The Chancellor must take action to reduce the 'scotch supertax'

Posted On: 
31st October 2017

The Chairman & CEO of Chivas Brothers, which controls 14 distilleries in Scotland, calls on the Chancellor to take action in the Budget to reduce duty on whisky to boost the Scotch Whisky industry, which has recently witnessed a drop in sales.

Dalmunach Distillery near Aberlour in Speyside.
Chivas Brothers

Scotch Whisky is a great British success story. An iconic product which is loved at home and coveted around the world. It is steeped in history and tradition but is a thoroughly modern drink.

More than 40,000 people are employed making Scotch and in its supply chain, from distilleries to warehousing and distribution, to bottlers, label makers and cereal growers the length and breadth of Britain. Scotch is sent across the globe in great volumes and is the UK’s number one food and drink export.

It is exactly the kind of industry the Government should be backing to the hilt as the UK prepares for Brexit. But instead, Scotch is battling against an unfair UK tax regime which was made worse by the Chancellor’s decision to increase spirits duty in March.

As a leading producer of Scotch Whisky with 14 distilleries, Chivas Brothers believes further taxation on this world-famous product – including our Chivas Regal, The Glenlivet and Ballantine’s brands - will be bad for the company both at home and in the more than 150 countries we export to. Quite simply, Scotch does not deserve to take another hit.

The Chancellor’s 3.9% duty increase in March – which put tax on Scotch up to an astonishing 80% of the price of a standard bottle - is already taking a toll. Of an average bottle sold at £12.77, more than £10 goes straight to the Treasury.

Scotch Whisky sales in the UK have fallen by one million bottles in the first half of this year after the hike. Official HMRC figures show 36.7 million bottles were released for sale in the first six months of 2017 – down from 37.7 million in the same period last year.

We want the Chancellor to cut this “Scotch Supertax” and are calling on politicians to give the Scotch Whisky industry the support it needs to ensure it can go from strength to strength.

In 2016, exports of French wine were valued at €7.5billion. The rate of tax on wine in its home country was close to zero - the same rate applied to wine in major exporting countries such as Spain, Italy and Portugal. Yet the Scotch Whisky industry, the largest net contributor to the UK's balance of trade in goods and 20% of all UK food and drink exports, is confronted by the fourth highest spirits duty rate in the EU.

Per unit of alcohol Scotch Whisky is taxed 19% higher than wine, 51% higher than beer, and 327% higher than cider here at home. This sends out all the wrong signals about how the Government values the contribution of the Scotch Whisky industry.

The Scotch Whisky industry has been not just a great British success story, but a global success story. However, our success should not be taken for granted. So we are urging all politicians at Westminster and Holyrood to convince the Chancellor to deliver a Budget that supports our future export growth and creates a more competitive domestic environment.

Scotch has been a highly-successful British export for many years but its treatment in its home market is damaging its ability to grow at home and to sell overseas.

As a company, Chivas Brothers is committed to expanding production facilities in the Highlands of Scotland and is spending £40 million on creating a state-of-the-art manufacturing base in Dumbarton as part of a £60 million annual spend.

We want our commitment to the industry to be matched by the Chancellor in his Budget next month – and he can show that commitment by cutting the tax on Scotch.

Laurent Lacassagne is the Chairman & CEO of Chivas Brothers

Alistair Carmichael MP has a Westminster Hall debate on Tuesday 31st October 2017 on the '​Future of the Scottish whisky industry'. He has written an article on this here