SWA unsure why US Scotch sales are falling

The Scotch Whisky Association has admitted it’s “not totally sure” why sales are falling in the US, but claims it’s “not really worried”.

Irish and American whiskey may be stealing market share from Scotch

Sales of Scotch whisky in the US, its most valuable market, fell by 16% in the first six months of 2014, down £63 million.

While austerity measures in China, weak exchange rates and political tensions in the Middle East and Eastern Europe collectively drove an overall 11% fall in Scotch whisky value during the period, SWA chief executive David Frost said the fall in the US was unexplainable.

“To be honest we’re not totally sure why,” Frost told The Spirits Business, although he added the decline was not enough to concern the association.

“To be equally honest we’re not really worried because the fundamental drivers seem so strong,” he added. “The attractiveness of the category in recent years, the strong interest in malts, the premiumisation in the US – none of that seems to have changed.

“Until we get some stronger evidence, I think everyone’s still very bullish about the US… talking to people in the industry, I don’t really pick up concern.”

However, analysts argue that the soaring popularity of Irish and American whiskey in the US right now is stealing market share from Scotch.

Spiros Malandrakis, data analyst at Euromonitor, said American whiskey distillers have shown themselves to be much more inventive and experimental, which has in turn driven sales.

“They have embraced the trend around craft distilling, expanded with flavours and tapped into the whole Americana-Prohibition thing, and they’ve also massively premiumised the category,” he said.

“When Red Stag and Jack Daniel’s Tennessee Honey came along, Scotch whisky was looking in awe and fear from the corner of the bar.”

Diageo’s head of whisky outreach, Dr Nick Morgan, said that despite growth in American and Irish liquid, there is still plenty of space for growth for Scotch.

“Penetration of spirits in the US is still relatively low against the adult drinking population,” he said.

For an in-depth analysis of the Scotch category and why sales have fallen, see the November 2014 issue of The Spirits Business.