What’s Wrong With Scotch Whisky? And What’s Not!
By: Kristiane Sherry
What’s Wrong With Scotch Whisky? And What’s Not!
6 minutes read
Introduction by: Peter Marshall
So, what exactly has gone wrong with Scotch whisky – and, crucially, what’s going right?
Without question, the Scotch whisky industry is enduring a challenging spell. Exports are down, sales are near-universally suppressed and share prices are down. But how did we get to this point and there is one critical question that remains thoroughly begged: is the industry missing some bright spots? Kristiane Sherry’s feature paints an interesting picture of the new marketplace reality and whether or not travel retail will be impacted.
It’s fairly safe to say that the Scotch whisky industry is injured right now. But depending on who you chat with, it is either on an intensive care life support machine, or just heading out of the minor injuries clinic, patched up with a couple of stitches.
The differing views add to the general sense of confusion and disarray. Some brands are doubling down, returning to more conventional marketing and even conservatism. Giant Diageo pulled its backing from Distill Ventures, the brand accelerator it is the sole funder of. And, across the country, stills have been left cold and roles are made redundant, with production teams scaled back to skeleton levels.
What’s actually going on behind all this?
Let’s look at the top-line numbers. The Scotch Whisky Association (SWA) keeps track of the industry’s exports. In 2024 the equivalent of 1.4 billion 70cl bottles left UK shores, the equivalent of 44 each second. This was valued at £5.4bn. While it all sounds impressive, in value terms exports had slipped by 3.7% on the previous year.
Conversely though, exports climbed by 3.9%. According to the SWA, this reflects the “changing trends in global consumer preferences” as well as the “challenging trading environment”. More on this shortly – but be aware that it’s far from all doom and gloom.
The waters are indeed murky – but one way or the other, they need to be navigated. And it starts by taking a look at what’s gone wrong, as well as remembering that there’s still much to be optimistic about (yes, really).
Scotch got complacent
A vast amount of Scotch whisky’s problems today can be explained by what happened in 2020: the global pandemic. There’s little point dwelling on this. We all know the unprecedented world we found ourselves in overnight. And for an industry like alcohol, which is so reliant on hospitality, the shift was seismic.
What happened in the years since was a cycle of overstocking from retailers and subsequent overpricing from brands. Cash is everything – especially for smaller and newer distilleries. If your first order with retailer A is still sitting in their warehouse depleting far more slowly than they forecasted based on 2021 demand, that crucial second order is not going to be forthcoming. It’s a simplification, but the assumption from across the industry that those second orders would come and with the same volume requirements, was, in part, based on complacency.
The price hikes are then understandable. But what the industry has collectively done is reinforce a notion, through the value proposition, that Scotch is more elevated than any other whisky sub-category. While inflation has raced ahead since the pandemic, whisky prices, especially in the premium-plus segment, have surged even further. I would argue that quality has not kept up with the price increases. Imagine a whisky that in 2025 costs £120, but was priced at £60 pre-pandemic (it’s not hard). There has been very little justification for the increase other than seemingly because it is Scotch. It doesn’t add up. Consumers have been priced out by what to me looks like complacency.
Scotch became irrelevant
On a similar theme, it feels like Scotch has not done enough to attract new drinkers, especially in mature markets. Sure, India is top of the tree when it comes to exports. And younger people are enjoying whisky right across South East Asia. But in the UK, France, the US and others, there’s an over reliance on those who already know they are Scotch drinkers. From marketing to advocacy and even product design – not enough has been done to appeal to the craft beer, natural wine, agave spirits and coffee drinkers who love flavour, but don’t see their lifestyle reflected in whisky. This isn’t to say the core demographics need to be ignored – but don’t expect to get a different outcome from doing the same thing over and over again.
Scotch sunk into pessimism
Listen. I get it. There’s a lot going on in the world right now, far bigger and more urgent than whisky. It feels like an uncertain, heavy time. And of course, this affects everything from consumer spending to business confidence. But I do wonder if the industry repeatedly telling itself how bad it is has just made everything feel worse?
Take the SWA. At the time that the 2024 export figures were released, chief executive Mark Kent cited tax increases, inflation, cost of goods and ingredients, energy prices, regulatory costs and more for the downturn. All of these things are real. They are hard. And they are undoubtedly extremely difficult to navigate. It feels like instead of looking for solutions, Scotch is quicker to express the disdain. Misery loves company, I guess?
“There is a level of pessimism in the world which I think is unusual,” William Grant’s Kirsten Grant Meikle told me last week. She is a company director and fifth generation of the Grant family. “ I don’t think that’s wrong, I just think it’s quite pronounced.” She puts it down to the general uncertainty. “I think that’s contributing a little bit to the overthinking of ‘what’s wrong?’ I don’t think there’s anything wrong.”
But really… there’s nothing at all wrong with Scotch
Meikle brings me to the final point. Perhaps there’s not actually much wrong with Scotch at all right now?
Last month, I met an industry colleague for a drink. Not long after sitting down he waved his phone wildly across the table at me. It showed a neat chart detailing Scotch sales over the last 20 years. For 2023 and 2024, sales had dropped dramatically from the pandemic-era highs. But actually they were fully in line with the upward trend seen in the 2010s.
SWA figures show this is true. Taking 2019 as a base line, exports have increased 10% in value, with volumes up 7%. “There are more people in the world drinking Scotch than ever before”, my source cheerfully told me.
Right now, they’re drinking lower value stuff (as a general rule – the highest of the high-end remains largely untouched too), which makes perfect sense given the ongoing cost-of-living crisis. Tariffs of course won’t help with this. But people like Scotch. They will keep drinking it, even if they’re trading down right now.
What does this all mean for GTR?
In some ways, not a lot. It has been noted that a number of releases once destined to be travel retail exclusives are being relaunched in domestic markets to use up stock. This was commonplace in the depths of the pandemic, and it will continue as the overstocking road bumps even out.
It would be wise to focus less on premiumisation-at-all-costs and instead lean towards delivering actual value – tricky in a channel where margins are tighter than tight. And the best way to support brands right now, especially the smaller ones? Just keep the cash flowing. Pay invoices promptly (or even early!). And bin off those preconceptions. Scotch has a broader appeal that the stereotypes suggest.
William Grant is confident that the general upward trend will continue, albeit with the usual ebbs and flows that come with a cyclical industry. So much so that the company is right now in a mid-expansion project at grain distillery Girvan. Capacity will almost double to over 220 million litres of alcohol a year. This isn’t just for Grants’ bottlings – they have supply contracts with businesses and blending houses across the industry. It’s a good, optimistic sign.
Meikle is certainly unfazed. “A lot of whisky companies had a fantastic year in 2023, a record year. And that’s almost falsely inflated in terms of consumption”. In her mind, that led to the “false landscape” for Scotch. The downturn we’re seeing now is “normal”. “It’s just how it is,” she says.
Because, while external headwinds are battering the industry, that’s the same for almost every sector. Yet, for Scotch, volumes are holding solid, and there’s a huge untapped market still to reach.
The industry needs to double down and ride out the storm, shake off the complacency and get relevant. This won’t be the last time Scotch experiences a downturn. But hopefully next time, we’ll all be a little less frenzied about it.
