Has the world really lost its thirst for Scotch whisky?

Once a byword for Scottish success, the single malt has been banjaxed by changing tastes and falling sales. But after the shuttering of several historic distilleries, there’s a hope on the horizon that might yet lift the spirits, says James Moore

Scotch is one of Scotland’s most iconic products – perhaps its most iconic, if you discount tartan, kilts, bagpipes, Harry Potter and Grand Theft Auto.

Unfortunately, it is not in a happy place. The glass is, sad to say, half empty, largely because a wee dram has become very expensive, and at a time when consumers are increasingly price-sensitive, and the global thirst for alcohol is changing.

It’s hard not to feel for the distillers, some of whom have paused production to cope with falling demand, and their suppliers. They have been caught in a perfect storm, with taxes and tariffs battering both domestic and international consumption.

The UK was far from the worst hit by Donald Trump’s “liberation day” bomb dropped on global trade flows. But even the 10 per cent tariff – which may yet rise – on exports from the UK represents a hefty burden to overcome, particularly when Scotch is up against vibrant domestic competitors produced in states such as Kentucky and Tennessee.

The real enthusiasts may choose to swallow higher prices. But casual drinkers? That’s a different matter altogether. Inflation has made people more picky and price-conscious. The US is set to feel a great deal more of that pressure in the year ahead. Trump is poised to appoint a new Fed chair who will speak with his master’s voice by cutting rates at a dangerous moment. American inflation is likely to be one of the defining economic stories of next year. Count on it.

The global trade disruption caused by Trump, alongside China’s economic woes, has battered exports to that vital market. But before we curse the president and all his works once again, it’s hardly just Trump who has made whisky tumblers harder to lift. Britain’s chancellor, Rachel Reeves, has played her part, too.

The scale of the overall tax increases she unveiled in her most recent Budget meant the rise in alcohol duty didn’t receive the scrutiny it often does. Reeves increased it in line with RPI inflation, which the Treasury said was designed to maintain the levy’s “current real-terms value”. This, it added, “is consistent with the government’s policy, reflected in the Office for Budget Responsibility (OBR) forecast, that the duty should keep pace with overall prices”.

Except it isn’t doing that. The duty is now outpacing overall price growth because the chancellor cynically used RPI inflation – a flawed and outdated measure regularly criticised by statisticians – to calculate the increase. It has been running ahead of CPI, the official measure, for as long as anyone can remember. This was a deeply cynical move by the Treasury, and a slap in the face for the industry.

The Scottish Whisky Association had called for a freeze – and of course it did. Duty is bruising its members. Roughly three quarters of what consumers pay for their tipple goes into the grasping hands of the Exchequer. VAT, after all, is charged on the overall price, including the duty, so any increase in the latter inflates the former too.

The chancellor may well be cutting off her nose to spite her face with whisky duty. Push a tax too high and it becomes counterproductive. You can quickly find yourself in a position where overall revenues fall because consumers simply change their habits. There is already evidence to suggest that this is happening.

According to the OBR, alcohol duty receipts are expected to raise £12bn in 2025-26, a 5.1 per cent decline compared with 2024-25. That is because the quantity of alcohol products sold is forecast to fall by 6.4 per cent over the coming year. Part of this reflects greater moderation among consumers, but it is also, as the OBR itself puts it, “a response to higher prices”. It is high time the chancellor cut the industry some slack.

Is there any hope on the horizon? Perhaps those changing tastes could yet work in the industry’s favour. Fashion is fickle. It might only take a celebrity extolling their fondness for Scotch in an interview to move the dial back in the industry’s favour.

I’m not a regular drinker, but if I am having a Scotch, I turn to the rich, peaty taste of an Islay – and the medicinal kick of a Lagavulin in particular. It is an acquired taste, one that takes a little work to appreciate (but the rewards when you do, oh mercy). Could there be fresh opportunities, then, for milder Speyside or Lowland malts in the years ahead? Just a thought.

I’m all for low-alcohol beer – I drive a lot – but whisky? That seems to miss the point.

Yet Debra Crew, the former CEO of Diageo, Scotland’s biggest distiller, said earlier this year that the group’s no- and low alcohol range was growing fast. So what do I know? Lower alcohol, of course, means lower duty.

There is also optimism that the UK’s shiny new trade deal with India could help. Punitive tariffs of up to 150 per cent are set to tumble as part of the agreement, potentially opening up a rich new seam for the industry. It is a vast market, with considerable untapped potential.

In the meantime, those involved in producing Scotch could be forgiven for pouring themselves a stiff drink to help drown their sorrows. Ideally, one bought from a duty-free shop.