Scotch whisky industry highlights economic impact

In 2022, the Scotch Whisky industry generated £7.1bn ($9bn) Gross Value Added (GVA) in the UK, according to the figures published by the trade association last week.

Exports have also increased by 31% over the last five years: surpassing £6bn ($7.5bn) for the first time last year.

Increased production, new distilleries, investments in technology

GVA – essentially a measure of economic productivity - is used to indicate the size of the industry within the Scottish and UK economy.

The economic impact report shows that the last five years has seen ‘significant growth’ in the economic importance of Scotch Whisky.

The Scotch Whisky industry is estimated to have contributed £7.1bn ($9bn) to the UK economy in GVA in 2022 (covering production, sales and distribution).

Out of this total, £5.3bn was generated in Scotland.

That represents a 29% increase when compared to the industry's GVA in 2018, and a 42% increase when compared to GVA in 2016.

The increase in GVA has been driven by a number of factors.

That includes increased production (between 2018 and 2022 the maturing stock of Scotch Whisky increased by 10%), as well as new distilleries and corresponding supply chain impacts (10 new Scotch Whisky distilleries opened over this time period, taking the total to 148).

Meanwhile, investments have been made in energy efficiency, fuel and low-carbon technology as the industry moves further towards the ambition of net-zero by 2045.​

Scotch ranks highly in terms of GVA in Scotland. Beverage manufacturing (dominated by Scotch) produces £273,000 GVA per employee. That's just behind the energy sector (including renewables) at £279,000 per head (2019).

Exports

Unlike the rest of the UK - which is dominated by the services industry - manufacturing accounts for the largest proportion of Scotland's exports. 

Scotch makes up 77% of Scotland’s food and drink exports. And exports of of the spirit increased by 31% between 2018 and 2022: reaching a record £6.2bn in 2022.​ More importantly, this also represents both recovery from pandemic years and growth on pre-pandemic years.

The US is the top market by value (representing £1bn), followed by France and Singapore. 

Challenges and opportunities

The Scotch Whisky Association says these figures help highlight the resilience of the category.

“Over the past turbulent five years, when the industry has faced retaliatory tariffs in the largest global market​ and we have all faced a global pandemic and the knock-on economic pressures, the Scotch Whisky industry has remained resilient and redoubled its commitment to provide employment, investment and opportunity in Scotland and beyond,” said Mark Kent, chief executive of the Scotch Whisky Association.

“The numbers are impressive: a 29% increase in GVA since 2018 when we last took a snapshot of the industry's economic footprint; 24,000 more jobs supported across the UK than a decade ago; billions of investment in future growth."

While there is still room for growth, the Scotch Whisky Association warns that multiple barriers remain in the way. At the top is the UK's spirits duty rate - which the association says in the highest in the G7. Trade deals - including with India - still need to be finalised (the SWA estimates a free trade agreement - easing the 150% tariff burden - could create an additional £1bn of growth over the next five years).

Tackling these challenges will be key against rapidly increasing competition from other premium spirits.