Scotch whisky exports up by 23%

Industry leaders claim growth in exports has come from breaking down trade barriers

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Scotch whisky exports soared over the first nine months of this year, with the valuation of shipments rising by 23% on the same period last year.

The value reached nearly £3bn, with the industry pulling in £125 every second.

Exports to Brazil were up nearly 50%, reaching almost 10 million litres of pure alcohol, according the Scotch Whisky Association (SWA).

The city of Recife in Brazil is believed to have the highest per capita consumption of whisky in the world.

The value of exports to the USA remained the highest of any country, at £430m.

France was the country that received the largest volume of Scotch whisky imports, at 39.4 million litres of pure alcohol.

Singapore is in the top four by volume and value, though it is often a trading post for onward export, much of the whisky going to China.

Industry leaders, through the SWA, stressed that much of the growth had come from breaking down trade barriers.

The next major goal is to achieve a breakthrough in European Union trade talks with India, the world's biggest whisky market, which has 150% tariffs on imported whisky.

The Scotch Whisky Association (SWA) says planned minimum pricing of alcohol in Scotland provides a precedent for other countries to impose taxes that defend their domestic drinks industries.

Chief executive Gavin Hewitt cites a backbencher's bill tabled in the South Korean parliament that would impose a tax on higher strength spirits, affecting Scotch whisky imports while protecting local rice spirit, which is about half the strength.

There is also a plan to impose a health tax on spirits in France, which distillers around Europe see as a way for the Paris government to protect its wine industry.

The minimum pricing legislation is expected to go through Holyrood, as the Scottish government says it has a mandate to pass it.

However, the SWA believes a legal challenge to the law could see it blocked either for going beyond Holyrood's powers, or acting as a barrier to European trade. It is not proposing to make that challenge itself, however.

The incoming chairman of SWA, Edrington Group chief executive Ian Curle, says minimum alcohol pricing is not likely to work with other countries looking for opportunities to protect their domestic industries.

He says: "It's like putting the ball in the six-yard area and taking the goalie out."

The Scottish government has backed its proposals for minimum alcohol pricing saying the measures have widespread support from health experts and police, as one of several measures to tackle Scotland's problem relationship with drink.

They say the industry has increased its capacity for whisky production by investing £1bn over the past five years, including new distilleries, increased production at existing ones, additional bottling lines and a new Diageo cooperage, for making casks, which opened this week in Alloa.

However, the SWA is concerned that planned minimum pricing of alcohol in Scotland provides a precedent for other countries to impose taxes that defend their domestic drinks industries.

As the chairmanship of SWA is passed this month from Diageo chief executive Paul Walsh to Edrington Group chief executive Ian Curle, they also highlighted a new challenge that had emerged for the industry.

With such fast growth and at least five years to maturation, demand looks set to outstrip supply, and that is likely to mean rising prices.

The industry is also shifting distillery capacity from other drinks, such as vodka - meaning more imports of those white spirits into Britain, and more capacity for whisky.

Mr Curle commented: "The industry's in excellent health at present. Scotch is truly iconic. It's extremely well positioned, largely due to investment and also down to developing economies' growing middle class wealth and aspiration."

During a visit to Brazil, Scotland Secretary Michael Moore welcomed the increased imports of Scotch whisky. In a meeting with the country's trade minister, he pushed for reduced tax on imported spirits.

He said: "The numbers tell the story of a growing demand for Scotch whisky here in Brazil. But from the people I've met here and the changing demographics of this country, I am very confident that the potential for future sales is much greater.

"That's why I raised the issue of tax on whisky with the Brazilian trade minister at our meeting in Brasilia.

"He is a man with a fine appreciation of our national drink and he has committed himself to looking again at the issue, in a creative way, to seek a solution. I look forward to following this up with him when he visits the UK in the spring."

Richard Lochhead, the Scottish rural affairs secretary, commented on the export figures: "Our whisky sector is an international success story with more and more discerning drinkers across the globe enjoying a dram and a little bit of Scotland.

"We have great ambition for exports from Scotland. Other industries should be learning from the continuing investment of the Scotch whisky industry. The Scottish government does not take this investment for granted and we fundamentally recognise the contribution that Scotch Whisky makes to Scotland - in jobs, tourism and culture."

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