Strategies for growth

Scotland’s multibillion-pound tipple

Scotch whisky is more than just ‘a fine dram’. It adds enormous value to the UK economy, employing tens of thousands of people.

By Dan Matthews

Scotland’s exports are powered by its food and beverage industry, particularly its world-renowned whisky. Excluding oil and gas, food and drink is its biggest export sector by far and whisky accounts for 80% of its total value.

Data from HM Revenue and Customs shows that more than £1 billion-worth of single malt was shipped abroad in 2016, the equivalent of 113 million standard bottles. Scotch is the largest net contributor to the UK’s balance of trade in goods.

It is an international success story and demand is increasing in major markets such as China and Brazil. In all, around 93% of the whisky produced by Scottish distilleries is exported. According to official data, the US is the biggest overseas customer by value, while France is number one by volume.

‘The Scotch whisky industry is a global brand and its distribution networks reach into markets worldwide,’ says Robert Hannah, COO at Grant Thornton, who has worked extensively in the industry. ‘Its networks are so well established that it should be the blueprint for other food and beverage businesses aiming for success outside the UK.’

Of course, Scotland doesn’t have a monopoly on whisky production – it is also a major industry in the US, Japan and Ireland, for example, while English whisky is showing signs of life with a smattering of notable distilleries such as Hicks & Healey, Adnams and the London Distillery Company, among others.

But Scotch has cornered the market. It is a byword for heritage, quality and flavour. According to Hannah, this is not a happy coincidence but the accumulation of many years of brand development.

‘Production costs are similar for all whiskies across the market, but what separates Scotch whisky is its quality and aspirational brand,’ he explains.

‘The industry has achieved premium status over the past 30 years. It has taken a product – brand names that were universally known – and achieved a “premiumisation” of those brands in a way that we haven’t seen in many other sectors.

‘The quality of the product has always been there, but the brand image has been developed in recent decades. It has taken the industry to new heights.’

The prestige of Scotch is reflected in the development of whisky tourism. According to the Scotch Whisky Association (SWA), 1.7 million people visited distilleries last year, up nearly 8% on 2015. SWA Chief Executive Karen Betts says Brexit, coupled with the depreciation of the pound, has given the industry ‘a short-term boost’.

Distilleries are also reporting large groups of visitors from Germany, the US, France, Sweden and Norway – proving that whisky is an increasingly important cultural export for Scotland, as well as a flavoursome one. 

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