A slump in whisky sales has been blamed for a decline in the overall value of UK food and drink exports.
In the week the future of Scotland was decided in the polling booth, the Food & Drink Federation revealed overseas sales of the country’s national drink had fallen 11% in the first half of this year compared with the same period a year ago.
Total UK exports of food and drink – excluding alcohol – have risen 4.8% year on year to £6.5bn but are down 0.5% to £9.3bn when alcohol exports are incorporated in the data. The decline was largely due to whisky, said the FDF, as growth slowed in Asia and other top 10 markets.
The North Korea factor
Scotch whisky suppliers were this week told a ‘yes’ vote could open up North Korea as a market.
North Korean leader Kim Jong-un was looking to trade with Scotland if the country gained independence, according to media reports. “North Korea is rich in natural resources and we like the taste of Scotch whisky, so we can be beneficial to each other,” said Choe Kwan-il, managing editor of pro-North Korea newspaper .
However, Rabobank warned a ‘yes’ vote could be bad news for whisky exports. “With an independence vote, Scotland would lose its status as an EU member, at least temporarily,” it said. “This would result in loss of automatic free trade with key EU markets, and rising input costs.”
Trade body the Scotch Whisky Association said sales in the first half of the year had fallen to £1.77bn from £1.99bn a year ago. The association added that demand for Scotch was levelling off in some key markets following a number of years of fast growth.
Industry insiders suggested a key source of the decline was a sharp drop in sales to Singapore, which supplies to China. ‘Anti-extravagance’ measures introduced by the Chinese government had been blamed for declines in spirit sales by some suppliers. Sales in the US and other markets are understood to have been lower due to a strong performance by whisky in 2013. The SWA said there was still long-term confidence in Scotch, with at least 30 distilleries being built over the coming years and £2bn of capital investment in Scotland committed by producers.
“We are confident Scotch whisky will continue to grow in the long term as markets stabilise and new ones, such as emerging economies across Africa, open up,” said SWA chief executive David Frost. “However, it is clear that in the short run there are economic headwinds affecting exports.”
There was better news for another key Scottish export, salmon, which was one of the strongestperforming UK exports in the FDF data, with overseas salmon sales up 31% year on year to £261m. The greatest gains came from the US (up £27m) and China (up £14m).
“We remain committed to raising the profile of Scottish salmon in new and emerging markets, and maximising opportunities to ensure long-lasting sustainable growth,” said Scott Landsburgh, chief executive of the Scottish Salmon Producers’ Organisation.
Although exports to Ireland were static, it remains the largest importer of UK food overall, at £1.6bn. Algeria, meanwhile, joined the list of the 20 largest markets for UK produce following a boom in dairy and grain exports.