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%.”
In a major legal breakthrough, Scotch Whisky has been registered as a certification trade mark in Taiwan, giving consumers and the industry better protection against fakes.
Taiwan is the fourth biggest market for Scotch by value with exports worth £75 million in the first six months of the year. Consumers are knowledgeable about Scotch and willing to try out new brands. It is the third biggest overseas market for Single Malt with exports worth £41m in the first half 2016.
The Scotch Whisky Association (SWA), which applied for the trade mark, says the existence of the UK Customs’ Spirit Drinks Verification Scheme, which was introduced in 2014, was an important factor in meeting the requirements necessary to secure protection. The scheme ensures every part of the Scotch Whisky supply chain is mapped by the industry, registered with the UK Government and inspected to check it complies with all the rules on the production of Scotch. The SWA said the scheme gave the authorities in Taiwan even greater confidence in the robust procedures around Scotch.
The trade mark recognises that Scotch must be made in Scotland from water, cereals and yeast and matured for at least three years. It is of great commercial value to the Scotch Whisky industry and gives consumers confidence in the quality and provenance of what they are buying. A second trade mark has been awarded in Taiwan to protect the Chinese characters that spell out ‘Scotch Whisky’.
The SWA says that while it already works well with the authorities in Taiwan, which is an ordered and well-regulated market, the trade marks make it more straightforward to take legal action against anyone trying to produce or sell fake Scotch in the future.
Lindesay Low, Scotch Whisky Association senior legal counsel, said: “Taiwan has for many years been a major market for Scotch Whisky, in particular Single Malts. The trade marks for Scotch Whisky mean that consumers can have even greater confidence in the quality of what they are buying. It will also give a further boost to Scotch Whisky producers exporting to Taiwan.
“We would like to thank the authorities in Taiwan who were of great assistance in working with us on the successful outcome of our trade mark application, as were the UK Government.”
27 September 2016
Scotch Whisky in Chinese characters: 蘇格蘭威士忌
With media queries please contact Rosemary Gallagher, Scotch Whisky Association head of communications, 0131 131 222 9230 or 07432 605385, email firstname.lastname@example.org or David Williamson, SWA public affairs and communications director, 0131 222 9226 or 07432 605385
Scotch Whisky is an iconic product recognised around the globe and new research published today (28 January) reveals its vast contribution to economic growth in Scotland and across the UK.
‘The Economic Impact of Scotch Whisky Production in the UK’ report, commissioned by the Scotch Whisky Association (SWA) from 4-consulting, shows the industry contributes nearly £5 billion overall to the UK economy. For every £1 million of value added, the industry generates another £520,000 across the UK, for example in spending on suppliers in a range of sectors, from packaging to haulage.
In terms of the value it adds to the UK economy, Scotch Whisky is bigger than a number of industries, such as iron and steel, textiles, shipbuilding and computing. It is also larger than other UK food and drink sectors, including meat, dairy, beer and soft drinks. In Scotland, it makes up almost three quarters of the food and drink sector and is three times the size of Scotland’s digital or life sciences industries.
Key findings of the report include:
•Overall economic contribution of Scotch Whisky industry to UK is almost £5bn (£4.956bn).
•Direct economic impact of industry, ignoring its wider economic benefits, is £3.3bn, up 21% since 2008.
•Each year, Scotch Whisky producers spend £1.8bn on suppliers. 90% of that expenditure is in the UK, including £1.4bn in Scotland. Dry goods, including bottles and packaging, cereals, energy and transport and distribution make up the majority of purchases.
•Capital expenditure makes up £140m of the total industry spend. Some 70% of that is outside Scotland in other parts of the UK and overseas. The specialist nature of capital equipment, such as machinery, vehicles and software, means it often has to be sourced from further afield, spreading the impact of the Scotch Whisky industry across a wide geographical area.
•The industry supports 40,300 jobs in the UK – up from around 35,000 in 2008 – in a range of sectors including glass manufacturing and labelling. This total includes 10,900 people directly employed by the industry in Scotland, up 6%.
•Every job in Scotch Whisky supports a further 2.7 British jobs.
•Scotch Whisky workers are among the most productive in Scotland – they are around four times as efficient in production as employees in aerospace, life sciences and the digital sectors.
As well as supporting employment in towns and cities, for example in large bottling halls, Scotch Whisky is the lifeblood of many rural communities where it sustains 7,400 jobs, contributes around £900m in gross value added (GVA) and generates around £250m of income.
Despite a slowdown in exports, the Scotch Whisky industry is expanding at unprecedented levels with around 30 new distilleries being planned or built across Scotland. Capital investment reached £142m in 2013, up 31% since 2008.
Finally, Scotch exports are vital to the UK’s balance of trade. They are worth around £4bn a year and without them the UK’s trade deficit would have been 16% larger in 2013.
David Frost, Scotch Whisky Association chief executive, said: “This new report shows just how significant the Scotch Whisky industry is to the wider UK economy, adding £5bn of value, supporting over 40,000 jobs, and contributing £4bn to Britain’s trade performance.
Scotch Whisky must be recognised as a cultural asset that boosts growth and jobs, supports communities and combines the best of the traditional and the modern.
“Given the scale and impact of the Scotch Whisky industry we believe the government should show its support. One way of doing so, in the short term, would be for the Chancellor to cut excise duty by 2% in the March Budget. It is unfair on the industry and consumers, and detrimental to the economy, that almost 80% of the average price of a bottle of Scotch is taxation.”
With media enquiries, please contact: Rosemary Gallagher, SWA communications manager, 0131 222 9230 or 07432 605 385 or email@example.com or David Williamson, SWA government and communications director, 0131 222 9226 or 07730 496151 or firstname.lastname@example.org
A full copy of the report is available here /media/70534/economic_impact_20pp_web_v2.pdf
See a short film on the report here http://vimeo.com/117789170
Gross Value Added (GVA) measures the contribution to the economy of each individual producer, industry or sector in the United Kingdom.
Gross Domestic Product (GDP) is a key indicator of the state of the whole economy. In the UK, three theoretical approaches are used to estimate GDP: ‘production’, ‘income’ and ‘expenditure’.
Scotch Whisky’s £5bn (£4.956bn) GVA includes direct, indirect and induced impacts. Its direct GVA is £3.3bn (£3.261bn).
To find out more about the ‘Drop the Duty!’ campaign to have excise cut by 2% visit www.droptheduty.co.uk and follow it on Twitter @droptheduty
Article provided by The Scotch Whisky Association (SWA) – http://www.scotch-whisky.org.uk/
28th January 2015
SWA’s Annual Review, May 2014
The people of Scotland face a historic choice in September’s independence referendum. The implications are huge and the basis for the eventual decision needs to be fully discussed. So I make no apology for dealing with it at length.
This industry is in a special position in this debate. We can make Scotch Whisky only in Scotland and our brands are indissolubly linked with it. 35,000 jobs depend on the industry. Our operations are at the heart of many communities around Scotland and we sustain economic activity in rural and remote areas that might otherwise have difficulty in attracting it.
That success is not the result of chance. It has come about because of a wide range of factors which have been well provided for us within the United Kingdom and would need to be similarly provided in the future if it were to be within an independent Scotland.
At the UK level, we are fortunate to have – on the whole – certainty in our domestic business environment. Monetary and fiscal policy is predictably managed. We benefit from the fact that our domestic market is the sixth biggest economy in the world, large enough to support broad and balanced growth and provide a pool of relevant skills. In contrast, as of now, the nature of an independent Scotland’s currency remains unclear, and self-evidently this could affect our exports, management of supply chains, pricing, and competitiveness. The taxation regime also remains to be developed, and any regulatory divergence between Scotland and the rest of the UK may increase costs to business. In all these areas, we need further information and reassurance before we can assess whether we can mitigate these potential risks.
At the EU level, the legal framework provided by EU membership is fundamental. The ‘Scotch Whisky’ geographical indication is protected in EU law. We are able to export tariff-free across the single market, use EU mechanisms to eliminate market access problems, and benefit from the EU’s clout in trade negotiations. Of course, not everything in the EU is perfect and, in my view, many areas need reform. But even a temporary interruption of EU membership involving exclusion from the single market or the customs union, if this were a consequence of independence, would be damaging and difficult to manage.
Internationally, as an export-oriented sector, we rely on effective support from government in our overseas markets, whether in influencing EU negotiations or pressing other governments to allow fairer market access. Both the UK and Scottish Governments have been supportive of us and there will be risks if this support is not maintained. The Scottish Government White Paper envisages a network of 70 to 90 overseas missions, but we export to around 200 markets. A diplomatic network with the necessary geographic footprint, expertise, and influence to provide commercial and political support globally will continue to be essential.
In short, as we consider the potential impact of constitutional change, we look for reassurance on how an independent Scotland could deliver a business, regulatory, and export environment at least as supportive as that which the industry currently enjoys.
Whatever the result on 18 September, we are committed to working with government in the future to deliver sustainable economic growth – either helping to shape the policy regime for an independent Scotland or engaging in the debate about further devolution. That is what the people of Scotland would expect and it is what I am determined to deliver.”
David Frost, SWA Chief Executive
11 Sep 2014
An exhibition exploring the rich heritage of Scotland’s national drink will be on display in the main hall of Glasgow’s Mitchell Library from the end of May.
The Scotch Whisky: From Grain to Glass exhibition was created to mark the Centenary of the Scotch Whisky Association (SWA), the industry trade body, in 2012.
The exhibition’s only previous outing was its display at The Scottish Parliament in Edinburgh for two months at the end of last year. When it comes to Glasgow, new exhibits will be added to be seen by the public for the first time.
The exhibition brings together an array of images and artefacts from several Scotch Whisky producers and enthusiasts. Many items on display have been stored in archives and personal collections until their inclusion in this exhibition. The display also tracks landmark events in the last 100 years which have shaped the SWA and the industry.
Scotch Whisky’s rich past is showcased, highlighting its position as an iconic Scottish product and demonstrating how vital Scotch Whisky is to the country’s economy and society. Scotch Whisky exports are worth around £4.3 billion a year and the industry directly employs more than 10,000 across Scotland, many in and around Glasgow.
Visitors will learn everything from how Scotch Whisky is made to how it is marketed and exported. The exhibition explains, through images and words, how the “What is Whisky?” debate of the early 20th century led to a Royal Commission report which helped establish the modern day Scotch Whisky industry.
Visitors will also find out why a full size model of a white horse and a papier mâché giraffe are on display at a Scotch Whisky exhibition.
Gavin Hewitt, chief executive of the Scotch Whisky Association, said: “We are delighted to bring the exhibition of images and artefacts from across the Scotch Whisky industry to Glasgow for the first time. The spectacular main hall of the Mitchell Library, an historic building which has been part of life for Glaswegians for over a century, is a perfect setting for this display.
“For more than 100 years we have been committed to promoting and protecting Scotch Whisky. We hope as many people as possible will visit the Scotch Whisky: From Grain to Glass exhibition to find out more about the heritage of Scotland’s national drink.
“Visitors will find out exactly how Scotch Whisky is made and how marketing has changed through the decades. Everyone, from Scotch Whisky aficionados to novices will learn something new from the exhibition.”
Councillor Archie Graham, Chair of Glasgow Life, said: “Whisky is an essential part of our shared heritage so we are very much looking forward to welcoming the definitive story of our national drink and one of our most recognised international exports to the Mitchell Library.
“The exhibition will also feature items from Glasgow’s own collection alongside images and objects brought together by the Scotch Whisky Association for what is a unique insight into this global industry.”
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