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Tariffs setback

Whisky distillers want duty cut after 25% plunge in US sales

Macallan single malt whisky

Single malt sales to the US have plummeted following tariffs

Whisky distillers are urging the Chancellor to cut excise duty in next month’s budget to help counter a 25% plunge in sales following the imposition of higher import tariffs in the US.

The Scotch Whisky Association says it would allow distillers to re-invest in the UK market while sales are under pressure in America.

The 25% tariff, introduced on single malts in October in a tit-for-tat dispute between the US and the EU, have caused some exporters to doubt their ability to continue exporting to Scotch whisky’s biggest market.

Karen Betts, the SWA’s chief executive, said: “The imposition of a 25% tariff on exports of single malt scotch whisky and scotch whisky liqueurs to the United States is very concerning, and the 25% fall in exports to the US in the fourth quarter of 2019, immediately following the implementation of tariffs, is stark.

“The tariffs are hitting producers hard, particularly small distillers.  Some are now asking themselves how they can continue exporting to the US, whether they can build up alternative markets, which is not something that can be done quickly, and if not how their businesses will cope.

“We are continuing to press the UK government to put in place a package of support for distillers to help mitigate the impact of tariffs, including a cut in excise duty in next month’s budget which would allow distillers to re-invest in the UK market while sales are under pressure in the US.”

A government spokesman said: “We have been clear that these tariffs are not in the interests of the UK, EU or US. The UK Government is working closely with the US, EU and European partners to support a negotiated settlement.

“We have raised the issue at the highest levels of the US administration, including with the President.”

Mrs Betts’ comments accompanied latest figures, compiled from HRMC export data, showing that the export value of global Scotch Whisky exports grew by 4.4% to £4.91bn, with growth in more than 106 of its global markets. The number of 70cl bottles exported also increased, growing to the equivalent of 1.31bn, up 2.4%.

Export growth was driven in particular in Asia and Africa, with value increases of 9.8% and 11.3% respectively.

However, the tariff on the import of single malts and Scotch whisky liqueurs into the US means the outlook for the industry remains uncertain, particularly given that this tariff could rise.

The SWA warned in August that exports in 2019 had been affected by changing trade conditions in key export markets. Producers anticipated two Brexit deadlines in March and October, as well as the US tariffs, with additional shipping.

While the US remained the Scotch Whisky industry’s most valuable market, increasing in value by 2.7% to £1.07bn, export volume fell by 7% to 127m 70cl bottles. There was a marked difference in the final quarter of the year. In Q4 2019, exports to the US fell by 25%.

Ms Betts said: “These figures underscore the global reach of Scotch Whisky. They show that Scotch Whisky remains at the heart of a dynamic, competitive, international spirits market and continues to attract consumers tapping into the global trend for premium spirits.

“The growth of developing markets in Africa and Asia shows that Scotch Whisky continues to bring new consumers to our globally renowned brands.”

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