As we head into 2025, the question looms: is the whisky industry on the verge of another surplus crisis, reminiscent of the infamous “whisky loch” of the 1980s? The numbers suggest that such fears may not be unfounded, so let’s examine the evidence.
The Data
According to the Food & Drink Federation’s Q3 2024 Trade Snapshot report, whisky exports have experienced a significant downturn. Export values dropped by 36.4% to £2.8bn, while volumes fell by 28.5% compared to the previous year. This decline is particularly striking given that whisky remains the UK’s largest food and drink export.
By contrast, other major UK exports, such as salmon (+27.5% value, +31.8% volume) and chocolate (+9.4% value, +15.7% volume), have shown strong growth. The USA, the UK’s third-largest export partner, saw whisky exports decline by 23.2% to £558m. Despite these challenges, whisky remains the largest food and drink category exported to the American market.
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While overall food and non-alcoholic drink exports reached a decade high of £12.4bn, the decline in whisky exports contributed significantly to a 10.2% drop in total food and drink exports when alcoholic beverages are included. This suggests that, while other food categories are thriving post-Brexit and post-pandemic, whisky is facing unique challenges in 2024.
Why We Should Be Concerned
History Repeating Itself?
Buxton points to several factors that echo this period of crisis. The industry’s rapid expansion, with significant investments such as Pernod Ricard’s £88 million upgrades to Aberlour and Miltonduff distilleries, comes against a backdrop of economic turbulence. Inflation, energy crises, and global trade tensions are creating conditions eerily reminiscent of the 1980s.
There are additional concerns about the industry’s exposure to the Chinese market, where major producers have invested in single malt distilleries. This could backfire if Chinese consumers pivot to domestic alternatives or if trade barriers emerge, as happened with Australian wine exports to China. Furthermore, Buxton identifies patterns of “reckless optimism” in past decades—a trend that appears to be repeating itself now, with whisky investment schemes and soaring asset prices raising concerns about overproduction and market sustainability.
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Wider Problems in North America
Global Economic Instability and Export Challenges
Global events have compounded the whisky industry’s struggles. The Russia-Ukraine war has disrupted key export markets. Since February 2022, there have been zero whisky exports to Russia, which was previously a fast-growing market. Sanctions have further complicated matters, removing a significant revenue stream. This has added to the broader instability affecting global supply chains and economic conditions.
High interest rates and the rising cost of living have also dampened consumer spending on discretionary items like whisky. Retailers face slower sales, independent bottlers are scaling back cask purchases, and the overall industry is feeling the ripple effects of reduced activity. Together, these challenges highlight the fragile state of whisky export markets.
Hope for Recovery
Despite these challenges, there are reasons to be cautiously optimistic. While the Russia-Ukraine conflict has created significant disruption, recent developments suggest that geopolitical shifts could be on the horizon. A resolution to the conflict would likely stabilise global markets, reopen key export channels, and alleviate economic pressures.
In this context, the possibility of de-escalation offers a glimmer of hope for global markets. Should tensions ease, we could see improvements in energy costs. Lower interest rates and more stable consumer spending might follow, helping to stabilise the market. Such changes, while unlikely to happen overnight, could help the whisky industry navigate its current challenges and position itself for recovery.
With significant geopolitical shifts seeming closer to resolution than ever before, there is hope that 2025 could mark the beginning of recovery rather than further decline. Careful planning and adaptability will remain essential for whisky producers as they navigate this uncertain period.
Conclusion
The whisky industry is undoubtedly facing significant challenges, with export declines, overproduction risks, and geopolitical turmoil creating a perfect storm of difficulties. However, history shows that the industry is resilient. With thoughtful management, strategic adaptability, and potential geopolitical breakthroughs, 2025 could be a pivotal year. Rather than sinking further into crisis, the whisky industry has an opportunity to rebuild and chart a path towards stability and growth.
