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UK spirits exports face huge strain

Published:  13 October, 2020

The UK’s burgeoning spirits industry has taken a hit, with exports significantly down in the first half of 2020. 

So far, spirits exports from the UK around the world have totalled £2.3bn from January to July – a 28% drop compared to the first half of 2019, when the export value hit £3.2bn, according to the Wine & Spirit Trade Association (WSTA). 

Predictably, export values started dropping from March as the pandemic took a firm hold across the globe, with the 2020 total on target “to fall somewhat short” of 2019’s £6.1bn export figure.

But, while it is clear that British exporters of spirits are suffering as a result of Covid-19 and the additional pressures it has placed on an already uncertain global trading environment, Miles Beale, CEO of the WSTA, said the strain placed on businesses looking to export due to the pandemic was just “one of a number of worries”.

Other issues raised by Beale include tariffs re-emerging, the end of the Brexit transition period, which is coming around the corner fast, and Covid’s impact on hospitality affecting the domestic market, sapping consumer and business confidence. 

“Unfortunately, this economic environment risks reducing investment and ambition among the UK’s new SME [small and medium-sized enterprises] distillers, who would otherwise be keen to take advantage of new trading arrangements from 1 January,” said Beale. 

“Take British gin, for example. Widely regarded as the best gins in the world, the export potential of UK gin SMEs is being hobbled by lack of confidence and uncertainty.”

There was some relief for the gin industry in August when the US backed down on its threat to expand a 16-year-old trade fight with the European Union to impose tariffs on the spirit – a move which would have been “hugely detrimental” for the British alcohol industry, said Beale.

This relief, however, was not extended to the dominant Scotch whisky sector, which was hit with a 25% US tariff imposed on single malt Scotch whisky in October 2019. 

Still, the industry remains positive about the future of the whisky category, which recorded a 31.2% drop in export values in the first half of the year to £1.5bn, according to the Scotch Whisky Association (SWA). 

The industry body said it has started seeing a recovery in specific markets, particularly in Asia, with green shoots in China, Taiwan and Japan.

“Scotch whisky is well known and well loved by consumers all over the world. We’re confident that Scotch will remain resilient through the crisis and are confident that the industry will emerge stronger and more popular than ever,” a spokesperson said.

The SWA launched a campaign in July urging whisky lovers to write to their MPs underlining the damage that US tariffs are causing. It has now reiterated that, for the industry to regain its strength globally, it is “critical to end US tariffs, reduce barriers to trade, and for the UK government to deliver specific support for the industry”. 

As part of its continued commitment to supporting all its members through this tough time, 

Beale said the WSTA was in “continuous dialogue” with government departments surrounding ongoing issues – including on “how to support would-be SME spirits exporters, where we believe continued and greater government support should be made available.”