UK: Chivas Brothers calls for removal of tariffs on single malt Scotch exports to the US and a cut in spirits duty in next UK budget

The chairman and chief executive of Chivas Brothers, the Scotch whisky business of Pernod Ricard, used the firm's results call to call for the removal of tariffs on single malt Scotch exports to the US and a cut in spirits duty in the next UK Budget, the Insider reported on February 12.

Jean-Christophe Coutures said that for the industry to continue its recovery, the UK Government must prioritise the interests of Scotch in future free trade agreement negotiations.

Attention was also drawn to securing improved market access in India, where Scotch whisky faces import tariffs of 150%.

Coutures said: “We must build on this momentum by clearing the path for Scotch to fully rebound and recover, and that means bringing about a swift end to US tariffs, prioritising Scotch in post-Brexit trade negotiations and a cut in spirits duty in the next Budget.”

Global exports of Scotch Whisky fell by more than £1.1 bln during 2020, according to the Scotch Whisky Association, putting them at the lowest in a decade.

In 2020, the export value of Scotch Whisky exports fell 23% by value to £3.8 bln, as countries went into Covid-19 lockdown, with hospitality and travel restrictions impacting airport retail - export values fell 70% compared to 2019.

But it is the continued impact of tariffs on exports of Single Malt Scotch Whisky to the United States that has caused the most significant losses.

The US is Scotch Whisky’s most valuable market, valued at over £1 bln in 2019, when it accounted for a fifth of global exports. Last year, exports of Scotch Whisky to the US fell by 32% to £729 mln.

Export losses to the US are in large part a result of the 25% tariff on Single Malt that the industry is forced to pay, because of a continuing dispute between the EU, UK and US governments over subsidies granted to Airbus and Boeing.

Pernod Ricard's half year results showed that although total organic sales were down 10% compared with the same period the previous year, this was a 17% up from the second half of full year 2020, when restrictions first hit.

Despite a challenging environment in travel retail - with sales down 16% - Chivas Regal returned to growth in China, following the loosening of lockdown restrictions, and also recorded double digit growth in the US and UK.

Coutures explained: “Travel retail will continue to be a challenge this year, but our domestic market performance - even in countries with on-trade restrictions - demonstrates the strength of our brands and the versatility of Scotch as a multi-occasion drink."

A 2% growth in worldwide domestic business sales, indicates the resilience of Chivas Brothers’ brand portfolio.

Sales were particularly strong in Eastern Europe, which grew 10%, driven by Russia and Poland.

Double digit growth was also recorded in China, Taiwan and South Korea where lockdown restrictions have been eased.

North American sales were up 2%, owing to the continued market-leading performance of The Glenlivet in the US.

Chivas Brothers also used the press conference to update on progress towards net zero emissions.

It announced the trialling of biofuel at Braeval distillery which follows the ongoing trial of heat electrification at Glentauchers. If successfully rolled out, the technology has the potential to halve total distillation emissions.

Progress made in circular packaging means that 95% of Chivas Brothers packaging is now recyclable, 98% is plastic-free, and a new packaging testing lab is being built to ensure it meets the 2025 target of 100% recyclable, reusable, compostable or bio-based packaging.

The company comprises 1,600 employees, 14 Scotch distilleries, two bottling facilities and over 300 warehouses across its 26 sites including Orkney, Scotland and London.

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