Angus MacLeod

As leading legal advisors in the drinks sector, we recognise the importance of understanding and addressing the pressing issues that are currently facing the Scotch Whisky industry.

After conducting an in-depth review of how Brexit-driven regulatory changes, trade barriers, sustainability concerns, and other global challenges might impact clients in this sector, it is evident that the road ahead presents both challenges and opportunities.

From combating counterfeit products to addressing sustainability concerns, the industry must adapt and innovate to thrive in a highly competitive global market.

Some of the findings from the review found

Brexit-driven regulatory changes

Following the United Kingdom’s withdrawal from the European Union, the Scotch Whisky industry has grappled with introduced regulatory changes and uncertainties. The industry, heavily reliant on the EU’s single market and trade agreements, must now navigate different regulations and potential disruptions to supply chains in the new trade relationship between the UK and the EU.

Trade barriers and tariffs

The imposition of trade barriers and tariffs has been a significant concern for the Scotch Whisky industry. Trade disputes, such as those between the United States and the European Union, have in the past resulted in retaliatory tariffs on Scotch Whisky exports. While Brexit untangled the UK from that particular dispute, it has its own disputes and uncertainties over tariffs now. These tariffs increase the cost of Scotch Whisky for consumers and create market uncertainties, affecting the industry’s competitiveness and growth potential.

Intellectual property protection

The Scotch Whisky industry continues to battle against counterfeit products and the misuse of its protected geographical indication (PGI) status. Unscrupulous producers in various parts of the world attempt to imitate Scotch Whisky or to produce “piggyback” products, misleading consumers and damaging the industry’s reputation. Strengthening intellectual property protection and combating illicit trade remain significant priorities for the industry to safeguard its heritage and maintain consumer trust.

Sustainability and environmental concerns

As global awareness and concern for environmental sustainability grow, the Scotch Whisky industry faces increasing pressure to address its environmental footprint. Issues such as water usage, energy consumption, waste management, and carbon emissions are key areas of focus. The industry is striving to adopt sustainable practices throughout the supply chain, including sourcing ingredients responsibly, reducing energy consumption, and implementing circular economy initiatives.

Changing consumer preferences

The evolving tastes and preferences of consumers pose challenges for the Scotch Whisky industry. Younger consumers, in particular, may have different drinking habits and preferences compared to previous generations. The industry must adapt to changing consumer trends, including the demand for premium, craft spirits, experimentation with new flavours and styles, and the rise of alternative spirits categories. All of this has to happen whilst preserving the heritage factors within the industry’s brands, which are key to its success.

Global competition

The Scotch Whisky industry faces intense competition from other global spirits producers. Whiskies from countries like Ireland, Japan, and the United States have gained popularity and recognition, challenging Scotch Whisky’s dominance. The industry must continue to emphasize its unique heritage, quality, and craftsmanship to maintain its position in the global market.

Brexit and workforce challenges

Brexit has also created concerns about the availability of skilled workers in the industry. Like many industries, workers in the Scotch Whisky industry, including distillers and blenders, come from other EU countries. Changes to immigration policies and potential labour shortages pose challenges for the industry’s workforce, potentially impacting production capabilities and expertise. Navigating new rules for skilled worked migration can be challenging, but skills gaps have to be filled.

Responsible drinking and regulations

Promoting responsible drinking and complying with regulations regarding alcohol advertising, labelling, and marketing are ongoing priorities for the Scotch Whisky industry. Striking a balance between promoting the brand and product while adhering to strict regulations ensures the industry maintains its reputation and contributes to the responsible consumption of its products.

Despite the myriad challenges faced by the Scotch Whisky industry, I firmly believe in its enduring resilience and remarkable adaptability.

The industry has weathered storms throughout its history, constantly evolving to meet changing times and consumer demands.

With its unwavering commitment to innovation, quality, and craftsmanship, the sector will undoubtedly navigate these challenges, emerging stronger than ever before.

Angus MacLeod is partner at Wright, Johnston & Mackenzie