SWA concern over growth of ‘geopolitical risk’

The CEO of the Scotch Whisky Association, David Frost, has expressed concern at the growth of “geopolitical risk”, most evidently by the current crisis in Russia and Ukraine.

David Frost, CEO of the Scotch Whisky Association, is concerned with the growth of “geopolitical risk”

In a speech to the Whiskies & Spirits Conference at the end of February, Frost noted that while the economy in the US seemed “to be going pretty well” the global economy is slowing.

His worries stemmed from the fact that Scotch whisky producers export 90% of their production, according to Frost, which means the industry’s success relies greatly on global markets.

“That is why, from our industry’s perspective, I am concerned at the growth of geopolitical risk – most obviously in the consequences of the Russia/ Ukraine crisis, but there are plenty of other risk areas around the world too,” said Frost.

“I am also concerned by the effects of bad governance in many countries – notably, the persistently poor economic management in the Eurozone which has had dreadful effects in big markets like Spain and Greece, the even worse economic management in places like Argentina and Venezuala.

“There are many bright spots too – India, Taiwain – but it is clear we are going to have to work harder to keep exports growing in future years.”

While Frost admitted there was little that the Scottish or UK governments could do about the economic states of foreign countries, he stressed his message to the UK government to not “tax us excessively”.

“In Britain we have to put up with 80% of the price of an average bottle of Scotch whisky being taxation,” he continued. “You’re lucky that America doesn’t like heavy taxation and you’ve been able to stop things getting this bad – though 54% still sounds bad enough.

“Treat us fairly as a product. Don’t stigmatise us, don’t restrict us unreasonably, don’t make it harder for us to get our message across.”

Neo-prohibitionist measures

Furthermore, Frost went on to highlight the debate surrounding alcohol and health and the need to “push back” against organisations that favour implementing a “restrictive neo-prohibitionist route”.

He described the topic as “perhaps the biggest long-term issue” for the alcohol industry and that it is reasonable for governments to be involved and work in partnership with the industry to deal with harmful drinking.

“At the same time we have to make clear that there is no point in governments taking actions that won’t work and are counterproductive,” said Frost.

“Together we are all part of a great industry and the more we can collaborate on the issues that cause us difficulties, the more successful we will be.”