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Figures show whisky sector not in decline, say insiders

The Scotch whisky industry is not in crisis, in spite of mass layoffs at Diageo and recent production cuts at Chivas Brothers, and the forthcoming global export data will prove it, insiders at the Scotch Whisky Association claim.

The industry body’s figures for the first half of 2009, set for release at the end of the month, will reveal an uptick in the overall value of shipments around the world, SWA insiders said.

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However, they will also show that during the first quarter of the year, whisky distillers saw markedly diminished demand from trade customers, which had difficulty obtaining funds from banks amid the credit freeze – but increases in the second quarter offset the earlier decline.

“We’ve said all along that the whisky industry is recession-resistant, not recession-immune – and we stand by that,” one insider said.

“What these latest figures will show is that global consumption overall has not decreased. The problem was that trade customers were ordering less because they were having trouble getting credit.

“These customers were simply using up existing supplies before deciding to restock. That situation changed in the second quarter.”

The insider told The Herald: “To suggest the whisky industry is in decline is ridiculous. In the past two years alone, around £500m has been invested into new and rejuvenated distilleries. If that’s not a sign of confidence, I don’t know what is.”

Such comments are noteable because Diageo, the world’s biggest drinks group, earlier this week said it would continue with plans to close its Johnnie Walker bottling plant in Kilmarnock and axe headcount at Port Dundas with the combined loss of 900 posts.

The group, which last week also issued a downbeat outlook for 2010, will offset the layoffs by creating 400 jobs through the expansion of the packaging plant in Fife.

Meanwhile, Chivas Brothers, which is owned by French drinks giant Pernod Ricard and controls around 20% of the Scotch whisky market, also this week said it cut production at several distilleries as whisky sales suffered in the past six months. It said volumes of Ballantine’s are down 4% and Chivas Regal off 5% year-on-year.

Earlier this year, SWA figures revealed the Scotch whisky industry has set new records for exports in 2008, earning £97 every second for the UK’s balance of trade. The value of shipments increased by 8% to a record £3.1bn.

Comments by insiders suggest that the latest half-year figures, when published, will reveal that industry is on track to set a new record in 2009.

“Some markets are down, it’s true. Spain, Korea and the US are down – and while this reflects the state of the economy, there are also credit and supply issues,” The Herald was told.

“But there is definitely a vast improvement over the situation at the end of last year and the beginning of this year. Whisky remains a growth industry.”

Whisky industry is not in crisis, claims Scotch Whisky Association

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