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Scotch distillers hit hard by rising costs

Nearly 40% of Scotch whisky distillers have seen their shipping costs double in the last 12 months, while almost a third of producers expect energy fees to soar, a new survey has found.

Scotch Whisky
Whisky production is an energy-intensive process

A new survey conducted by trade group the Scotch Whisky Association (SWA) found that 57% of distillers have seen energy costs increase by more than 10% in the last year, with 29% seeing their energy prices double.

Almost a third (30%) of Scotch distillers expect energy costs to double in the next 12 months.

The survey also found that 57% of businesses expect energy costs to go up by a further 50%, and nearly three quarters (73%) expect the same increase in shipping costs.

Furthermore, 43% also reported supply chain fee rises of more than 50%.

However, the SWA noted that the industry continues to invest in operations and supply chain. More than half (57%) of distillers reported an increase in their employee numbers in the past 12 months, with all respondents expecting to expand their workforces in the coming year.

The SWA is calling on the new prime minister and the Treasury to support the industry by cancelling the planned double-digit tax increase in excise duty in the autumn budget. The last budget statement in October 2021 saw former chancellor Rishi Sunak freeze spirits duty.

Mark Kent, chief executive of the SWA, said: “The industry is delivering much needed growth for the UK economy through investment, job creation and rising revenue to the Treasury. But this survey reveals that distillers are investing in growth despite the economic headwinds and rising costs on business.

“The industry has shown remarkable resilience, but this cannot be taken for granted. We are at a critical juncture for many of our members. The autumn budget must support the Scotch whisky industry, which is a crucial driver of growth in the economy, particularly across Scotland.”

Kent noted that UK excise duty on spirits is among the highest in the world at 70%.

“Any such increase would compound the cost of business pressures companies are facing, add at least 95p of duty alone onto every bottle of Scotch whisky, and further fuel inflation,” he added.

Last November, the UK government pledged £11.3 million (US$15.1m) to support four distillery sustainability projects.

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