Scotch Whisky Supply Chain

05 Feb 2015

Economic Impact

The Scotch Whisky industry has direct, indirect, and induced impacts on the UK economy. Direct impacts measure the impact generated directly by the industry. Indirect impacts capture the employment and value generated by the links between businesses in the Scotch Whisky supply chain (for example, distillery purchases of cereals or transport services) and by capital spending. Induced effects arise through the spending of workers in the industry or the supply chain (for example, workers in a bottling plant support jobs on the high street of their local town when they spend their salaries).

Taking all these impacts together, the Scotch Whisky industry adds around £5bn of value to the UK economy, supports 40,300 jobs, and supports salaries of £1.4bn to UK workers.

In its direct impact, the Scotch Whisky industry adds value of nearly £3.3bn to the economy, employs 10,900 workers, and generates £520m in salaries for its employees.
   
In indirect and induced impacts, the industry adds £1.7bn in value, supports 29,400 jobs, for example across the supply chain in areas such as packaging, and generates £875m in salaries.

Supply Chains

  • Every £1 paid to the industry's supply chain sustains a further £0.54 in salaries
    to workers in the supply chain.
  • Scotch Whisky producers spend £1.4bn a year on Scottish suppliers.

By mapping operating costs and investment to production categories it is possible to analyse the Scotch Whisky industry's supply chains in more detail.

Of the £1.8bn operating expenditure of the Scotch Whisky industry, 81% is spent on Scottish suppliers and 90% in the UK (against an average of 80% for Scottish manufacturing industry overall).

The remaining 10% is spent outside the UK. The pattern of purchases from suppliers based in the rest of the UK is similar to that of suppliers based in Scotland with dry goods (bottles, packaging), cereals, energy and transport & distribution accounting for the majority of purchases.

Of the £140m capital expenditure, only about 30% is spent in Scotland, and 70% in the rest of the UK or overseas. This is because of the specialist nature of capital equipment: capital items like machinery, vehicles and software are less likely to be produced in Scotland.

Scotch Whisky producers have significantly increased spending with Scottish suppliers in recent years. Part of this increased spending is a result of rising commodity prices where Scottish suppliers are particularly competitive. For example, energy accounted for 4.1% of operating costs in 2000, but by 2008 this figure had doubled to 8.5%.

The latest Input-Output data published by the Scottish Government and surveys of SWA members show around three quarters of goods and services purchased from outside of Scotland are sourced from suppliers in the rest of the UK. This suggests around £330 million of operating and capital costs were spent on suppliers in the rest of the UK.

Fact & Figures

  • Scotch Whisky producers spend £1.4bn a year on Scottish suppliers and around £320m on suppliers based in the rest of the UK
  • 90% of the Scotch Whisky industry's operating expenditure is within the UK
  • The industry supports 40,300 jobs directly and indirectly across the UK
  • The operating costs of the Scotch Whisky industry in 2013 were around £1.8bn, excluding employee costs.
  • The industry invested £142 million in 2013 and increase of 31% since 2009.
  • The Scotch Whisky industry adds around £5bn of value to the UK economy, and supports salaries of £1.4bn to UK workers.
  • About 92% of the jobs supported (37,000) are within Scotland, a further 8% (3,300) within the rest of the UK.
  • Of the £1.8bn operating expenditure of the Scotch Whisky industry, 81% is spent on Scottish suppliers and 90% in the UK.
  • Of the £140m capital expenditure about 30% is spent in Scotland, and 70% in the rest of the UK or overseas.
  • Scotch Whisky adds £3.3 billion directly and nearly £5bn overall to UK GDP

 

The above supply chain information is taken from our Economic Impact of Scotch Whisky Production in the UK report. The attached map is a cross representation of industry suppliers across the UK, rather than a comprehensive list.