Scotch Whisky: powerhouse in Europe
26 Jun 2014
I was happy to be back in Brussels this week, my old
stamping-ground when in government. I was speaking at the
launch of SpiritsEUROPE'S brochure on the importance of spirits
exports to European prosperity.
Its title says it all, Spirits: a European powerhouse for
trade. The keynote speaker was the European Commissioner for
Trade, Karel De Gucht. Also on the panel, compered by Paul
Skehan, SpiritsEUROPE'S director, were my opposite number in
France, the head of the Cognac association (BNIC), Catherine Le
Page, and Hosuk Lee-Makiyama, from the think-tank
All of us in our different ways underlined the success of the
European spirits sector. Over the decade to 2013, European
spirits exports outside the EU doubled to €10 billion, making them
the EU's most valuable agricultural export. Scotch
Whisky represents about 40% of this total. We also underlined
the sector's capacity to carry on increasing exports significantly
over the next five years, and stressed how important it was for the
incoming European Parliament and Commission to carry on supporting
a positive trade agenda.
I said the following about the success of the Scotch Whisky
industry over the last decade:
1. We currently export €170 of Scotch Whisky every second
from the UK, with about €100 going outside the EU, and that
proportion growing. The growth in our exports tracks
growth in emerging markets, and even in difficult markets our
record is good. For example, in India our exports increased
by 12% last year, despite all the barriers and a 150% tariff;
Brazil is our 10th biggest market, with exports up by nearly
20%. And in Nigeria, although exports are still well below
potential, we saw them increase by over 40% last year.
Getting fuller and freer access to these markets is vital if we are
to continue to succeed.
2. We have succeeded because:
- we make a long-term commitment. Scotch Whisky companies
have had a presence in the main emerging markets for years.
They know local preferences and networks and can work with
them. They have invested in high-reputation brands that
appeal to aspirational consumers.
- we protect our reputation. We've made a determined effort
to make sure Scotch Whisky is produced to high and rigorous
standards, in Scotland. We've determinedly chased down fakes
and products that, by implication, suggest they are Scotch Whisky
when they are not. Over a long period, this pays
dividends. Just as German machine tools command a premium and
are sought by customers, so is Scotch Whisky from
- like the rest of the spirits industry, we've used trade policy
mechanisms to get results. We were a pioneer in getting trade
deals through bilateral EU agreements, for example the Spirits
Drinks agreements with the US and Mexico. We press when
necessary for the use of WTO and single market enforcement
mechanisms. In all this being able to work closely with both
the Commission and British Embassies is vital.
3. But we could do more. On what basis?
- The potential of EU Free Trade Agreements is not yet fully
developed. The EU's FTA negotiations started off ten years
ago as an emerging markets programme, to help improve the business
environment in those countries and deal with behind the border
barriers. In practice is has become a developed markets
programme, with deals concluded with developed economies like
Korea, Singapore, and Canada, and with the most live negotiations
with the US and Canada. Meanwhile, progress is slow on major
emerging market talks such as with Mercosur, with SE Asia, and with
India. We hope the new Commission will give new energy to
these vital negotiations.
- FTAs also need to actually generate free trade. We are
disappointed that alcoholic drinks were excluded from
liberalisation in the West Africa EPA and perhaps will be from
other EPAs too.
- There could be more creativity in trade negotiations. The
EU/US TTIP is potentially an excellent example here, with the
proposed Spirits Drinks Annex to set out best regulatory practice
as an example to others. Moreover, the TTIP will enshrine the
Commission's excellent idea of a "living agreement", ie providing a
framework to negotiate issues that don't make it into the initial
deal. This too could be a model. With our biggest
partners, we could aim at continuous negotiating processes
providing periodic agreements, rather than big bang deals.
This would mean that sectors not in an initial agreement could
still look forward to the prospect of liberalisation, rather than,
as now, losing it for a generation.
- Finally, we'd like to see DG Trade getting more resources.
The scope of its work has expanded massively in the last few years,
and resources have not kept pace. The Commission needs to be
more rigorous in moving people from low to high profile areas, and
be more willing to take in staff from Member States on a temporary
basis to help get things done.
David Frost, Scotch Whisky Association chief
You can read the brochure here: