UK: Distillers confident despite Scotch whisky exports fall
Export volumes of Scotch whisky are predicted to have fallen by almost 2% in 2008, according to preliminary figures, but distillers at this week's World Whiskies Conference remained optimistic about investment in the sector.
Scotch exports slipped by around 1.75% to 82m nine-litre cases last year, according to preliminary figures compiled by drinks industry research body IWSR and seen by just-drinks yesterday (21 April).
The fall reflects a 10% drop in exports to Spain, traditionally an important market for Scotch, as well as falls of 3% in France and 1.5% in the US. Exports to Russia and India, meanwhile, rose by 34% and 21% respectively, IWSR has predicted.
The figures will add to fears that Scotch whisky is beginning to feel the ripples of the global economic downturn.
"I'm concerned about Spain," said whisky writer and Scotch expert Dave Broom, speaking at a forum hosted by just-drinks at yesterday's World Whiskies Conference in London.
"A precipitous fall for a such a prestigious market for Scotch whisky is of considerable concern," he said, adding that anecdotal evidence suggests there has also been a "dramatic slowdown" in growth in Russia in early 2009.
Many delegates at the forum said they believe that Scotch distillers could use the global economic slowdown to rethink strategy and emerge stronger.
Nick Morgan, marketing director for Classic Malts at Diageo, said: "To think that the sky is falling in on the Scotch whisky industry would be absolutely crazy. It's a long-term business. We've been here before and we know how to handle it."
Morgan said that Diageo still intends its new distillery at Roseisle on Speyside to become fully operational this year, in anticipation of rising demand for Scotch in coming years. In 2007, Diageo announced that it would invest GBP100m in its Scotch facilities.
Some distillers believe that the Scotch industry is in danger of neglecting mature markets, such as those in Western Europe, by concentrating too much on Asia.
Several delegates said that they believe more can be done to reinvigorate the market for blended Scotch whisky in the UK, France and Spain. Scotch sales in the UK fell by 1.9% last year, according to IWSR.
Campbell Evans, of the Scotch Whisky Association (SWA), which has yet to release its own export figures for 2008, sought to calm fears of a significant decline in Scotch sales.
At another conference session earlier the same day, however, he agreed with calls to increase marketing efforts: "We've got GBP500 to GBP600m of investment coming on-line in three, five, ten or 15 years. That whisky's got to find a home."
David King, of UK wine and spirits merchant Berry Bros & Rudd, said that the industry should focus more on brand building: "I don't think that people really drink categories, I think they drink brands. People who invest in their brands are going to do very well."
The preliminary figures from IWSR were taken from the forthcoming just-drinks report, The global market for Blended Scotch 2009. For more details on this report or to pre-order a copy email firstname.lastname@example.org.
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