Alan Gray, an analyst at Sutherland & Partners in Edinburgh, said: 'Stocks of malt whisky remain too high and production will need to be cut again.' But he added: 'The reduction does not need to be as severe as the 15 per cent cut in 1993 and a cutback of 5 to 7.5 per cent seems likely.'
Production of grain whisky also remains too high. 'It needs to be trimmed, with a further reduction in the current year, similar to the 3 per cent cut made in 1993,' Mr Gray said.
Further cuts in 1994 would mark the fourth consecutive year of reduced output. They would largely bring stocks into line with consumption, although Mr Gray said production needed to be held at these lower levels during 1995.
Despite the need for cuts, he said the scale of over-production in the late 1980s and early 1990s had not been nearly as great as in the late 1970s and early 1980s.
In addition, there was clear evidence of a recovery in whisky consumption in the UK, the US and Continental Europe, and continued growth in the rest of the world.
The value of exports last year was likely to have broken the pounds 2bn mark for the first time, and the rate of growth 'should now gather momentum,' Mr Gray said.
World consumption, which declined in each of the three years from 1990 to 1992, is forecast to expand steadily by more than 3 per cent between 1993 and 1996.
Countries with the best potential for significant growth include those in South America and the Far East, with the exception of Japan, where sales will remain suppressed for this year at least.
But selling prices, which have been under pressure because of the over-production and recession, are unlikely to improve this year.
Sales to the US last year improved for the first time in a decade. Total volumes rose 5 per cent to 40.4 million litres and the sales value rose 13 per cent to pounds 283m.
Sutherland said that after four years of decline the UK 'is likely to have staged a modest recovery reflecting a lifting of the recessionary clouds and further improvements should be achieved in the current year.'
Single malt sales in the UK have shown signs of recovery after two difficult years. Exports of malts, however, remained depressed.