With the recent success of Scottish whisky firms increasing the sales of their product on an international scale demand for the spirit has sky rocketed in recent times, and if the basic principles of economics have taught us anything it is that where there is a demand, there must also be an adequate supply. The question is though where has it all been coming from; granted Scottish farmers are more than happy to accept as much business from distillers as is viable, although the sheer demand for ingredients is so high that Scottish farmers alone cannot supply all that is needed. As such distillers have looked across the border to England for more arable farmers and encouraging them to grow barley for use in the malting process of whisky.
This may come as a bit of a shock for any patriotic Scotsman who has probably just choked on their dram but the fact of the matter is despite the national pride and the romance that whisky conjures up in people’s minds, distilleries are businesses run by business people who have for years been buying ingredients from outside Scotland. Really it shouldn’t come as any surprise that England would be the prime candidate for this, especially considering the fact that Scotland only has one land border which it shares with England.
The result of this cross border cooperation has further benefits on a national scale. The seemingly recession busting increase in whisky sales over the past few years ranks it as one of the UKs top ten exports and it shows no sign of stopping. Bowmore has already procured ‘The Harbor Inn’ on the island of Islay itself in order to gain a greater foothold in the retail sector, and Diageo has recently announced it will invest a further $49 million to expand its Scottish Clynelish distillery which produces single malt to be sold as single malt itself or to be used in blends.
Although despite the success of the whisky industry in an otherwise fruitless recession, the UK government shows no sign of scrapping the alcohol duty escalator for whisky as it already has done for beer. The escalator means that duty has increased 2% above inflation for the last several years meaning that consumers are now paying a whopping 44% tax on the dram, which is approximately 50% more than what beer drinkers have to pay. As a result the Scottish Whisky Association is now urging the UK government to start addressing the disparity by supporting the ‘Call Time on Duty’ as a means of stemming the damage the escalator is causing to the domestic market which last year dropped by 12%.
It is understandable why the chancellor would want to keep such a valuable resource as close to the chest as possible as the whisky industry provides a much needed source of funding to the exchequer. However conversely smothering the industry with stricter controls may damage the domestic market further which is of grave concern for distillers as to quote that old phase “a good thing can’t last forever”.
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