TRENDS FOR SCOTCH WHISKY TO 2027

 Scotch Whisky Market Report Summaries

Detailed Information By Top Players Diageo Plc, William Grant & Sons, Pernod Ricard, Bacardi Limited, Suntory Holdings, Aceo Ltd., & Others 

UP TO 2018

Scotch whisky is malt or grain whisky made using malted barley and unmalted cereals such as maize or wheat in Scotland. The malt drying process for Scotch whisky production gives it a smoky flavour, thus enticing the consumer to purchase it. The Scotch whisky market is expected to witness robust growth due to the increasing preference of consumers towards premium products. Further, the wide availability of various unique flavours such as malt & honey, dried fruit & nut, elegant & floral, fresh fruit & vanilla, and others in Scotch whisky has also contributed to fuelling its market.

The increase in global export of Scotch whisky, owing to the increasing consumer demand from Asia Pacific and Africa, is majorly driving its market growth. According to the Revenue and Customs (HMRC) reports published by the Scotch Whisky Association (SWA) the volume of exports increased by 5.6% to almost 558 million bottles in 2018. The export value of Scotch whisky also increased by 10.8% to $ 2.50 billion in 2018. Along with this, the rising demand for organic Scotch whisky has also added to the global market growth.

The soaring popularity of premium spirits owing to the consumer’s evolving taste preferences is a major factor driving the global Scotch whisky market growth. According to Vinexpo, an international brand that creates and develops major events in the wine and spirits sector, the recent trend of drinking less but better will increase the consumption of pure alcohol & leading consumers to shift from wine and beers to whisky. Further, the distinct flavour of Scotch whisky plays a crucial role in boosting its popularity among the millennials, which in turn also fuels the market growth.

The high price of Scotch whisky due to its high production and storage costs is an impeding factor in its market growth. Further, the harmful health effects associated with alcohol consumption have also negatively impacted the market performance of Scotch whisky.

Key Players Covered: The key companies operating in the global Scotch whisky market are, William Grant & Sons, Pernod Ricard, Diageo Plc, Bacardi Limited, Suntory Holdings, Aceo Ltd., Ben Nevis Distillery, Edrington, Louis Vuitton Moet Chandon, Hennessy and Gordon & MacPhail.

The blended Scotch whisky segment accounted for a major share of the market as it is the most consumed variant of whisky due to its quality, authenticity and rich taste. Blended Scotch whisky is a blend of grain and single malt whisky that gives it subtle and refined flavour notes, hence is widely preferred by consumers, whereas, the single malt Scotch whisky segment is expected to grow exponentially in the market owing to the rise in its exports, that increased by 11.3% in 2018.

The off-trade channel is the most preferred sales channel for Scotch whisky worldwide. Consumers usually prefer off-trade channels such as supermarkets and speciality stores for purchasing liquor as it is comparatively cheaper than purchasing it from on-trade channels such as pubs, bars and restaurants. However, the on-trade channel is witnessing significant traction, as consumers in developed economies as they prefer attractive ambience and entertaining environments during liquor consumption. Thus, boosting the sales channel growth.

Regional Analysis:

North America is expected to observe significant growth in the Scotch whisky market due to its growing popularity and liking for it and being its largest global importer. The U.S. is the major importer of single malt whisky in 2019 coupled with this the increasing number of Scotch whisky distilleries has boosted the market growth performance. There is talk about the local scope for production, reducing import dependency, and opportunities in-house as declared by an uneducated lout of a teetotaller and grotesque leader.

Asia Pacific is the fastest-growing market owing to changing lifestyle of consumers and rapid urbanization. The increase in disposable income of the consumers as well as the extensive adoption of westernized culture has led them to switch to such premium spirits. Thus, these factors have cumulatively fuelled the Scotch whisky market growth in the region.

Segmentation By Geography

• North America (U.S., Canada, and Mexico)
• Europe (Germany, France, Italy, Spain, U.K., Russia, and the Rest of Europe)
• Asia Pacific (China, India, Japan, Australia, and the Rest of Asia Pacific)
• South America (Brazil, Argentina, and the Rest of South America)  
• Middle East &Africa (South Africa, UAE, and the rest of the ME)

The key companies operating in the global Scotch whisky market are, William Grant & Sons, Pernod Ricard, Diageo Plc, Bacardi Limited, Suntory Holdings, Aceo Ltd., Ben Nevis Distillery, Edrington, LVMH, Hennessy and Gordon & MacPhail

The blended Scotch whisky segment is accounted for a major share of the market as it is the most consumed variant of whisky due to its quality, authenticity and rich taste. Blended Scotch whisky is a blend of grain and single malt whisky that gives it subtle and refined flavour notes, hence is widely preferred by consumers. Whereas, the single malt Scotch whisky segment is expected to grow exponentially in the market owing to the rise in its exports, that increased by 11.3% in 2018. 

The off-trade channel is the most preferred sales channel for Scotch whisky worldwide. Consumers usually prefer off-trade channels such as supermarkets and speciality stores for purchasing liquor as it is comparatively cheaper than purchasing it from on-trade channels such as pubs, bars and restaurants. However, the on-trade channel is witnessing significant traction, as consumers in developed economies as they prefer attractive ambience and entertaining environments during liquor consumption. Thus, boosting the sales channel growth.

Regional Analysis:

In November 2018, William Grant & Sons launched Grant’s Distinction, a new variant in its leading Blended Scotch whisky brand in India. The company aims to cater for the increasing demand for premium spirits in India through the new product launch.

In April 2019, Diageo plc a British multinational beverage company announced a joint venture with Jiangsu Yanghe Distillery in China and inaugurated the partnership by launching a new whisky. The joint venture between the companies will aid in their geographic expansion and also broaden their consumer base.

BEYOND 2018

INTERIM FORECAST AND ANALYSIS 2022-2026

The Scotch whisky market share is expected to increase by 209.49 million litres from 2021 to 2026, and the market’s growth momentum will accelerate at a CAGR of 4.36%.

This Scotch whisky market research compiled reports of several market vendors, including Aceo Ltd, Allied Blenders and Distillers Pvt. Ltd., Asahi Group Holdings Ltd., Bacardi Ltd., Brown Forman Corp., Constellation Brands Inc., Davide Campari Milano NV, Diageo Plc, G and J Distillers Ltd., Heaven Hill Sales Co., Isle of Arran Distillers Ltd., John Distilleries Pvt. Ltd., LVMH Moet Hennessy Louis Vuitton SE, Pernod Ricard SA, Sazerac Co. Inc., Speymalt Whisky Distributors Ltd, Suntory Beverage and Food Ltd., Thai Beverage Plc, The Edrington Group Ltd., and William Grant and Sons Ltd among others.

KEY SCOTCH WHISKY MARKET DRIVER

One of the key factors driving growth in the Scotch whisky market is the increased number of marketing and advertising campaigns. One of the major growth drivers for the global Scotch whisky market is the rising number of marketing and advertising campaigns by players to increase the visibility of products and awareness among consumers about the brands available in the market. Investment in advertising and marketing campaigns by players is increasing and is expected to help the market grow during the forecast period. For instance, Diageo Plc (Diageo) increased its marketing expenditure to about $2.64 billion in 2019, an increase of about 8% compared with that in 2018. Marketing expenditure by other players is also increasing and is expected to drive the growth of the global Scotch whisky market during the forecast period.

KEY SCOTCH WHISKY MARKET TREND

The increasing demand for Irish whiskey and American bourbon is another factor supporting the Scotch whisky market share growth. Irish whiskey is the fastest-growing spirit category globally, and the increasing demand for Irish whiskey and American bourbon is expected to help the growth of the global whisky market during the forecast period. Its sweet and smooth taste, competitive pricing, investments by major brands, and increase in the demand among young, first-timers, and female whisky consumers are some of the factors that will drive the demand for Irish whiskey. The demand for American Bourbon whiskey, Tennessee whiskey and rye whisky has helped increase the overall sales of spirits. To meet the growing demand for American Bourbon, players are increasing their production capacities, and also new distilleries have been set up.

KEY SCOTCH WHISKY MARKET CHALLENGE

The increasing competition from other alcoholic beverages will be a major challenge for the Scotch whisky market during the forecast period. The increasing demand for other spirits, such as mezcal, vodka, rum, and tequila, in the US and other American countries, is affecting the sales of whiskey. In APAC, China is the largest market for alcoholic beverages. Most Chinese consumers prefer to consume beer over spirits, which will further affect the growth of the whisky market negatively. India is the largest market for whisky globally, and the increasing demand for other alcoholic drinks is affecting the sales of Scotch whisky products in India. Therefore, it has become important for the manufacturers of Scotch whisky to focus on innovative marketing strategies, better product development, and new strategies to build a customer base to sustain and grow in the highly competitive global Scotch whisky market.

MAJOR SCOTCH WHISKY MARKET VENDORS

• Aceo Ltd
• Allied Blenders and Distillers Pvt. Ltd.
• Asahi Group Holdings Ltd.
• Bacardi Ltd.
• Brown Forman Corp.
• Constellation Brands Inc.
• Davide Campari Milano NV
• Diageo Plc
• G and J Distillers Ltd.
• Heaven Hill Sales Co.
• Isle of Arran Distillers Ltd.
• John Distilleries Pvt. Ltd.
• LVMH Moet Hennessy Louis Vuitton SE
• Pernod Ricard SA
• Sazerac Co. Inc.
• Speymalt Whisky Distributors Ltd
• Suntory Beverage and Food Ltd.
• Thai Beverage Plc
• The Edrington Group Ltd.
• William Grant and Sons Ltd

On the basis of product type, Scotch whisky is segmented into single malt, blended malt, blended, single grain, blended grain, and organic whisky. Furthermore, on the basis of the price range, the Scotch whisky market can be segmented into premium, high-end premium, and super premium.

Statistics:

The Scotch whisky market was valued at US$ 4.97 Bn in 2018, and it is expected to reach US$ 7.89 Bn by the end of 2027, exhibiting a CAGR of 5.3% during the forecast period (2019 to 2027).

Drivers:

Several health benefits associated with the consumption of Scotch whisky are expected to drive the market growth during the forecast period. For instance, Scotch whisky contains high levels of elegiac acid, which is an antioxidant compound that prevents the body against cancer. Furthermore, Scotch whisky also reduces the risk of stroke, helps prevent diabetes, and lowers the risk of dementia. These factors are expected to boost demand for Scotch whisky among health-conscious people, globally.

Statistics:

Figure 1: Global Scotch Whisky Market Share (%), By Region, 2018

MARKET RESTRAINTS

Stringent government regulations about the production and processing of Scotch whisky are expected to hamper the growth of the global Scotch whisky market over the forecast period. For instance, according to the Government of the U.K., the Scotch Whisky Regulations 2009 came into force on 23rd November 2009, which includes regulations related to the production, labelling, advertising, and packaging of Scotch whisky.

Furthermore, side effects related to excessive consumption of Scotch whisky are expected to limit demand for Scotch whisky globally. Side effects such as ulcers and nerve damage, among others are a few long-term side effects of overconsumption of alcohol.

Market Opportunities & Trends

The market players within the Scotch whisky market are focussing on the development of single-cask bottling, owing to changes in buying behaviour of customers. Independent bottlers are experimenting with bottling at cask strength, maturing with different kinds of cask types such as rum casks or wine casks. Furthermore, there is an increasing trend of younger distillations bottled as single-cask whisky in the market. The trend is attributed to the fact that independent bottlers are running out of finances, as long-matured whisky is rare and expensive. The players within the market are also willing to offer high-quality bottling at a lower price range.

RECENT DEVELOPMENTS

Diageo Plc.

In November 2019, Diageo launched a new artificial intelligence-based whisky selector, which is helpful in selecting single malt scotch whiskies for consumers based on their individual tastes. This device can be accessed from all smartphones or electronic devices, which are connected to the internet. This mobile application is named “what’s your whisky” and uses innovative FlavorPrint Technology.

Bowmore Distillery

In November 2019, Bowmore Islay Single Malt Scotch Whisky became an exclusive spirits partner of Aston Martin Lagonda. These two British luxury brands came into collaboration for creating an exclusive series of outstanding products and experiences by selling Scotch whisky to its customers.

Brown-Forman Corporation

In April 2016, Brown-Forman Corporation acquired BenRiach Distillery Company for around US$ 312 million. With this acquisition, three single malt Scotch whisky brands would be added to the whisky portfolio of the company namely - The GlenDronach, BenRiach, and Glenglassaugh. This acquisition would help the company to re-enter the industry’s growth segment- single malt Scotch whisky.

Scotch Whisky Market to Surpass US$ 7.89 Billion by 2027

The global Scotch whisky market was valued at US$ 4.97 Billion in 2018, according to Scotch Whisky Market Report, by Product Type (Single Malt, Blended Malt, Blended, Single Grain, Blended Grain, and Organic), by Price Range (Premium, High-End Premium, and Super Premium), by Distribution Channel (On Trade (Restaurants & Bars, Liquor Stores, and Others) and Off Trade (Supermarket & Hypermarket, Discount Stores, Online Stores, and Others)), and by Region (North America, Latin America, Asia Pacific, Europe, Middle East, and Africa) published by Coherent Market Insights.

Scotch whisky is produced in Scotland, majorly in the regions such as Highland, Islay, Campbeltown, Lowland, and Speyside. The global Scotch whisky market is expected to reach US$ 7.89 Billion by 2027, exhibiting a CAGR of 5.3% during the forecast period (2019-2027).

The Scotch whisky market is majorly driven by changing perceptions of consumers towards Scotch whisky and rising demand for premium whisky by customers. Moreover, the increasing disposable income of consumers across the globe is rising the affordability of premium products among customers. The market is also driven by the changes in regulations provided by the Scotch whisky association. Under the guidelines of new regulations, scotch can also be matured in oak casks, which were previously used for the ageing of beer, wine, spirits, and ale. This has further broadened the variety of casks available to distillers.

However, the growth of the global Scotch whisky market is expected to be hampered by increasing demand for aged Scotch whisky, which has led to rising in price and a shortage of Scotch whisky. Consumers tend to buy aged whisky and the major issue faced is that there is no shortcut to speed up the distillation process.

Key Trends and Analysis of the Scotch Whisky Market

The major trend in the Scotch whisky market is the increasing inclination of consumers towards premium whisky. Consumers are shifting their focus to super-premium products. With increasing disposable income, consumers have started considering whisky as an affordable luxury. Millennials account for only 29% of the drinking-age population, but they over-index on the consumption of all major types of alcohol. Whiskies alone account for 32 per cent of total consumption. This trend is projected to continue as millennials grow older and their purchasing power grows. Millennials are also likely to have influenced market growth in one type of alcohol over another. According to FMI research, millennial consumption patterns have played a significant part in the transition from beer to whisky. Millennials place a premium on quality, originality, and provenance, and are willing to pay more for it. Owing to all these factors, the manufacturers are focussed on launching premium and super-premium products. This is majorly driving the markets of the U.S. and France. A major downturn seems possible due to the Russia-Ukraine conflict.

Key Takeaways of the Market:

Among product types, the blended segment is expected to witness significant growth in the market over the forecast period, owing to the inclination of consumers towards the adoption of premium products for maintaining their social status. This has led whisky manufacturers to focus on providing their products with enhanced features such as quality, age, and authenticity for distinguishing their products from other competitors.

Asia Pacific is expected to experience significant growth in the market over the forecast period, owing to increasing per capita income and rapid urbanization in emerging economies of Asia Pacific such as China and India that are driving the growth of the Scotch whisky market in this region. The population of emerging economies has a higher adoption rate towards western culture and lifestyle. This has led to fuelling demand for Scotch whisky.

Major players operating in the global Scotch whisky market include Diageo Plc., Pernod Ricard, William Grant and Sons Ltd., Bacardi Limited, Bowmore Distillery, Suntory Beverage & Food Limited, Brown-Forman Corporation, LVMH, Isle of Arran Distillery, La Martiniquaise, and The Edrington Group.