Drink up: Weak US imports hit Scotch whisky sales
The value of Scotch whisky exports dropped 7 percent in 2014, according to a prominent industry organization, that noted a sizeable fall in deliveries to the U.S.
Whisky exports from Scotland dropped to £3.95 billion ($5.84 billion) last year from £4.26 billion in 2013, the Scotch Whisky Association, said on Wednesday in a report. The volume of exports also fell slightly, by 3 percent.
The value of exports to the U.S. - the biggest market for Scotch Whisky -fell by 9 percent in 2014, according to the trade body, which suggested the fall was partly due to adjustments in stock levels, with existing inventories being used up.
Scotch whisky, often just called Scotch, can only be made in Scotland, where primitive versions of distilling begun as long ago as the 15th century. Scotch is noted for is distinctive flavor, as well as its long history, and is one of Scotland's best-known exports.
It conceded, however, that the spirits market in general was becoming increasingly competitive.
"Economic and political factors in some important markets held back Scotch Whisky exports in 2014, after a decade of strong growth. It shows that the industry's success cannot be taken for granted," David Frost, the association's chief executive, said in the press release.
The trade body also highlighted "consolidation in many developed markets," as well as political volatility in some major markets.
Jeremy Cunnington, senior alcoholic drinks analyst at Euromonitor International, said that drinks wholesalers tended to eat into stockpiles at times of economic crises. But he told CNBC via telephone that this was not necessarily what was playing out here and that a number of issues could be happening along the supply chain.
He said the market for premium single malt-which is made up from malts from one particular distillery-had performed very well in recent years, with a trend towards "brown spirits" like whisky and cognac. However, the market for cheaper blended Scotch - which is made up of malts from different distilleries - is becoming more saturated and could continue to struggle.
A yearly review by the U.S. Distilled Spirits Council in February found that Scotch single malts exports to the U.S. roses 6.4 percent by volume in 2014, and 9.2 percent by revenue.
The important Chinese market was another area where whisky underperformed in 2014, according to the Scotch Whisky Association, which took its data from the U.K.'s customs office. It said the value of these exports sunk 23 percent last year.
Cunnington told CNBC that this was partly down to an ongoing austerity campaign in China aimed at cracking down on gift giving in the public sector.
He also said there had been a major shift in consumption habits in China as it became a more consumer-driven economy, and predicted that cheaper whisky variants could see a pickup in sales over the coming years.
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