9 April 2008 – Increasing demand from China and India and a renewed interest for single malt whisky in mature markets are pushing Scotch whisky makers to expand, media report.
Diageo, the world’s largest spirits group and the maker of the world’s two top Scotch whisky brands, Johnny Walker (sales up 14% to $1 billion in 2007) and J&B, is building Scotland’s first new whisky distillery in over 30 years. The distillery, at Roseisle, Northeast Scotland, will cost $80 million and start production in early 2009. It is part of a $200 million expansion package which makes provisions for some $160.5 million to be spent on expanding capacity, with the remaining $39.5 million being earmarked for warehousing and packaging.
Others are following suite. According to figures released by the Scotch Whisky Association, $1 billion has been invested across the Scotch whisky industry for 2008-2009.
The near totality of Scotch whisky production (90%) is exported. Exports of Scotch whisky rose 4% to a record $5 billion in 2006, when whisky sales accounted for 25% of Britain’s food and drink exports. Strong growth continued through 2007 and into 2008, industry experts forecast.
In China and India, two of the world’s largest and fastest growing economies, sales of Scotch whisky are soaring. In China, where drinking whisky is now seen as a sign of sophistication, sales of Scotch whisky have rocketed, from $2 million in 2001 to $1.1 billion in 2006, helped by a drop in tariffs from 65 to 10% in 2001. Whisky is well established in India and sales were valued at $48 million in 2006, helped there too by a cut in tariffs, from 550 down to 150%.
Meanwhile, sales of single malt whisky are also experiencing some strong growth, aided by the industry’s marketing focus on "premiumisation". Malt exports grew faster than blended whisky exports in 2007, rising 7% and prompting Edrington Group Ltd., the maker of Famous Grouse and Macallan, to invest in a dormant distillery which, once operational, will increase the group’s annual production of Macallan by over 30% to more than 8 million litres.