Tag Archives: Industry

Scotch Whisky makes strong Economic Impact

With the Brexit debate dominating British politics, the fate of Scotch, the money spinner for Scotland will be closely watched.

The Scotch Whisky industry is strategically important to the economies of Scotland and the United Kingdom. This report – building on work by the Centre for Economics and Business Research (CEBR) – explores Scotch Whisky’s direct contribution to GVA, international trade, employment, supply chain and revenue through excise duty. The contribution of the Scotch Whisky industry to the UK economy has grown by 10% since 2016 to £5.5bn.

A new report by the Scotch Whisky Association, building on research carried out by the Centre for Economic and Business Research (CEBR), also reveals Scotland’s national drink generates two-thirds of all spirits Gross Value Added (GVA) in the UK. The industry has been buoyed in recent years by record exports, reaching £4.7bn in 2018, and several new distilleries beginning production and opening their doors to tourists.

This success comes despite the industry continuing to pay the fourth highest duty rates in the EU, and one of the highest of spirit producing nations globally. Recent freezes to UK duty have helped the industry to reinforce its vital importance to the UK economy. Karen Betts, Chief Executive of the SWA, said:“This research shows the huge contribution that our industry plays to both the Scottish and UK economies.

“Significantly, the research shows that our industry’s GVA increased by 10% to £5.5bn between 2016 and 2018, as a result of Scotch Whisky companies’ continued export success and the industry’s consistent investment – over £500 million in the last 5 years – in production, distribution, marketing and tourism.

“Despite the challenges of Brexit, this is investment that continues to flow, with more projects planned and more distilleries set to open – a sign that the Scotch Whisky industry remains confident about the future. This is great news for our many employees, our investors, supply chain and, of course, for our consumers all over the world, who love Scotch. “This report also highlights the high rate of domestic tax that Scotch Whisky faces in the UK. In the US, Scotch and other whiskies are taxed at just 27% of the rate that HM Treasury taxes us here at home. We will continue to press the Chancellor for fairer treatment of Scotch Whisky in our domestic market, which reflects the vital economic contribution the thousands of people who work in whisky make to the UK economy every day.”

Scotch Whisky provides £3.8bn in direct in GVA to Scotland – helped by regulations in place that requires all Scotch Whisky to be distilled and matured for at least three years in Scotland. This means Scotch Whisky contributes more than double than life sciences (£1.5bn) to the Scottish economy, supporting more than 42,000 jobs across the UK, including 10,500 people directly in Scotland, and 7,000 in rural communities.

The sector was found to perform a crucial role in driving productivity across Scotland. The manufacturer of beverages in Scotland – dominated by Scotch – produces £210,505 GVA per employee. Comparatively, the industry is more productive than the energy sector (including renewables) at £173,511 per head, life sciences at £93,735 per head, and creative industries at £60,712 per head.

Exchequer Secretary to the Treasury Robert Jenrick MP said: “I’m delighted to see how this important sector is thriving. “We are supporting the Scotch whisky success story by freezing duty on spirits again this year. “Our record of reductions and freezes to alcohol duties have provided more than £4bn of support to the drinks sector here in the UK.” Rural Economy Secretary Fergus Ewing MSP said: “I welcome the contribution that the Scotch Whisky industry makes to the Scottish Economy. “The industry’s performance is testament to the hard work of those who work in this important sector, making Scotch Whisky one of Scotland’s greatest global exports.”

France’s buoyant US Spirits Business Tops 200 Million Bottles

France has been known for its luxury spirits brands and the US is one of the biggest markets in the world for premium spirits. Naturally French exports are directed to this market.

French spirits exports to the US have doubled in ten years and now account for more than 200 million bottles a year, says Christophe Macra MW, spirits expert and one of France’s Masters of Wine.

He said that interest in spirits was growing worldwide due to better distillation quality, innovation and new spirit-producing regions entering the market. Spirits consumption would continue to grow in both economically prosperous and developing regions.

At a spirits Master Class and review of market trends at Vinexpo 2019, Macra traced four trends in spirits development. He also predicted which five spirits categories would dominate global spirits in five years time. M Macra illustrated his review of international trends with a tasting of Calvados Armagnac, Gin and a Gentian aperitif and cocktail ingredient from France, Vodka from Ireland, Mezcal from Mexico, Whiskies from Sweden and Taiwan. The diversity of spirits and their origins showed that “The world wants spirits and people want to drink them”. A growing spirits distribution sector worldwide – especially in France where there were now between 20 and 30 national distributors compared with three or so 29 years ago – was further evidence of trade and consumer demand. Trends pushing spirits expansion are: revivals of traditional spirits such as Calvados and Armagnac where there was growing interest in Asia; rediscovery of locally-produced spirits, eg Irish Whisky, Gin and Vodka; global interest in little-known spirits such as Mezcal; new exotic spirits such as agricultural rum from Tahiti, “where no spirits at all were made 10 years ago”.

Similarly, in Sweden 12 whisky distillers operate using locally grown malt and wood casks. Taiwanese whisky was now a huge market characterised by accelerated maturation in a warm climate and excellent cask selection. M. Macra was asked to forecast the five spirits likely to dominate world growth in the next three to five years. He nominated: World Whisky – “still very strong and growing”; Rum – “mostly spirit made from molasses, but a growing contribution from rhum agricole; Brandy – “high quality brandies of all kinds”; Tequila and Mezcal – “growing interest worldwide” and Local craft spirits – “small distillers of high quality –hence the trend to ‘drink local’”

Worldwide Alcohol Consumption Declines -1.6%

IWSR 2018 Global Beverage Alcohol Data Shows Growth in Spirits, but Beer and Wine Volume is Down; Market Expected to Grow by 3% Over Next 5 Years

Beverage alcohol drinkers across the globe consumed a total of 27.6bn nine-litre cases of alcohol in 2018, but while that number represents a decrease of -1.6% from the year prior, new data from the IWSR forecasts that total alcohol consumption will steadily increase over the next five years, to 28.5bn cases in 2023.

In terms of retail value, the global market for beverage alcohol in 2018 was just over $1tn, a number which the IWSR expects to grow 7% by 2023 as consumers continue to trade up to higher-quality products.

These figures – and more than 1.5m other points of data – are included in the just-released IWSR Drinks Market Analysis Global Database, which also shows:

Gin was the Leading Global Growth Category in 2018, and Forecasted to Reach 88m Cases by 2023

The largest gain in global beverage alcohol consumption in 2018 was in the gin category, which posted total growth of 8.3% versus 2017. Pink gin was a key growth driver, helping the category sell more than 72m nine-litre cases globally last year. In the UK alone, gin was up 32.5% in 2018, and the Philippines (the world’s largest gin market) posted growth of 8%, fueled by a booming cocktail scene and premiumisation of the market. By 2023, the gin category is expected to reach 88.4m cases globally, with particular strong growth in key markets such as the UK, Philippines, South Africa, Brazil, Uganda, Germany, Australia, Italy, Canada and France. Notably, Brazil has emerged as a new hotspot for the category, with volumes there more than doubling last year and forecasted to grow at 27.5% CAGR 2018-2023, as the gin-and-tonic trend has increased in upmarket bars of São Paulo and Rio de Janeiro.

Consumption of Whisky and Agave-Based Spirits Continues to Increase

Spurred by innovation in whisky cocktails and highballs, the global whisky category increased by 7% last year, driven in large part by a strong Indian economy (whisky grew by 10.5% in India, as consumers continue to trade up in the category). The US and Japan posted 5% and 8% growth, respectively. The IWSR forecasts whisky to grow by 5.7% CAGR from 2018 to 2023, to almost 581m nine-litre cases. Also, continued interest in tequila and mezcal (especially in the US), and innovation in more premium variants and cocktails, drove the agave-based spirits category to 5.5% global growth in 2018 – and is expected to post 4% growth over the next five years (2018-2023 CAGR).

Mixed Drinks and Cider Grow

The mixed drinks category (which includes premixed cocktails, long drinks, and flavoured alcoholic beverages) grew 5% globally in 2018. By 2023, it is projected that more than 597m nine-litre cases of mixed drinks will be consumed across the world. The growth is backed by continued strong gains in ready-to-drink (RTD) cans in the US and Japan, the category’s two largest markets. In Japan, most RTDs are locally made and almost exclusive to Japan. Their popularity is partly due to the fact that they are relatively dry, which makes them more food-friendly and sessionable. In the US, the popularity of alcohol seltzers has been a tremendous engine for growth in the RTD market. In the cider category, as investment levels in those products continue to rise, almost 270m cases are expected by 2023, a 2.0% CAGR 2018-2023. Both of those categories (mixed drinks and cider) are taking share from beer as perceived accessibility increases (less bitter, easier to drink.)

Vodka, Liqueurs, and Cane Spirits are in Decline

Vodka lost volume in 2018 (-2.6%) as the market for lower-priced brands continued its decline in Russia and the Ukraine (two of the largest markets for this spirit). Higher-priced vodkas, however, showed a more positive trend last year. Nonetheless, the outlook for total vodka over the next five years remains sluggish as the category is forecasted at -1.7% CAGR 2018-2023. Also in decline is the flavoured spirits category (liqueurs), which dropped by -1.5% globally in 2018, and is expected to continue to slip in 2019 before rebounding slightly in 2020. Cane spirits (primarily Brazilian cachaça) was down -1.6% last year, and is forecasted to lose another 4.5m cases by 2023.

Beer Continued to Lose Volume in 2018, but is Expected to Rebound

Global beer declined -2.2% in 2018, impacted greatly from volume decreases in China (-13%). Other large markets such as the US and Brazil also fell (-1.6% and -2.3%, respectively), while Mexico and Germany saw growth (6.6% and 1%, respectively). The future outlook for beer, however, paints a more positive picture, as the category is expected to show a slight increase in 2019 and post a 0.7% CAGR 2018-2023.

Wine Volume Declines, but Value Increases

Wine, which had posted strong global growth in 2017, lost -1.6% in volume in 2018 as wine consumption declined in major markets such as China, Italy, France, Germany and Spain (the US market was flat). However, though consumers are drinking less wine, they’re increasingly drinking better – pushing wine value to increase. Globally, the retail value of wine is projected at $224.5bn by 2023, up from $215.8bn in 2018. The one bright spot in wine volume is the sparkling wine category, which is expected to show a five-year CAGR of 1.17% 2018-2023, driven in large part by prosecco.

Low- and No-Alcohol Products on the Rise

Low- and no-alcohol brands are showing significant growth in key markets as consumers increasingly seek better-for-you products, and explore ways to reduce their alcohol intake. Growth of no-alcohol beer is expected at 8.8%, and low-alcohol beer at 2.8%. No-alcohol still wine is forecasted at 13.5%, and low-alcohol still wine at 5.6%. Growth of no-alcohol mixed drinks is predicted at 8.6%. (Above figures are all CAGR 2018-2023.)

Top Ten Performing Global Markets, 2018-2023

A look at the world’s fastest-growing beverage alcohol markets shows an emergence across a variety of developing countries. A combination of growing legal-drinking-age populations and healthy economies is driving some of this growth, which is expected to continue over the next five years.


“Every year our analysts spend months traveling the world to speak with suppliers, wholesalers, retailers, and other beverage alcohol professionals to assess what is happening market by market in this fast-changing business,” says Mark Meek, the IWSR’s CEO. “The raw data we collect is enormously valuable, but equally important is what that data tells us in terms of trends, challenges, and opportunities facing the industry.”