A quick web search will show that there are more than 150 gin brands produced in Scotland; an increase in demand has led some industry experts to suggest that gin could overtake whisky sales in the near future. Demand has grown in part due to the increasing popularity of cocktails, but in many cases, whisky distillers across Scotland are opting to produce gin because it is quicker and easier to make and offers a faster return while whisky must mature before sale. Using existing skill-sets and expertise for gin production is perhaps why around 70% of all the gin produced by the UK is made in Scotland.
Embracing Scotland’s heritage
Three of the world’s best-selling gins are made in Scotland – Hendrick’s, Gordon’s and Tanqueray – but it is with the boutique firms that much of the strong growth is being realised. One of the reasons Scottish gin has grown in popularity is because makers are embracing their heritage. For example, The Botanist Islay Dry Gin is made from a selection of wild plants and herbs from the island to give its unique flavour. The House of Elrick uses fresh water from Loch Ness to make their gin, and has a heritage dating back to the Scottish Enlightenment in 1720.
More than a wee dram of whisky exports
While gin is enjoying a boom, traditional Scottish whisky is not being left behind. Analysis of HMRC data by the Scotch Whisky Association (SWA) found exports grew 7.8% by value in 2018. Bulk whisky for bottling abroad and bottled single and blended grain whisky exports together amounted to £359m. The reputation of Scottish whisky travels a long way – the US became the first billion pound overseas market last year, although the EU remains the largest market, representing 30% of global value and 36% of volume sales.
Bucking the trends
On a global scale, there has been a decline in alcohol sales by volume and experts predict that this is likely to stagnate further in the future. Cocktail culture has aided the growth of spirits, but current healthy lifestyle trends suggest that the real growth in the future could be in those drinks that also offer something on that front. The use of natural botanicals as gin ingredients, and the heritage of whisky production in Scotland and its links to the landscape could help buck the overall trend of declining sales. The challenge for distillers will be to maintain the same quality and unique identity as the market comes under pressure; there is growth potential in export markets for brands that understand the unique value of their product.
Exporting a piece of Scotland all over the world
Roughly 3% of total Scottish GDP comes from the spirits industry; whisky alone accounts for 20% of all the UK’s food and drink exports and the growth in gin will make this industry another force to be reckoned with on the global market. The industry is a major employer in Scotland and helps to support other industries such as tourism as visitors flock from across the world for distillery tours and whisky trails.
Using an FX expert
Producers looking to explore the potential of export markets do face some challenges. Brexit is putting a question mark over European markets and may see exporters branching out further to spread their risk. The uncertainty is also leading to greater volatility in currency markets and those fluctuating currency values can impact margins and make revenue and costs harder to predict. That’s why we work closely with distillers who have global ambitions to manage all their international payments in multiple currencies with great rates, expert guidance and a range of specialist tools to mitigate the risk of fluctuations in the value of the pound. It’s clear that there is a lot of global potential in Scotland’s distilleries and support from a currency specialist can help producers make the most of that opportunity. Our Scottish office in Edinburgh can assist you with international payments and together we can raise a toast to the good health of distilleries across the country - sláinte mhaith!