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22 August 2022

Distillers expect costs to double in next 12 months

Distillers expect costs to double in next 12 months
New survey finds 30 percent of Scotch distillers expect energy costs to double in next 12 months; with 72 percent expecting shipping costs to go up by a further 50%

Scotch Whisky distillers have called on the new Prime Minister and Chancellor to back the industry in the Autumn Budget by cancelling the planned double-digit tax increase.  

The tax burden on the average priced bottle of Scotch Whisky already sits at 70% due to high rates of spirits duty. A new survey reveals over half of Scotch Whisky distillers have seen their costs double in the last 12 months and expect further increases in the next year.

A survey conducted by the Scotch Whisky Association (SWA) found that 57 percent of distillers have seen energy costs increase by more than ten percent in the last year, with nearly a third (29 percent) seeing their energy costs double. Nearly 40 percent of businesses, which produce the UK’s number one food and drink export, reported shipping costs doubling in the last 12 months, with 43 percent also reporting supply chain cost rises of more than 50 percent.

The survey also found most distillers see costs rising further over the next year, with 57 percent of businesses expecting energy costs to go up by a further 50 percent and nearly three quarters (73 percent) anticipating another 50 percent increase in shipping costs. However, despite rising costs, the industry expects to continue to invest in operations and supply chain. 57 percent of distillers reported an increase in their number of staff in the past 12 months, with all respondents expecting to need to add to their workforces in the coming year.

The Scotch Whisky Association has called on the new Prime Minister and HM Treasury team to commit to supporting the industry by not increasing excise duty in an Autumn Budget.

Mark Kent, Chief Executive of the Scotch Whisky Association, said:

“The industry is delivering much needed growth for the UK economy through investment, job creation and rising revenue to the Treasury. But this survey reveals that distillers are investing in growth despite the economic headwinds and rising costs on business.

“The industry has shown remarkable resilience, but this cannot be taken for granted. We are at a critical juncture for many of our members. The Autumn Budget must support the Scotch Whisky industry which is a crucial driver of growth in the economy, particularly across Scotland. UK excise duty on Scotch Whisky and other spirits is already one of the highest in the world, and we call for there to be no spirits duty increase in the budget. Any such increase would compound the cost of business pressures companies are facing, add at least 95p of duty alone onto every bottle of Scotch Whisky, and further fuel inflation.”