The UK market for Scotch Whisky is showing signs of improvement despite 76% tax — but the industry says more support is needed from the UK Government if the recovery is to continue.
Figures from HM Revenue and Customs (HMRC) published by the Scotch Whisky Association (SWA) show the number of 70cl bottles of Scotch “released for sale” increased by 2% last year.
About 84.9 million bottles were released for sale in 2015, up from 83.3 million the previous year.
However the SWA said the current UK tax of 76% — including excise and VAT — on an average priced bottle of Scotch is still too high.
While exports of Scotch have mostly increased over the past 10 years, the number of bottles released for sale in the UK has fallen by around a quarter.
In 2005, more than 107 million bottles were sold in the UK — but annual volumes in the UK market have not exceeded 100 million since 2008.
By contrast, Scotch Whisky exports totalled £1.7 billion in the first half of 2015 — that’s the equivalent of 517 million bottles exported in the first six months of last year alone.
Scotch accounts for around a quarter of all UK food and drink exports — with Scotch exports generating £3.95 billion for the UK balance of trade in 2014 alone, the SWA said.
The SWA said the 2% cut in UK excise duty in last year’s UK Budget gave a confidence boost to the industry in its home UK markets.
However, it said the UK drinks market remains fiercely competitive and it is calling for “Fair Tax for Whisky” with a further 2% cut in excise in the UK Budget on March 16 — “a move supported by three quarters of the British public.”
The SWA said last year’s excise reduction — only the fourth time in the last century that duty on Scotch has been cut — boosted Treasury coffers by contributing to a £102 million increase in revenue receipts from spirits.
David Frost, Scotch Whisky Association chief executive, said: “A strong UK market is vital, particularly for new entrants to the industry.
“In the last two years, nine new distilleries have started production in Scotland and they need a strong domestic base to grow from.
“The UK is still the third biggest market for Scotch in the world, but it is fragile and competitive.
“That’s why we want Chancellor George Osborne to support an important domestic industry by cutting duty by a further 2% next month.
“The tax treatment of Scotch in its home market also has repercussions for our export performance.
“If overseas governments see Scotch being treated unfairly in the UK, that could influence their decisions.
“This makes it harder to ensure a level playing field for Scotch overseas.
“With Scotch now the biggest net contributor to UK trade in goods, it is important the Chancellor acts to support distillers and therefore the wider economy.”