Scotch Whisky contributes £5.5bn to UK economy

A new report from the Scotch Whisky Association (SWA) shows the contribution of the Scotch industry to the UK economy has grown by 10% since 2016 to £5.5 billion.

The report, building on research carried out by the Centre for Economic and Business Research (CEBR), also reveals Scotch generates two-thirds of all spirits Gross Value Added (GVA) in the UK.

The industry has been boosted in recent years by record exports, reaching £4.7bn in 2018, and several new distilleries beginning production and opening their doors to tourists.

“This success comes despite the industry continuing to pay the fourth highest duty rates in the EU, and one of the highest of spirit producing nations globally,” said the SWA.

“Recent freezes to UK duty have helped the industry to reinforce its vital importance to the UK economy.”

SWA CEO Karen Betts said: “This research shows the huge contribution that our industry plays to both the Scottish and UK economies.

“Significantly, the research shows that our industry’s GVA increased by 10% to £5.5bn between 2016 and 2018, as a result of Scotch Whisky companies’ continued export success and the industry’s consistent investment – over £500 million in the last 5 years – in production, distribution, marketing and tourism.

“Despite the challenges of Brexit, this is investment that continues to flow, with more projects planned and more distilleries set to open – a sign that the Scotch Whisky industry remains confident about the future.  

“This is great news for our many employees, our investors, supply chain and, of course, for our consumers all over the world, who love Scotch. 

“This report also highlights the high rate of domestic tax that Scotch Whisky faces in the UK.

“In the US, Scotch and other whiskies are taxed at just 27% of the rate that HM Treasury taxes us here at home.

“We will continue to press the Chancellor for fairer treatment of Scotch Whisky in our domestic market, which reflects the vital economic contribution the thousands of people who work in whisky make to the UK economy every day.”

The report says Scotch Whisky provides £3.8 billion in direct in GVA to Scotland – helped by regulations in place that requires all Scotch Whisky to be distilled and matured for at least three years in Scotland.

This means Scotch Whisky contributes more than double than life sciences (£1.5 billion) to the Scottish economy, supporting more than 42,000 jobs across the UK, including 10,500 people directly in Scotland, and 7,000 in rural communities.

The manufacturer of beverages in Scotland – dominated by Scotch – produces £210,505 GVA per employee.

Comparatively, the industry is more productive than the energy sector (including renewables) at £173,511 per head, life sciences at £93,735 per head, and creative industries at £60,712 per head.