Value of single malt Scottish Whisky rises due to ‘premiumisation’ and calls for tax cuts

Scottish single malt whisky exports have boosted following a rising demand for premium alcohol products.

This trend known as “premiumisation” has been seen across the beverages industry, especially in the sales of liqueurs and spirits. According to a 2014 GlobalData survey, 17 per cent of consumers across the globe said that they had bought whisky at the premium end of the price range.

The rise in demand for premium whisky coincides with a fall in general sales. Premium single malt Scotch whisky accounted for only nine per cent of volume, and 24 per cent of all Scotch whisky sales were shipped overseas.

According to figures from Her Majesty’s Revenue and Customs, the USA, China, Latvia and Japan saw particularly strong growth.

South Korea and Brazil were previously strong markets with affluent consumers looking towards premium brands. However, both have seen a downturn of 26 and 20 per cent respectively.

Karen Betts, chief executive officer of the Scottish Whisky Association (SWA) said to the BBC: “It is good to see demand for Scotch increasing in a diverse range of mature and emerging markets around the world.

“But the figures mask more concerning underlying trends. The value of exports is up but the volume is down.”

The SWA is cautious over the exports of whisky due to prospects of Britain leaving the European Union. In the “Brexit briefing” published on their website, the SWA stressed the need for “a fairer approach to alcohol taxation unconstrained by the EU excise structures directive.”

The Association have been campaigning for a reduction of the “supertax” on Scotch whisky that was increased during the Spring Budget. Currently, a unit of Scotch is taxed 51 per cent higher than the same unit in beer.

Scottish Conservative MPs have now joined calls for Chancellor of the Exchequer Phillip Hammond to cut the tax in next month’s budget.

Speaking in a Westminster Hall debate, Douglas Ross, MP for Moray, said: “The Treasury should actually be looking at the benefits of reducing the taxation, because actually the Scotch Whisky Association, with the independent back-up of KPMG, have actually shown that by reducing the duty on Scotch whisky, you increase the revenues going to the Treasury.”

Kirstene Hair, MP for Angus, said “Other EU countries do support their home industries, and I think we too, even more so now, need to follow suit.”

The SWA have published figures which estimate the Scotch industry earns approximately £5 billion for the UK economy and supports more than 40,000 jobs, 7,000 of which are in the rural economy.

 

Image: ScottSimPhotography via flickr

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