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Scotch whisky exports to China plummet 30%

Scotch whisky exports to China plummeted by 30% last year, dropping the region out of the top 20 markets for Scotch.

Dram of Scotch whisky
Scotch whisky export to China dropped sharply in 2013 due to the government’s continuing campaign of austerity

Data released by the Scotch Whisky Association (SWA) today shows Scotch exports to the country dropped to £51 million in 2013.

This decline has been attributed to the Chinese government’s continuing campaign of austerity, which has seen a crackdown on conspicuous spending and gifting.

Numerous drinks producers and spirits categories, most notably high-end Scotch and Cognac, have admitted to suffering financially as a result of the measures, which were first embarked upon at the end of 2012 in order to counter claims of corruption among the military and government officials.

Scotch exports to Taiwan, South Korea and Japan also all fell in value by between 13% and 15%.

However, the SWA reports that overall, worldwide exports increased 3% in volume to the equivalent of 1.3 billion bottles in 2013, from 1.2bn bottles the previous year.

Single malts made up a fifth of exports by value, growing 5% to a record £820m, yet overall exports in terms of value remained flat at £4.3bn.

Growth in some markets

Strong performances were noted among the US, France and India, Brazil, Mexico and Poland.

In the US, which is by far the largest market for Scotch by value, exports grew 8% on 2012 to a record £819 million, representing nearly £1 in every £5 of exports.

The SWA claimed that the Transatlantic Trade and Investment Partnership (TTIP) could help boost this figure even further in the future.

France remained the largest market for Scotch by volume, and grew 16% following the end of a tax hike implemented in the country in 2012.

2013 was described as the “best year yet” for Scotch exports to India, which is now the fourth biggest market by volume and fourteenth by value, up 12% to £69m.

Although export sales are affected by a large 150% import tax tariff, the SWA claimed that it is hopeful a reduction could follow on from new EU-India free trade agreement negotiations, which will re-start following this year’s Indian elections.

Exports to Brazil and Mexico grew by around 20%, to £99m in Brazil and £110m in Mexico.

Meanwhile, a greater shift towards international brown spirits was noted in Poland, a gateway to Eastern Europe, where Scotch exports grew 38% to £60m.

Economic headwinds

“The unprecedented investment programmes in Scotch Whisky by producers show that in the long term they are confident that demand will continue to grow,” said David Frost, CEO of the SWA.

“However, in the short run, there are some economic headwinds. Formal and informal barriers to trade remain. We should remember that the industry’s success does not come automatically but is based on hard work, investment and careful stewardship.”

Frost added that the industry continues to require “strong political support” from government with regards to international trade negotiations.

He also said that regardless of the Scottish referendum on independence, which is set to take place later this year, the SWA will “continue to need the backing of an effective diplomatic network with the necessary global reach, commercial expertise, and capacity to influence”.

Overall, Scotch whisky represents around 85% of Scottish food and drink exports and nearly a quarter of the British total.

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