This quarter has been fairly quiet as the whisky world focuses on getting back on track after the disruptions of the past 18 months or so. All indications point to a rapid recovery following the COVID-19 pandemic, with most long-term forecasts projecting solid global growth into the next five years or so.
Scotch Continues Rosy Recovery
The picture looks especially rosy for Scotch, which has been hit by a triple-whammy of Brexit, US tariffs, and the COVID-19 pandemic over the past couple of years. Scotch exports are up 31% for H1 2021 compared with the same period in 2021. Exports of Scotch to China in particular have surged tenfold over the past decade. The total value of Scotch single malt traded on the secondary market is projected to hit a record £75 million by the end of this year. It’s good news indeed for investors sitting on decent collections of rare and limited production Scotch.
Whisky Market Overview
As we enter the final quarter of the year, the fine whisky market seems to be on track for a classic “V-shaped” recovery after the challenges of the past 18 months or so. The Knight Frank Whisky Index (KFWI) lost some momentum in 2020, dropping by 3.5%. Yet the broader market rode out the pandemic in better shape, with sales of premium whiskies in particular showing consistent long-term growth.
According to a recent study by market research firm Fact MR, the global whisky market is predicted to grow at a compounded annual growth rate (CAGR) of 6% between 2021 and 2031. In line with these projections the market will expand from total global revenues of $60 billion in 2021 to $108 billion by 2031. Super-premium whiskies in particular are set to claim a 40% market share by 2031. Overall it’s a rosy outlook for investors, which yet again highlights the whisky market’s resilience even during times of economic uncertainty.
“Explosive Growth” For Luxury Spirits
Over in the US sales of luxury spirits have rocketed by 125% between 2015 and 2020 according to a new report by Distilled Spirits Council of the United States (Discus). The organisation has recently introduced the Luxury Brand Index (LBI) which tracks sales of luxury spirits with a price of $50 or more per 750ml bottle. Included in the index are American whiskey, Irish whiskey, Japanese whisky, single malt Scotch, Tequila and Cognac.
The inaugural report on the LBI demonstrates impressive growth of the luxury spirit sector with a CAGR of 17.7% from 2015 to 2020. In comparison the wider spirits sector has a CAGR of just 2.5% for the same period. In H1 2021 alone the LBI has shown growth of almost 25%.
Japanese whisky has shown the highest growth from 2015 through 2020 with 42%. Next up is American whiskey at 41%, with Discus especially highlighting the performance of Bourbon, Tennessee whiskey, rye and American single malts. Scotch has suffered in recent years due to the hefty 25% tariffs imposed by the US. Yet sales are recovering in the US with the segment showing 5.6% growth by volume in H1 2021 alone.
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