The state of the Scotch Whisky industry is grim, according to a recent report from the Scotch Whisky Association (SWA), the organization that advocates on behalf of Scotland’s many distillers.
Distillers and distributors have seen a drop in eight out of the 10 top export destinations for their product, with the biggest losses coming from the US market, where the value of whisky imports fell nearly 32% from the previous year’s high of £1.07bn. Experts cite the effects of the coronavirus to most of these losses, but with the United States spirits market, the 25% tariff imposed on imports of whisky has had the biggest impact.
“These figures are a grim reminder of the challenges faced by distillers over the past year, as exports stalled in the face of the coronavirus pandemic and US tariffs,” Scotch Whisky Association Chief Executive Karen Betts said, in a prepared statement. “In effect, the industry lost 10 years of growth in 2020 and it’s going to take some time to build back to a position of strength.”
That tariff went into effect in 2019 as part of an ongoing trade war that began with an argument over the subsidies that the World Trade Organization gave to Airbus and Boeing to help in the development of new planes. The result was tariffs applied by the US to hundreds of items imported from Europe, including Parmesan cheese and wool clothing.
“In these challenging times, what’s so disappointing is the damage being caused by US tariffs,” Betts’ statement continued. “The US has been, for decades, our strongest and most valuable market, but Scotch Whisky is now losing considerable ground there. These tariffs were avoidable had the UK, EU and US governments and the European and American aerospace industries been less intransigent. That governments and companies have allowed their dispute to continue while the livelihoods of real people, and the future of one of Scotland’s oldest industries, are put at stake reflects badly on them.”
There is some hope of resolution. The UK trade minister Liz Truss has already requested a meeting with incoming US trade czar Katherine Tai to discuss the removal of these tariffs. And just before the transition of power, Trump administration officials were working on a mini-deal to get tariffs on both sides of the Atlantic lifted.
The SWA is also calling on Chancellor of the Exchequer Rishi Suna to consider cutting the duty on spirits in the UK budget to help, as Betts says, “reassure distillers that the UK government wants to support Scotch Whisky in riding out the current storm and returning to growth when possible.”
The US isn’t the only source of the Scotch Whisky industry’s financial woes. According to the SWA, the value of exports is down £1.1bn compared to 2019’s numbers and down in 127 of 179 global markets. This is due, in no small part, to ongoing pandemic lockdowns and travel restrictions that have cut into airport retail sales.
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