Global sales of Scotch whisky have suffered one of their worst falls in recent decades, slumping by 11 percent for the first half of the year and wiping £220 million (US$360.5 million) off overall sales.
The Scotch Whisky Association (SWA) blamed new anti-extravagance drives in China, the stronger pound and an economic slowdown in some markets for the decline in Asia and the Americas, two of the industry’s fastest-growing regions.
The association said exports of blended and malt whisky fell from £2 billion in the first six months of last year to £1.77 billion for the same period this year — the largest half-yearly decline in 15 years.
The figures present a significant headache for the SWA’s recently appointed chief executive, David Frost, who said the drop proved that the UK government had to continue bringing down trade barriers and restrictions.
The association is expected to ramp up pressure for a 2 percent cut in excise duty.
Frost also said it would start consulting its members, dominated by global drinks giants such as Diageo, Pernod Ricard and Suntory, over the tax and regulatory reforms that could follow greater devolution for Scotland.
“The latest figures also act as a reminder that the success of Scotch whisky can’t be taken for granted. We need support from government to beat down trade barriers and help us access new markets overseas,” Frost said. “That is why we are determined to play a full part in the forthcoming debate about further devolution, so that it enables a supportive business environment to ensure the future success of Scotch whisky.”
The association said it would study the UK and Scottish government proposals for greater devolution after last week’s independence referendum, in which voters chose to remain in the UK.
A spokeswoman refused to speculate on the powers that could be handed over to the Scottish parliament.
The ruling Scottish National Party in the devolved government in Edinburgh has previously raised the prospect of devolving excise duty and has recently pushed hard to devolve corporation tax.
The latest figures end a long period of booming sales and export records as whisky sales expanded rapidly in South America, particularly Brazil, and Southeast Asia.
The association said sales in China, where Scotch is regarded among the newly rich as a symbol of significant affluence and status, had fallen 35 percent, down from £25 million to £15 million. While that puts China only 28th in the global rankings for whisky sales, the Chinese market is also supplied heavily via Singapore, which saw its whisky imports collapse by 46 percent from £174 million to £94 million.
Sales also fell 16 percent in the US to £328 million, 46 percent in Singapore to £94 million, 19 percent in Brazil to £40 million, 27 percent in Mexico to £39 million and by 22 percent in Germany to £65 million, marking a significant reversal in fortunes in those markets.
The SWA said the first half of any year tended to be quieter than the second half, primarily because of market cycles and festivals such as Christmas that fall late in the year.
The association’s spokeswoman confirmed, however, that this was the most significant half-year drop since 1999, when sales fell by 14 percent.
There have been other half-yearly declines, with modest falls in 2012 and 2009, but they were made up for by sales in the second half of those years.
The SWA added that sales increased in some important new and traditional markets: In Taiwan up by 39 percent to £91 million, in Japan by 18 percent to £32.5 million, in the UAE by 26 percent to £54 million — because it acts as a distribution hub to other markets — in India by 31 percent to £36 million and in France by 6 percent to £211 million. France is the industry’s biggest market by volume.
The association highlighted sales growth in the “difficult market” of India, where the UK government and the SWA have been in open conflict over counterfeiting and import barriers. India also has a popular indigenous whisky industry in competition with Scotch.
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