Scotch whisky ‘more productive than energy sector’ as contribution to UK economy rises to £5.5bn

Whisky distilleries in Scotland are injecting more money into the UK’s economy than the energy sector, according to a new report.

(Photo: George Clerk/iStock)

The report, which was commissioned by the Scotch Whisky Association (SWA and carried out by the Centre for Economic and Business Research (CEBR) found that whisky generates two-thirds of all spirits Gross Value Added (GVA) in the UK.

It estimated that each employee in the industry generates around £210,505 of activity, compared with a contribution of around £173,511 per head for energy workers, life sciences at £93,735 per head, and creative industries at £60,712 per head.

Distilleries have 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.

Karen Betts, the SWA’s chief executive, said the research sheds light on the “high rate of domestic tax” whisky producers pay, adding that the organisation will continue to lobby for “fairer treatment for Scotch whisky”.

“Despite the challenges of Brexit, this investment continues to flow, with further projects planned and more distilleries set to open – a sign that the Scotch whisky industry remains confident about the future,” she said.

“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 for Scotch Whisky in our domestic market, which reflects the vital economic contribution the industry makes to the UK economy every day.”

The research shows that  GVA increased by 10% to £5.5bn between 2016 and 2018, as a result of distilleries growing their exports while more new brands enter the market.

In 2018, the export value of Scotch Whisky grew 7.8% by value to a record £4.70bn, with the previous record high £4.37bn in 2017, according to figures from HMRC.

The three largest export destinations for Scotch Whisky in 2018 were the United States with a value of £1.04 billion, France with exports totalling £442.1 million and Singapore, which imported around £319.9 million worth of whisky last year, up by more than £29 million from 2017. Singapore is one of the industry’s fastest-growing markets.

A number of drinks giants have capitalised on the surge in popularity of dark spirits. Global drinks giant Diageo recently launched its own Game of Thrones-inspired whisky label in partnership with HBO. Most recently, the producer launched an interactive pop-up dedicated to its Game of Thrones whisky label at Singapore Changi Airport.

The pop-up, which includes a mock Iron Throne at the airport in Singapore, one of the Scotch industry’s key export markets, comes as the SWAs report reveals the full scale of whisky’s contribution to the UK economy, from the still house to exports.

Exchequer Secretary to the Treasury Robert Jenrick MP said the government will duty on spirits again this year.

“Our record of reductions and freezes to alcohol duties have provided more than £4 billion of support to the drinks sector here in the UK.”

Around 42,000 people in the UK work in the Scotch industry, including 10,500 people directly in Scotland.

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