Indian thirst for Scotch whisky boosts exports

India's thirst for Scotch remains unquenched despite sky-high import taxes - but Brexit may dampen European demand, experts warn.

Scotch is popular in India, where demand has increased 41 per cent (Reuters)

Scotch whisky exports rose 3.1 per cent in the first six months of 2016, driven by booming demand in India, a market that whisky's trade body says should be a top trade priority for Britain as it navigates its exit from the European Union.

Demand in India, where the market grew 41 per cent by volume and 28 per cent by value, helped drive total global sales to 533 million bottles equivalent. That marked the first increase in global whisky sales volumes in three years, the Scotch Whisky Association said today.

In value terms, total Scotch exports fell by 1 per cent, still an improvement on the near 3 per cent decline it recorded in the first half of 2015.

Global demand for Scotch appears to be strengthening thanks to “an emphasis on craftsmanship and provenance, backed by investment”, SWA head David Frost said in a statement.

Indian tariffs of 150 per cent are a hurdle for exporters, but its spirits market is set to expand 3 per cent in 2016, according to industry data specialist IWSR, and Scotch distillers are keen to capitalise. The SWA is calling for a new trade agreement with India to be top of the list as Britain reshapes its global relationships.

The industry says it will face no tariffs to the EU, which made up nearly a third of its £3.86 billion in exports last year. But it remains concerned about Brexit, because Scotch may no longer benefit from being under the wing of the EU for trade with countries outside the bloc.

The weakness of the British pound, which fell against major currencies after the Brexit vote on 23 June, would boost revenues in sterling from exports in the short term, the SWA predicted. But it called on the government to provide clarity as soon as possible on the future trade relationship with the trading bloc.

Scotch whisky accounts for nearly a quarter of all British food and drink exports on an annual basis, and around a third of Scotch exports are destined for the EU. France is the biggest Scotch drinker not only in the EU but in the world, quaffing 91 million bottles in the first half of the year.

Reuters