base.
There's no denying, however, that mature markets are still vital for producers. The US remains the top export market by value, while three of the top five are in Europe. Much as the likes of Brazil, China and India are trumpeted as being the next big markets for Scotch, it will be some time before the balance of power shifts away from the current market leaders. As the SWA's Gallagher told me: "With more markets opening up, we don't know what their tastes will be."
But, for the moment, these latest figures are unlikely to be causing sleepless nights.
The results of a consultation document regarding veryfing the geographical origin and production and aging processes for Scotch whisky will be published in the coming weeks. But, asks, Ian Buxton, is ...
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