The world’s biggest markets for Scotch: 2021
2021 was never going to be an easy year for drinks exports. But Scotch faced additional challenges.
Not only has it had the impact of the pandemic to contend with, but the crippling affect of US tariffs, which mercifully came to an end after the first quarter of 2021.
While both have impacted exports of Scotch globally, the market for Scotch remained resilient in 2021, with the value of global exports of Scotch growing to £4.51bn (an increase of 19%) during 2021, according to figures released by the Scotch Whisky Association (SWA). The number of 70cl bottles exported also grew by 21% to the equivalent of 1.38bn.
Despite the ongoing difficulty of overcoming the 25% tariff imposed on single malts to the US in the first quarter, exports to the US grew by 8% in the United States. And in the first full year since the UK’s Brexit transition period ended, exports to the European Union grew by 8%.
“The global footprint of the industry in 2021 is a clear sign that the Scotch Whisky industry is on the road to recovery,” said chief executive of the Scotch Whisky Association, Mark Kent. “Value and volume are both up as consumers return to bars and restaurants, people return to travel and tourism, and we all return to a degree of normality after a period of enormous uncertainty for consumers and business.”
While growth was strong in established markets, emerging markets also performed well, particularly in Asia Pacific and Latin American markets, with value increases of 21% and 71% respectively. Key emerging markets for Scotch, such as India, Brazil, and China, also grew strongly.
Last year we saw nearly all markets decline, with only two exceptions, this year all markets posted growth, with only two markets in decline. Though there was a word of warning. While there was positive growth compared to 2020 (with value up by £705m), Scotch exports are yet to return to their pre-pandemic levels. Exports remain 8% lower than 2019 (by some £403m) when exports were valued at a record £4.9bn.
“The industry has continued to invest in its production sites, tourist attractions and workforce to ensure that Scotch Whisky remains at the heart of a dynamic international spirits market and attracts new consumers around the world,” added Kent. “But this this is no time for complacency. The industry continues to face global challenges, including ongoing trade disruption, growing supply chain costs and inflationary pressures, and undoubtedly there is some road to run before exports return to pre-pandemic levels.”
So, which were the biggest markets by value for Scotch in 2021? Where have we seen the biggest declines, and which markets are emerging as big players for the industry in the future?
NB: Data sourced from the Scotch Whisky Association
Value of exports: £118m
Percent change: +7.9% (£109m in 2020)
Spain’s export value increased by 7.9% to £118m, off the back of a 40% drop in 2020. Together with Germany, France and Latvia, Spain is among the European Union’s biggest markets for Scotch. Overall, exports to the EU totalled £1.36bn in 2021, a rise of 8.2%, accounting for 30% of global exports. Spain remains the fourth biggest EU market for Scotch, and made the biggest gains out the top 4 EU markets for Scotch, but it failed to keep pace with other global markets in 2021, dropping from fifth to 10th place compared to 2020.
Value of exports: £133m
Percent change:+16.2% (£114m in 2020)
Scotch exports to Japan increased by 16% in 2021, accounting for £133m worth of Scotch. Japan is the second biggest market for Scotch in the Asia Pacific, which accounts for 27% of global exports (the biggest after the EU), with its combined markets seeing an overall rise of 21.4% last year.
This growth is indicative of a recent free trade deal between Japan and the UK, which took effect on 1 January 2021. The UK–Japan Comprehensive Economic Partnership Agreement (CEPA) was the first deal that the UK struck post-Brexit as an independent trading nation, and saw all tariffs on exports from the UK into Japan removed.
Value of exports: £146m
Percent change: +42.9% (£102m in 2020)
According to the IWSR, the whisky category in India will see volume growth of +23% (2021–26), and 2021 saw it make a return to the top 10 for value after dropping out of the lineup in 2020. The value of exports to India jumped by an impressive 42% (the second biggest jump of any top 10 market) to £146m, which is nevertheless 20m less than its 2019 high of £166m.
India is currently the second largest export market for Scotch whisky by volume (after France), with 136 million bottles of Scotch shipped to the country in 2021. This is despite a longstanding astronomical customs duty currently applied to sales of Scotch in India. Every bottle is subject to a 150% basic customs duty (BCD), slashed from its prior 300%, but this doesn’t go far enough, says the SWA, which is currently making the case for its further reduction, alongside the UK government. Doing so could open up as many as 1,300 Scottish jobs as well as generating an additional £1.2 billion in Scotch sales, it says. The aim is to secure a free trade deal by the end of 2022.
“The UK-India trade talks offer a golden opportunity to reach an ambitious tariff reduction that could grow Scotch whisky exports to India by £1bn over five years,” said SWA chief executive Mark Kent. “Tackling the tariff would open the market up to smaller producers who are effectively locked out by the substantial barriers to trade.”
Value of exports: £148m
Percent change: +6.4% (£139m in 2020)
Germany drops one place from sixth to seventh in 2021, maintaining its growth and achieving a 6.4% uplift. It remains the third biggest market for Scotch in the EU, and a key market notable for its importance as a global hub for the re-export of Scotch to other countries.
Value of exports: £156m
Percent change: -11.8% (£176m in 2020)
One of the EU’s big four markets, Latvia suffered a double digit decline in 2021, one of only two top 10 markets to post declines. Still, it’s £156m total for 2021 is still higher than its 2019 pre-pandemic record, when exports hit £142m. This is partly thanks to its impressive performance in the Brexit and pandemic-stricken 2020, when Latvia posted a double-digit growth of 24%, despite its stablemates all suffering losses. Last year that accounted for the biggest rise of any market, so it could afford to take a hit this year, becoming the sixth biggest market for Scotch in the world. Impressive for a country that’s about 3.8 times smaller than United Kingdom.
Value of exports: £198m
Percent change: +84.9% (£107m in 2020)
China saw the biggest gains of all Scotch export markets in 2021, increasing its value by a whopping 84% to £198m. This is only the second year year that China has appeared in the top 10, having made its debut in 2020. It bucked the trend in 2020, being one of only two markets to post gains in a year that saw nearly all other major markets decline, and has continued to post impressive gains in 2021. In a wider context, China has seen the value of Scotch exports grow from less than £10 million in the early 2000s to £198m in 2021. Compared to 2020, when it placed 9th, this year it takes a top 5 position, demonstrating its growing power in the world of Scotch.
Value of exports: £212m
Percent change: -14.3% (£247m in 2020)
Scotch saw its exports to Singapore take another hammering in 2021, dropping by 14%, following a 17% drop in 2020. It was one of two top 10 markets to post declines in 2021, the other being Latvia.
Much of that could be put down to the fact that Singapore is a major hub for travel retail. And while it was hoped that the travel retail sector would recover in 2021, the emergence of the Omicron variant and continued restrictions prevented recovery.
Pre pandemic Scotch exports had been worth £300m. Nevertheless, it remains the fourth biggest markets by value and looks certain to recover, helped by the continued recovery of travel retail and the signing of an impending free trade deal between Singapore and the UK. The deal will see tariffs removed between both countries by November 2024, mirroring a similar pact that the UK would have benefited from as a former member of the EU.
Value of exports: £226m
Percent change: +24.3% (£182m in 2020)
Taiwan continues to demonstrate its growing clout on the world stage for Scotch, with exports totalling £226m in 2021 – a 24% rise. It’s now the third biggest market in the world for Scotch, overtaking Singapore this year, but despite its prominence it’s still considered an emerging market. Only in the past 10 years or so has Scotch been working to gain a foothold in the market, with impressive results.
Taiwan’s taste for whisky has evolved significantly, and is focused squarely on the high-end with expensive, rare single malts and collectible bottles its bread and butter with blends less common. Taiwan is about value over volume, making it an appealing and lucrative market for producers of high value malts.
Value of exports: £ 387m
Percent change: +2.8% (£376m in 2020)
Scotch made a slight gain in France in 2021, increasing its exports by a modest 2.8%, as it continues on its path to reach its pre-pandemic value of £432m (2019). It’s losses in 2020 were modest compared to some other markets, demonstrating its strength in the face of ongoing adversity. It retains its position as the second highest value market for Scotch in the world, (and is also the world’s biggest market for Scotch by volume too, with 176m bottles exported to the country in 2021). Taiwan is clipping at its heels though, and could catch up to France if its growth continues.
Value of exports: £ 790m
Percent change: + 8.4% (£729m in 2020)
Wrangling over tariffs have battered the standing of Scotch in the US in recent years, taking what had been a billion pound market in 2019 (£1.07bn) to the £790m it’s currently worth. That saga thankfully came to an end in the first quarter of 2021, when the 25% tariff on single malt Scotch exports to the US, first imposed by Donald Trump in 2019, was lifted. And with the pandemic increasingly in the rear-view mirror too, it’s hoped that the US market will recover to reclaim its place as Scotch whisky’s first billion pound market. According to the IWSR, by the end of this year whisky (not Scotch exclusively) will be bigger than vodka by volume in the US, for the first time in almost two decades. In any case, the US is still streaks ahead of France in terms of value, so isn’t at risk of being knocked from the top spot any time soon.