THE Scotch Whisky Association (SWA) has insisted the long-term export outlook for the sector remains strong, as Diageo put its distillery expansion plans on hold in light of weakening global demand.

Slowing sales in certain overseas markets, including China, has led Scotland's biggest Scotch producer to review the timetable for its £1 billion, five-year expansion strategy.

Diageo is hanging fire on plans to build a £50 million malt whisky distillery at Teaninich in the Highlands and an £18 million expansion of Mortlach distillery in Speyside as it seeks to find "the right balance between supply and demand".

But the company is understood to remain committed to the projects, and said yesterday it continues to see "long-term potential" for Scotch around the world.

That confidence was echoed by the SWA, which insisted the "fundamentals remain strong" - in spite of exports tumbling by 11 per cent to £1.77 billion in the first half of the year.

Highlighting a £2 billion pipeline of investment planned by the industry, spokeswoman Rosemary Gallagher said: "After a decade of record growth in Scotch exports, there are signs that in the first half of 2014 demand levelled off in some markets. However, the fundamentals remain strong and we remain confident Scotch whisky will grow in the long term as markets stabilise and new ones, such as countries across African, open up."

Diageo said: "Our long-term investments are naturally planned in phases to give us the ability to adjust to fluctuations in demand and to ensure the right balance between supply and demand."