In an ever-changing market; and as uncertain factors rest on the horizon, borrowers and lenders together face many challenges from stockpiling to the Crown preference queue jumping proposals, yet whisky asset based lending (ABL) is raising spirits in the sector.
Whisky has become a big growth area for ABL regardless of the sector understood to be ‘cash rich’. The increasing number of distilleries, small or large, looking for growth and/or investment have viewed ABL as a significant opportunity. With a business retaining assets of great value; lay in maturation warehouses for many years generating no cash, releasing funds on spirit and mature whisky as an appreciating asset has been an increasingly popular source of working capital for companies.
There are currently over 130 active distilleries producing Scotch Whisky with the sector vital to the Scottish and UK economies, adding £5 billion in value each year, supporting more than 40,000 jobs and exporting £4 billion of Scotch annually to almost 200 markets.
The USA remains the number one market by value, growing 14% to reach £865m. Consumers are seeking out premium products and Single Malts benefited from such trends with value up 22% to £267m last year. There was increased demand from a number of larger European markets, including Spain, the fourth biggest market, up almost 10% to £167m; Germany, the number five market, up 13% to £164m and Poland, up 19% to £63m. This reflects some improved economic performance and continued growing popularity of Scotch across parts of Europe. India is becoming increasingly significant with value of exports up almost 14% to £97m to make it the ninth biggest market for Scotch yet its full potential will not be realised until its 150% import tariff is reduced.
Scotch is realistically the biggest net contributor to the UK’s balance of trade in goods. Without the impact of Scotch Whisky, the UK trade in goods deficit would have been 2.8% larger at almost £139bn with Scotch Whisky accounting for over a fifth of the UK’s total food and drink exports.
Volume is now up almost 5% to more than 1.2 billion bottles; almost 39 bottles exported every second. Single Malt Scotch exports are worth more than £1bn for the first time; up almost 12% to £1.02bn, an equivalent of 113m bottles shipped overseas.