SWA Annual Review 2016-17

03 May 2017

Foreword

Events of the past year signal further change is yet to come - not least the impact of the vote to leave the EU. Since the seismic decision in June 2016, the Association and the wider industry, along with many others, have been analysing what this means in reality. We go into more detail about the potential impact of Brexit later in this review. The continuing growth of Scotch will be a litmus test of the success of the UK's exit from the EU.

While many things will change for Scotch Whisky, we are working hard to prepare for the multitude of areas where our circumstance will undoubtedly be altered. While the Association was a proponent in favour of remaining in the EU and continuing to enjoy the benefits of the single market, we have spent time since the vote working out where opportunities in Brexit lie. And given the size and scale of our industry, it is important that governments take on board our views. Scotch Whisky is a major UK manufacturing sector supporting 40,000 jobs, adding £5bn in value across the economy and generating annual exports of more than £4bn. We have been active in calling on the government to ensure the UK has as open a trade policy as possible, protects Scotch Whisky and delivers change with the minimum of disruption.

The performance of the Scotch Whisky industry over the last 12 months has been positive and I am optimistic that this will continue.

Demand for Scotch made a welcome return to growth after a slight decline in recent years. Last year, Scotch exports were up 4% in value to more than £4bn and up 4.8% by volume to 1.2bn bottles. While Blended Scotch Whisky continues to be the biggest category, it's also encouraging to see that Single Malt Scotch exports exceeded £1bn for the first time.

To meet this growing demand there has been substantial investment in the industry - by both new entrants and existing players. In the last three years, some 14 new distilleries have started production and around eight are set to open this year, with many more at various stages of planning and development. And companies already working in the sector have been expanding their facilities, for example with new warehouses and new and improved visitor centres.

The SWA wants to work closely with new entrants and support their growth, and the entire industry can benefit from the innovation they bring. That's why we signed a Memorandum of Understanding with the Scottish Craft Distillers Association, an organisation representing only newer, smaller producers of many types of spirits, earlier this year. The industry's expansion is largely down to the industry's desire to grow. It has been helped through support from the UK and Scottish Governments. We enjoy good relationships with both governments and we value their willingness to listen to our industry's needs, though we will continue to challenge where we see a need for change.

This Review gives an overview of some of the key pieces of work by the SWA in 2016 and early 2017, but it's impossible to capture all our activities in one report.
From our Edinburgh headquarters and London office we will continue to represent the Scotch Whisky industry in the UK and overseas.

I look forward to Karen Betts joining as our chief executive in May to steer us through current uncertainties. I am proud to hand on a strong Association in good shape to handle the opportunities and challenges presented by a constantly changing environment.

A strong trade association relies on the quality of input from its members and a
professional in-house team. I would like to thank all our members on Council and others who support us in what we do and for our great team at the SWA for the vital role they play in our successful work.

Julie Hesketh-Laird, SWA acting chief executive