Scotch whiskey shows surprising strength in global gloom


Alan Powell planned to retire in 2021. Instead, the 63-year-old who acts as consultant to investors in new distilleries says he has never been busier thanks to the booming market for Scotch whisky.

In a period that has included a pandemic that stopped travel and kept people at home, big changes to UK trade rules because of Brexit, supply chain problems and an inflation spike that is threatening to push major economies into recession, whiskey has been surprisingly resilient.

In Scotland it is pulling in so much investment that the number of distilleries in the country’s five producing regions is at its highest since the second world war, according to industry body the Scotch Whiskey Association. Demand is surging from less mature markets such as Asia and Africa, and last month a cask of rare whiskey was sold for a record £16mn to a collector in Asia.

Home consumption during the pandemic made up for the pause in tourism and sales at bars and restaurants, leading to a shortage of some vintages of a product that cannot be replenished quickly.

“Even during Covid, I was busier than ever,” said Powell, who’s the co-ordinator of the British Distillers Alliance. “New entrants are seeing the opportunity.”

Last year, Scotch whiskey accounted for 75 per cent of Scottish food and drink exports, 22 per cent of UK food and drink exports, and 1.4 per cent of all UK goods exports, according to the SWA.

A whiskey cask is inspected at Speyside Cooperage in Craigellachie, Scotland. © Peter Summers/Getty Images

It was among the key drivers of an increase of almost 20 per cent in UK drink exports to £7.6bn in the year, according to advisory firm Hazlewoods. Data from the SWA show that Scotch exports are on track to at least match their 2019 level of £4.9bn, having reached £2.2bn by the end of May.

“Many British drinks brands have successfully drawn on their heritage image to establish themselves as premium purchases overseas” and whiskey distillers have led the way, said Rebecca Copping, associate partner at Hazlewoods.

Ian Stirling and Paddy Fletcher are two Edinburgh residents who are building a distillery that they say will be capable of producing 400,000 liters of pure alcohol a year at the city’s historic Leith docks.

They found that whiskeys longer production schedule — it must be matured for at least three years — can have downsides for potential backers with shorter-term investment horizons.

“Institutional investors laughed at us,” Fletcher said at the distillery site, which is due for completion in early 2023.

They turned to smaller investors instead to complete the £14mn fundraising to build the distillery, while a crowdfunding campaign that closed at the end of July attracted 570 investors, they said.

Ian Stirling, left, and Paddy Fletcher, co-founders of the Port of Leith Distillery inside the facility.
Ian Stirling, left, and Paddy Fletcher, co-founders of the Port of Leith Distillery inside the facility. © Jeremy Sutton-Hibbert/FT

Sukhinder Singh and his brother Rajbir were pioneers of online retail in the sector, starting The Whiskey Exchange in 1999.

The pair sold the company to Chivas Regal brand owner Pernod Ricard in 2021 and are now expanding into production — in addition to retailing — through their Elixir Distillers business. The brothers are building a distillery on Islay, the Hebridean island already famous for its whisky, and buying the Speyside Tormore brand from the French company.

“More and more people are falling in love with whisky,” said Sukhinder, but it will be years before the increased capacity catches up with demand, he added, because “you can’t just turn the tap on”.

Artisanal Spirits Company is the listed Scotch producer that owns the more than 35,000-member Scotch Malt Whiskey Society. Managing director David Ridley said the high end of the market could be worth as much as $4.3bn.

In July, the company reported a “standout” 50 per cent rise in sales in China at its interim results.

“The desirability of what we have to offer surmounts the current situation in terms of the economy,” Ridley said.

Graeme Littlejohn, strategy and communications director at the SWA, said the long-term nature of the industry meant it was able to defy short-term economic volatility, noting that at the height of the financial crisis in 2008-11, exports rose by 40 per cent.

While it was “not immune to the global situation, the long-term vision means some of the bumps in the road are lessed”.

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