In 2021, the United States will import scotch whiskey worth £789.8 million and 426 million liters in volume, making it the world’s third-biggest importer and the largest importer by value. The Trump administration’s implementation of tariffs, including a 12% levy on single malt scotch whiskey in October 2019, has hampered exports, however. As a result, both the value and quantity of exports to the United States fell by 11% and 14%, respectively.

Thankfully, these tariffs have been lifted, and we anticipate a recovery in exports over the next few years. The rising economy and consumer spending power, as well as the sustained popularity of scotch whiskey in the United States, will all contribute to this expansion.

This article will examine the Scotch industry worldwide, with a special focus on the United States as a key export market for Scotch. We will also be looking at data and trends that will influence future growth in the American market.

Scotch Sales Around the World

There were 1.38 billion bottles of Scotch exported to 174 markets in 2021, with a total value of $4.51 billion, as reported by the Scotch Whiskey Association (SWA). The value is up 19.4 percent from 2020, while the volume is up 12 percent. The United States is Scotch whiskey’s most lucrative export market. Scotch whiskey exports to the United States were worth about £790 million in 2021, up 26% from the previous year. To put that in perspective, the second-highest value importer, France, imports £226.1 million. Among the many reasons for Scotch’s popularity in the United States is its status as a high-end product with a stellar reputation.

The fact that whiskey has been produced in Scotland since the 15th century contributes to Scotch’s widespread recognition in the United States. Scotch has been around for centuries, but its major rival in the U.S. market, bourbon, has a much shorter history.

About 30 percent of adults in the United States have tried Scotch, so there are plenty of Scotch enthusiasts in the country. This is owing in part to the large number of Scots and Irish who settled in the United States, but it is also the result of the successful marketing of Scotch to a younger demographic. Scotch consumption among adults aged 18 to 34 has increased as a result of this advertising campaign, from 15% in 2010 to 22% in 2020. Scotch exports to the U.S. will benefit in the long run if more young people develop a taste for the spirit.

While it may not be as popular as it once was, the U.S. market is still a precious commodity. Tariffs were placed on Scotch whiskey and other EU imports by the United States in 2018. Because of these duties, shipments to the United States dropped by 21% in the second half of 2018.

Tariffs’ Monetary Toll

The Scottish government commissioned a study showing that tariffs reduced exports by anywhere from 9.5% to 19.6%, or 2.5 million liters to 5.1 million liters of single malt. The Scotch whiskey sector loses an estimated £500 million due to this.

Single malt Scotch whiskey exporters were hit hard by the 25% tax because the majority of their shipments had been destined for the United States before the tariffs went into effect. As a result of the tariffs, numerous businesses redirected their shipments to Asia and Latin America.

Scotch whiskey and other EU exports were subject to taxes because of a disagreement between the European Union and the United States over aerospace. The Scotch whiskey industry was relieved when the tariff dispute was settled in June 2021 and the taxes were suspended until a final judgment. Since the tariffs were lifted, there has been an 8% rise in shipments to the United States, and now 4 bottles of scotch are shipped to the United States every second.

A Trademark Triumph Provides Much More Assurance

This year, the SWA not only succeeded in getting the ban overturned but also in getting “Scotch whiskey” registered as a trademark in the United States. The Scotch Whiskey Association has a vital role to play in the U.S. government’s inquiry into the Scotch Whiskey Association’s claims. As a result of the registration, legitimate manufacturers of Scotch whiskey will be shielded from competition from counterfeit goods and deceptive uses of the word “Scotch” in the United States.

The Scotch Whiskey Association has been trying to safeguard the interests of producers and consumers against whiskey being erroneously sold as Scotch in the United States for several years. This is a huge win for Scotch whiskey producers and will help ensure their exports to the United States continue to rise in the years to come. Scotch whiskey now has the same legal safeguards enjoyed by Champagne and other European food and drink specialties in the American market.

Future-Oriented Thinking

The global malt whiskey market is expected to reach US$6.7 billion by 2031, up from an estimated $4.7% CAGR between 2023 and 2031, as reported by Allied Market Research.

Several factors contribute to this optimistic outlook. First, according to Allied Market Research, scotch exports to the United States will continue to increase in value over the next few years. Second, as the world’s customers become more affluent and sophisticated, they are increasingly interested in purchasing premium and super-premium scotch whiskies.

Finally, the United States’ decision to lift trade restrictions on Scotch whiskies might boost shipments to the country in the years ahead. Scotch whiskey is expected to continue its rapid expansion in the years ahead for the aforementioned reasons, with the American market playing a particularly important role.

There will be some immediate fallout from the Covid-19 outbreak in 2020, but the industry’s long-term outlook is bright. Sales of scotch whiskey, a major contributor to the hospitality industry, have been hit hard by the outbreak. However, with the economy picking back up and people taking trips again, Scotch sales should increase rapidly.

Meanwhile, online purchases have skyrocketed and are only anticipated to increase in the years to come. Despite the difficulties, this is good news for the Scotch industry. Rare and expensive bottles of whiskey have fetched tens of thousands of dollars on the online market. The U.S. market is and will continue to be crucial to the scotch business, but there are other markets with tremendous development potential.

The Asia-Pacific region is the largest market, and it is projected to expand rapidly in the years to come. Scotch sales in India have been growing by double digits in recent years, making the country an important market for the spirit. Scotch import duties are prohibitively high and stifling development.

Sales of Scotch in Several African Countries Have Increased by Over 50%, Demonstrating the Market’s Potential

Despite the difficulties of recent years, the international Scotch market is ripe for expansion. Scotch exports have a promising future, especially if they concentrate on growing markets like the United States, Asia, and Africa.

The Upcoming Difficulties

Despite this optimism, some obstacles must be overcome before the scotch business can continue to expand. The first is the wide variety of economic difficulties the UK is experiencing. UK inflation has hit its highest level in over 40 years, which might reduce consumer spending and dampen demand for Scotch. Consumers and businesses alike will feel the effects of the Bank of England’s recent interest rate increases because of the increased cost of borrowing. Scotch exports may suffer if the UK economy slows as a result of this.

In a similar vein, Scotch exports have been hit hard by the United Kingdom’s decision to quit the European Union (EU). Scotch exports benefited greatly from the years when the United Kingdom was able to trade tariff-free with the European Union. After Britain’s exit from the EU, however, it must pay the same tariffs as other countries when exporting Scotch to the bloc. This has significantly increased the cost of exporting Scotch to the EU, which has strained the Scotch sector.

Scotch Exports Have Been Affected by the Situation in Ukraine

Grain and fertilizer are essential elements in making Scotch, and both Russia and Ukraine are large exporters of these commodities. Reduced output and higher prices for these ingredients as a result of the conflict between these two countries hurt Scotch exports.

Scotch is an energy-intensive product, and the rise in global energy costs has increased the cost of production, which is a big problem for the scotch business. Because of this, margins have been squeezed, and exports have dropped in recent years. Despite these difficulties, the Scotch sector remains vital to the Scottish economy.

Can You Still Put Money Into Scotch?

In a nutshell, sure.

The consumption of Scotch and whiskey, in general, has increased in recent years. The premium and luxury markets have been expanding at a more rapid clip than the mainstream market, which has contributed to this trend. Demand expansion in China and other emerging countries like Brazil and India have been major contributors to this expansion.

Although the sector has seen significant setbacks in recent years, such as those mentioned above, the general trend remains optimistic. Scotch Whiskey Association predicts a 35% growth in industry value over the next decade as a result of greater exports to new countries.

Scotch producers have been able to absorb the increase in global energy prices thanks to efficiency increases and cost-cutting initiatives. Scotch whiskey exporters have been working hard to promote and safeguard their products, especially in strategic markets like the United States.

The Scotch whiskey sector is poised for future expansion now that U.S. import restrictions have been eliminated, and demand in Asia shows no signs of slowing down. Scotch whiskey is still a good long-term investment because of its growing secondary market and the fact that it has historically protected its value from inflation. Scotch whiskey is a classic spirit with a promising future, therefore it’s a good choice for an investment. The future seems bright for this sector, making the present a fantastic moment to jump in.