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US tariffs drove severe slump in whisky exports in 2020

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Global exports of whisky fell by more than £1.1 billion during 2020, new industry figures show.

The export figures are the lowest they have been in a decade after the combined impact of Covid-19 and a 25% tariff on single malts in the US hit distillers hard.

According to the Scotch Whisky Association (SWA), the export value of Scotland’s national drink fell by 23% to £3.8bn last year. Volumes fell by 13% to the equivalent of 1.14 billion standard 70cl bottles.

The value and volume of exports to most of the industry’s top 10 markets fell as countries went into lockdown to combat the spread of Covid-19.

The closure of hospitality and travel restrictions impacting airport retail worldwide saw export values fall in 70% of whisky’s global markets, compared to 2019. Exports to the EU 27, the industry’s largest regional export market, fell by 15%.

US tariffs

But it is the continued impact of tariffs on exports of single malts to the US – part of a tit-for-tat transatlantic row over aerospace subsidies – that has caused the most significant losses.

Losses suffered by the whisky industry as a result of these tariffs have topped £500, other recent SWA figures show, million and continue to rise.

America is the industry’s most valuable market, valued at over £1bn in 2019 when it accounted for one-fifth of global exports.

In 2020, exports of Scotch to the US fell by 32% to £729 million, a loss of £340m compared to 2019 and accounting for around one-third of total global export losses.

The industry has repeated calls for more support for distillers in the UK Budget on March 3.

SWA wants Chancellor Rishi Sunak to cut spirits duty to mitigate the “significant damage” being done to the industry.

‘Grim reminder’

Karen Betts, the trade body’s chief executive, said: “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.

“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.

“In these challenging times, what’s so disappointing is the damage being caused by US tariffs.

“The US has been, for decades, our strongest and most valuable market, but Scotch whisky is now losing considerable ground there.”

We are calling on the chancellor to support Scotch whisky distillers by reducing our tax bill in the UK.”

Karen Betts, Scotch Whisky Association chief executive

Ms Betts added: “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.

“The Scotch whisky industry has now paid over half a billion pounds in tariffs – which are a form of tax – on behalf of the UK government because of the subsidies that the government granted to the aerospace sector in breach of World Trade Organisation rules.

“So we are calling on the chancellor to support Scotch whisky distillers by reducing our tax bill in the UK.

“Rishi Sunak can do that by cutting spirits duty in next month’s budget. That will help to mitigate the damage being done to Scotch whisky and help to reassure distillers that the UK government wants to support Scotch whisky in riding out the current storm and returning to growth when possible.”

Karen Betts, Scotch Whisky Association chief executive

 

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