SCOTCH whisky exports have declined for a second straight year as political and economic factors caused the value of shipments to the US and China to tumble.


Exports of Scotland's national drink fell by 7 per cent to £3.95 billion in the 12 months from January to December last year, figures published today by the Scotch Whisky Association (SWA) reveal.

The drop, which follows a 0.2 per cent decrease in export values in 2013, underlines the continuing difficulties faced by Scotch in China.

Exports to Singapore, the major gateway hub for exports to China - and the third most valuable destination for Scotch - plunged by 39 per cent to £201m, as government austerity policies continued to hit spirits sales hard.

Direct exports to China fell by 23 per cent to £39m, the official export data from Her Majesty's Revenue & Customs shows.

A spokeswoman for the SWA said: "The Singapore market itself isn't that large, and a lot of it is down what's happening in China. That's not going to change any time soon, because austerity measures are ongoing in China. That is really why Singapore is down so much.

"We just have to keep an eye on China and see what could happen there, but we are not alone - other drinks are struggling there because of the government measures and the economy not growing as quickly as people thought it might."

Beyond China, the SWA emphasised the industry is experiencing success in other parts of Asia, notably its in Taiwan. Exports to Taiwan, the industry's fourth most lucrative destination, soared by 36 per cent to £197m as single malts continued to be popular.

But in the west the industry faced significant headwinds in the US, the most lucrative global market for Scotch, where the value of exports fell by nine per cent to £748m.

This came as economic pressures weighed on consumer sentiment and as imports dropped because outlets worked their way through stocks built up in advance.

The US market has also seen intense competition in the spirits market, where Scotch is increasingly vying with other categories of brown spirits, including American whiskey, for consumers' attentions.

But the spokeswoman pointed to data from the US Distilled Spirits Council, which suggested the market shrank by just one per cent last year and volumes of single malt rose by 6.3 per cent.

"We think it's a short term blip, and hope the signs are looking good," she said.

The conflict between Russia and Ukraine also weighed on exports last year. Although the sanctions imposed on Russia do not extend to Scotch imports, the spokeswoman conceded exports have been caught up in the turmoil.

The value of exports to Russia dropped by 95 per cent to £24.8m, with shipments to Ukraine down by 20 per cent to £3m.

The effects of the conflict were also reflected by the export figures for Germany, a hub for Russia and Ukraine. According to the figures, exports to Germany, the sixth most valuable destination for Scotch, dropped by 18 per cent to £141m.

While the SWA noted that economic and political factors had held back exports last year, it pointed to significant success in other markets. Exports to India leapt by 29 per cent to £89m, despite a 150 per cent import tariff and an impasse in talks to secure a free trade agreement (FTA).

The SWA said the importance of securing freer market access for Scotch is illustrated by South Korea, where an EU agreement on free trade agreed in 2011 helped lift the value of exports by two per cent to £117m last year. It also noted the potential impact from prospective agreements with Vietnam and the US, the latter with the EU-US Trade & Investment Partnership (TTIP) and its potential for reform around labelling and regulations.

Scotch took significant strides in the United Arab Emirates (UAE), with export values up by 27 per cent to £116m, and there was growth in Japan, up eight per cent to £64m.

Exports to France, the second biggest market for Scotch by value, and the largest by volume, grew by two per cent in value terms to £445m.

But the value of exports to South Africa declined by 17 per cent to £136m, by 10 per cent in Mexico to £99m, by one per cent to Australia to £83.5m, and by 20 per cent in Brazil to £80m.

Scotch shipments to Spain also fell, by eight per cent to £166m, although the SWA said volumes made positive ground for the first time in several years, rising one per cent to 57.9m litres.

The overall volume of exports shipped by the industry dropped by 3 per cent to 1.19bn 70cl bottles.

The second successive fall in export values come after several years of record breaking growth for whisky, with big gains made in emerging markets.

The spokeswoman said the industry knew realistically that such growth had not been "sustainable as markets mature, and that the sector has returned to "steadier, more manageable growth".

Asked whether the export slowdown is influencing distillers' expansion plans, she said the mood in the industry remains optimistic. She noted the fact there are plans underway for as many as 30 new distilleries "is another sign that the long-term outlook is strong."