UK whisky businesses are struggling to maintain optimism due to escalating domestic and international cost pressures, according to Johnston Carmichael’s annual food and drink survey. The research found that just 37% of whisky firms reported feeling optimistic, compared to 56% of the wider food and drink sector.
The survey, commissioned by the leading UK independent accountancy and business advisory firm, questioned businesses about industry challenges and opportunities over the past 12 months.
Labor costs represent the largest area of cost increases for whisky distillers, cited by 42% of respondents. Taxation (47%) and tariffs (37%) ranked as the sector’s greatest regulatory concerns.
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READ THE STORYNew export customers remain the main growth driver for 37% of whisky businesses, underscoring the continued importance of international trade. While the European Union remains a primary export market for 32% of respondents, trade sentiment is fragile. Just 21% reported more positivity toward EU trade than last year, while 58% reported either the same or less positive sentiments.
Grant Roger, audit partner and lead of the Whisky Finance Director Club at Johnston Carmichael, said: "This year’s food and drink survey has laid bare the magnitude of challenges that are disproportionally affecting UK whisky distillers."
"The issues faced in international trading are in addition to domestic challenges with labour and taxation costs continuing to rise. This, combined with lower Gen Z alcohol consumption, has led to stagnation in the market and goes a long way to explaining why optimism levels are below 40%," Roger added.
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Workforce retention is also a concern. Respondents claimed 37% of people who left the whisky industry did so due to stagnant salaries, with a further 27% citing a lack of progression.
Energy costs compound the pressure. Some 21% of whisky businesses reported energy as their largest cost increase, compared to just 9% of the wider food and drink sector.
The survey did reveal signs of defiance. Some 79% of whisky firms are investing in new product development and innovation, and customers have largely faced just a 0-5% average price increase despite the headwinds.
Roger said: "The resilience of the UK food and drink industry shouldn’t be understated and there is positivity in the levels of innovation and new product development. But while the sector as a whole faces challenges, whisky distillers are experiencing major obstacles above and beyond what many others are."
"Whisky is crucial to the UK food and drink industry and remains the runway for all other producers to flourish. However, insights are clear that amidst widespread global uncertainty the sector craves greater clarity and stability," he added.
Johnston Carmichael works with more than 500 food and drink producers across the UK.
