Chancellor urged to cut tax at home to boost global success story
Scotch Whisky exports increased in value by 3.4% in the first half of the year to £1.8 billion, boosted by the continuing growth in popularity of Single Malts across the globe, including the USA, the industry’s largest market.
This growth benefits the entire UK economy and its export performance. Scotch remains Britain’s biggest food and drink export, making up almost a fifth of the sector’s overseas shipments.
The analysis of official HMRC figures published by the Scotch Whisky Association (SWA) today shows consumers are continuing to sample more Single Malts with exports up 7% to £479 million in the first six months of the year. Single Malts now make up more than a quarter of the value of all Scotch shipped overseas.
This trend was clear in the USA where total Scotch exports were up 8.6% to £388m and Single Malts jumped 14% to £123m.
Scotch exports to many other mature and emerging markets increased. There was a marked return to growth in China – up 45% to £27m as the country’s economy grows – and exports to Japan expanded 19% to £43m.
The European Union (EU) remains the biggest regional destination for Scotch with the value of exports up 4% to £559m, almost a third of the total.
But the Scotch Whisky industry needs support to sustain growth in the long term, not least as it manages the impact of Brexit. Overall, the volume of whisky shipped overseas was down 2% to 528m bottles, and this was in the context of relatively favourable exchange rates. The lower volume and higher value is partly as result of the shift to Single Malts.
Some markets declined in the face of continuing economic and political headwinds, such as Brazil where the value of Scotch exports fell 20% to £22m.
The SWA argues that a strong home market is required to underpin the industry’s global success and that Chancellor Philip Hammond could help next month by cutting tax on an average bottle of Scotch from an onerous 80%. Recent figures show that the UK market has shrunk as excise duty has increased, with a near 4% hike in the March Budget seeing Scotch sales fall by 1m bottles in the first half of 2017. A fairer domestic excise regime would help boost a world-famous industry which supports 40,000 jobs across the UK.
Such support at home would also encourage long-term confidence and underpin continued investment in the industry and supply chain that, in turn, relies on export success.
And one of the SWA’s priorities for Brexit is domestic reform to improve competitiveness, including changes to the current excise duty system.
Karen Betts, Scotch Whisky Association chief executive, said:
“The value of Scotch Whisky exports was up more than 3% in the first half of this year to £1.8 billion, which is great news. More and more consumers around the world are seeking out the fabulous range of Single Malts. 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. With the changes Brexit will bring to the way the industry operates and trades, we need the support of the UK Government at home and overseas if we are to grasp the opportunities and keep this international success story going.
“Overseas demand for our quality product requires investment by the industry in the UK and that needs government support. A strong domestic platform for growth is vital and the Chancellor could take a step in the right direction in next month’s Budget by cutting the tax on an average priced bottle of Scotch from the staggering level of 80%.”
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