New Distilleries and Increasing Capacity a Sign of Optimism in the Scotch Whisky Industry

Key findings from the recently published annual Scotch Whisky Industry Review (now in its 39th edition), written by industry analyst Alan S Gray are:-

Sales volumes estimated to grow at 2.3% over the five years 2015 to 2020 which compares with long-term growth of some 1.5% but only marginal growth of 0.3% between 2007 and 2015, due to a variety of factors which we refer to below:-

• A chief problem was the financial crisis which commenced in 2008 and resulted in world consumption only increasing from 347.03m litres of alcohol in 2007 (the year preceding the financial turmoil) to 348.13m LPA in 2015

• During this period the Eurozone was particularly weak, with shipments to the EU falling from 131.5m LPA in 2007 to a low of 114.7m in 2010 and still only 121.8m LPA in 2015.

• Particularly weak EU markets were Greece, Italy, Portugal and Spain:-

• Other contributory factors making for difficult trading conditions over the period were:-
  • A slowing Chinese economy combined with anti-extravagance measures by the Chinese Government
  • An EU trade embargo applied to Russia which has decimated Scotch shipments to that market

   

• Currency devaluation and a depressed economy which has seen shipments to Venezuela fall from 11.6m LPA in 2007 to only 0.8m LPA in 2015.Another factor supporting confidence in Scotch’s prospects has been the opening of over a dozen new distilleries since 2013 and plans for a further 35 or so over the next few years. Most of these are being built by new entrants to the industry, although there is also expansion of capacity by the established industry, with, for example, Edrington building a new 15m LPA Macallan Distillery due to open in 2018.The annual Scotch Whisky Industry Review also discusses Minimum Unit Pricing and the implications of Brexit. Alan Gray is a Master of the Quaich and has covered the Scotch Whisky industry for over 40 years.

• Other major areas covered by the Review include: Selling Prices, Major Markets, Production Costs, Production Figures, Issues & Problems affecting the industry, Names & Addresses of companies, List of Distilleries, Distillery Visitor Numbers, List of Brands and detailed Case Sales for Blend and Single Malt brands.
• The Scotch Whisky Industry Review 2016, published by Pagoda Scotland Ltd, is priced at £450 in the UK and £475 overseas and is available to purchase online at: www.scotchwhiskyindustryreview.com
• At the end of 2016 there were 111 malt distilleries in operation and with around 12 expected to start up in 2017 alone this would raise the total to 123 compared to 114 in 1980 and only 84 in 1986 which followed a major period of retrenchment.
• Looking ahead, however, the economic and financial clouds are lifting and trading improved substantially in 2016, with export volumes (and exports account for over 93% of Scotch Whisky sales) rising by 4.8% from 324.4m LPA to 339.9m whilst values rose by 4% from £3,855.5m to £4,008.9m, helped by sterling’s weakness against the US dollar and the Euro. 

Notes

The 2016 edition of “The Scotch Whisky Industry Review” has now been released. The Review is published annually and, having started life in 1977, is now in its 39th edition. Every edition of the Review has been compiled by the recognised leading independent industry analyst Alan Gray.

It is the single most authoritative source of business information on the Whisky industry – incredibly comprehensive in its coverage and painstaking in the accuracy of its research. The Review contains 280 pages packed with fascinating and useful information and is used as a reference by all the leading players in the Scotch Whisky industry.

In summary, the “Review” includes detailed information covering the following main areas;

• An overview of the industry and estimated consumption growth rates till 2020
• Industry Section
  • Consumption by market, production, stocks, production costs and profit margins
• Company Section
  • Names and addresses, list of distilleries (including details of around 40 new and projected distilleries), distillery capacity utilisation, and visitor numbers
• Case Sales
  • The most comprehensive Annual Case Sale figures available anywhere by Scotch Whisky type (Blend & Malt). Also 10 year record for all the major brands
• List of Bottled brands
  • List of bottled brands sold in the UK and overseas by company and category – an unrivalled list categorised by standard & deluxe blends and malts. See the brands owned by the different companies at a glance!
• Issues and challenges facing the industry
• Sponsorships
  • Information on current sponsorship deals by Scotch Whisky companies
• Appendices
  • Includes detailed figures on Scotch Whisky Broking Prices and Retail prices of Leading Brands and record of excise duty changes from 1885 onwards.

As Alan states “No Scotch Whisky industry professional, consultant, supplier, specialist retailer, importer, distributor or Scotch Whisky connoisseur should be without a copy.