How did that happen, asks Oscar Quine
David Cameron’s recent jaunt to China to rustle up new business was met with an icy dismissal of the UK’s global standing from the Chinese Global Times.
“Britain is no longer any kind of ‘big country’,” an editorial read. “But merely a country of old Europe suitable for tourism and overseas study, with a few decent football teams.”
Whisky should also have been on that list, according to new figures from the Office for National Statistics. It’s a pertinent omission, given that Chinese liquor cabinets stocked with glinting bottles of Johnnie Walker, Chivas Regal and Ballantine’s played a not inconsiderable part in Scotch making it on to the ONS’s top 10 products manufactured in the UK last year – putting it, remarkably, just one place behind structural iron and steel products.
With a reputation for fustiness on these shores, Scotch may seem an unlikely fit alongside motor vehicles, aeronautical parts and steel and iron. But exports to many emerging markets have been rampant for close to a decade, driven by its desirability as a status symbol among rapidly growing middle classes.
From Latin America to India, Sub-Saharan Africa, China and the Middle East, sales grow at such an unabated rate that suppliers closely regulate price to ensure they do not run dry. It’s a success story built on exclusivity and a sense of a certain kind of Britishness, which is bringing a much-needed boost to the UK economy.
While there was a 1 per cent overall increase in the values of exports, the value of manufacturers’ sales of whisky increased by 8 per cent to £3.11bn, marking the eighth consecutive year of growth. In 2012, Diageo, the producer of Johnnie Walker, the world’s biggest-selling Scotch, announced a £1bn investment programme into its Scottish operations – including a new Johnnie Walker distillery in Speyside – to take advantage of an internationally-led “renaissance” in the centuries-old industry. Last year, the company produced 50m cases of whisky and white spirits in Scotland – 85 per cent of which was sold abroad.
“What Scotch has got is a global reach,” says Peter Smith, Diageo’s public affairs director for whisky. “Right from the early days in the 19th century, you’d have ships’ captains leaving Scotland with a crate or two of whisky, while the diaspora of Scots has also taken Scotch whisky to all four corners of the world.
“It has this cachet that no other spirit has: there are some spirits that sell far more, there are some that may be a bit more funky, but it’s Scotch whisky that has that global reach that’s been so important to its continued success.”
It’s a story that producers are working hard to capitalise on. Johnnie Walker lounges have opened in Shanghai and Beijing, to “educate” consumers about the product. For an entry-level price of RMB800,000 (£80,000), customers can work with the company’s Master Blender Jim Beveridge to create a personalised blend. Meanwhile the brand’s Asia-Pacific marketing sells its association with aspiration to a wider audience with the slogan “Keep Walking”.
“It’s about heritage and branding,” says Jeremy Cunnington, senior analyst on the alcoholic drinks team at Euromonitor. “Whisky as a whole is seen as a premium product. What you’re finding is that as consumers have more disposable income and become more aspirational, they’re looking for those types of products and whisky fills that space. If you look at different regions, consumers are moving to it from their traditional spirits.
“White spirits are often considered as bog standard and what everyone drinks. But brown spirits and it’s not just whisky, but also cognac, have that positive premium image.”
Scotch was accompanied on the ONS’s list by beer in seventh place, contributing £3.55bn to the economy. Fluctuating around mid-table for the past five years, the value of manufacturer sales dropped by 12 per cent last year, as the volume of beer produced fell by a fifth. Soft drinks came in at six.
The production of small motor vehicles was the biggest contributor to the UK economy, bringing in £13.16bn, while larger vehicles contributed just over £6bn. Aerospace technologies, a sector in which the UK is a leading international player, featured heavily, with the value of repair and maintenance of civil aircraft notably rising from £2.9bn in 2011 to £3.3bn in 2012.
For a product that owes so much to its past, producers have to think a long way ahead. “Scotch whisky is perhaps one of the longest supply chains of any industry,” says Smith. “What you’re laying down in stock, you can’t use for at least three years by law and working with five-year cycles, we’re looking five, 10, 15 years ahead.”
Complex taxation, high import tariffs and counterfeits damaging the product’s reputation are all potential obstacles for the continued growth of the industry, according to the Scotch Whisky Association. However, no members of the organisation were available for comment as it was their Christmas party. It is unknown whether they passed it enjoying a dram.
Made in the UK: Top 10
1. Motor vehicles; £13.16bn
2. Medicines and drugs; £7.46bn
3. Civil aircraft parts; £6.46bn
4. Diesel vehicles; £6.02bn
5. Military aircraft (manufacture and repair); £5.74bn
6. Soft drinks; £3.66bn
7. Beer; £3.55bn
8. Repair and maintenance of civil aircraft; £3.32bn
9. Iron and steel structures; £3.13bn
10. Whisky; £3.11bn