Whiskey facing ‘serious’ supply chain issues
More than 90% of Irish whiskey producers have seen production impacted by supply chain issues, according to a new survey.
Irish Whiskey Association’s (IWA) International Trade Report 2022 has revealed that 92% of Irish whisky producers have said supply chain delays have negatively impacted their recent production output, and will likely impact future production output too.
The IWA created a survey to uncover the effects of supply chain issues, with the results suggesting the industry is ‘facing increasing cost pressures’, with SMEs looking at ‘serious challenges’.
However, it revealed that Irish whiskey exports are expected to grow again in 2022.
William Lavelle, director of the IWA, said: “2021 was a year of rebound for Irish whiskey with a record 14 million cases sold around the world, and this year looks set to be another outstanding year for export growth. Overall, Irish whiskey exports will grow again strongly in 2022, facilitated by supportive international trade policy.”
Irish whiskey saw a sales increases of 21% in 2021, when compared with the same period in 2020.
Russia and Ukraine cumulatively accounted for 7% of all Irish whiskey sales in 2021, leaving a ‘likely negative impact’ on global sales in 2022. Plus, India, Nigeria and China have been identified as emerging markets to watch for future export growth.
However, the survey also revealed that product launches have been affected, as two-thirds of respondents strongly agreed that increased delays in the delivery of materials had resulted in delays to product launches.
Additionally, 78% of producers have switched suppliers to secure a more sustainable or resilient supply chain.
Increases in malt prices, energy and general business costs and delays in international shipping are also among ‘the most serious supply chain concerns’ identified by industry.
Lavelle added: “Irish whiskey is facing many serious international trade and supply chain challenges, and the fact is that not all brands will grow this year. It is notable that the reported supply chain difficulties are being experienced equally by both large and small producers, and it is likely that the serious impacts will be felt hardest by SME producers.
“International trade and supply chain challenges increasingly have the potential to impact on trade, both at industry and individual business level. It is vital that international trade policy keeps-up, not just in reacting to threats but also proactively assessing and planning for the future.”
The IWA have also said that to ensure continued growth in the whiskey industry, more trade with positive partners is needed, as well as putting sustainability and supply chains at the heart of future international trade policy.
Lavelle added: “The growth in exports of Irish whiskey, including market access and diversification, has been greatly supported by free trade, and further growth is possible. We are calling for a number of actions to expand free trade agreements. These include reducing tariffs on Irish whiskey in Australia, India, Kenya and Thailand, amongst others.
“The report launched today explores the critical interrelationship between free trade, sustainability and supply chains, and calls for sustainability and supply chains to be put at the heart of future international trade policy.”
The report also details how producers can “guide” sustainable international trade, and sets out actions and recommendations on “building capacity” at industry and government level to respond to supply chain challenges.
Launch of the report
The Irish Whiskey International Trade report is being launched with two events, in the European Parliament in Brussels and the House of Commons in London.
Member of European parliament Colm Markey, who is responsible for launching the report in Brussels, said that international trade is “driving Irish economic growth” and “sustaining hundreds of thousands” of jobs.
He added: “Overall, our export sector is performing strongly despite ongoing global challenges. In 2021, we recorded our best ever trade performance, while figures for this year are very encouraging.”
According to Markey, recent data from the Central Statistics Office in Ireland show overall exports of goods from Ireland rose to almost €20 billion (US$20.1bn) in August, an increase of over €4bn when compared with July 2021.
“This positive outlook is reflected in the report, which shows the sector on-track for an outstanding year for export growth,” he continued.
“However, we cannot become complacent and I note the concerns raised in the survey of Irish Whiskey Association members.
“SMEs are facing serious challenges due to soaring energy costs and supply chain disruption. In the short-term, the government is responding through measures announced in budget 2023 and work is continuing at EU level to find a solution to the energy crisis.
“However in the long-term it’s clear we need to learn lessons from recent global turmoil and better plan for the future.”
Last year, producers shared how a combination of Brexit, the Covid-19 pandemic and other localised issues meant the spirits industry worldwide was struggling to cope with supply chains.