Executive Summary

The UK market for whisky, Scotch and imported was worth over £2bn at retail prices in 1992. Exports provided a further £2bn for the Scotch whisky industry.

The trend of the UK whisky market is seriously down in recent years, while Scotch exports are holding up quite well. Some of the larger `mature' overseas markets for Scotch are not growing, as consumers turn away not just from Scotch but from spirits and alcohol in general. Other overseas markets, however, are rising to take their place.

In the UK, a tiny proportion of the market is accounted for by imports, mainly from Canada, Ireland and the US. Cheap Canadian imports of under-strength `whiskies' are a new phenomenon but will have to be watched. Otherwise, imported whiskies appeal temporarily to young trendies whereas Scotch drinkers tend towards middle aged, ABC1s who are then loyal for life.

Whisky is expensive in the UK on account of discriminatory taxation. Undoubtedly, this has much to do with the decline of the UK market.

The industry continues to make strenuous efforts to get fair taxation for Scotch which is home produced, to put it on a level with wine, which is nearly all imported. However, it breathed a sigh of relief, when the November 1993 budget held taxation on spirits at the current level while slightly increasing the taxation on wine.

In the whisky market, suppliers have built up the image of their brands over generations, and brands, mostly `standard' blends, that are household names, have characterised the entire market. However, the dominance of brands, with a few exceptions is being eroded by retailers' own brands and by `value-for-money' brands deliberately marketed to offer consumers a more affordable product without damaging the image of their `premium' blends. If the industry allows the UK market to be mainly accounted for by two or three premium blends and all the rest, it will encourage decline.

Single malt whiskies aged ten years or more are the Rolls Royce products of the Scotch whisky industry. Retail prices in the UK are about double those of standard blends, so price resistance is an unfortunate barrier to growth, and their share of the UK market remains very low.

Short-term prospects for whisky and for Scotch in particular are not good. Recession, taxation and anti-alcohol propaganda will see to that.

In the medium to longer term, however, and towards the end of the century, the demographic profile of UK consumers will age and veer towards the higher social classes, that is, to match the profile of Scotch drinkers. At the same time there is likely to be a shift in consumer attitudes towards brands. Consumers are likely to return to traditional, quality products as exemplified by Scotch. They will not necessarily accept it in the form of the major brands that have been popular in the past, however. They are more likely to seek out brands that `express' themselves. Some of these brands may currently be minor blends. Others will probably be single malts.

Much of this depends, however, on whether the relentless advance of own brands can be held, before Scotch becomes perceived as a mere commodity by its target market.

The same applies to overseas sales. Exports of Scotch in bulk, both blended and malt, have been making good profits for suppliers for many years, but the end products that appear on the shelves of foreign supermarkets seem to do little to ensure the future prestige of Scotch.

More Information

  Denotes a required field.