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Whisky Investment Guide
Whisky Investment Guide
Covid & The Whisky Market
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Whisky Investment Guide
Covid & The Whisky Market
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The impact of Covid on the Whisky Market
All asset-classes have been impacted by the coronavirus pandemic. However, unlike some asset-classes, the impact on the whisky market is not a negative one from the perspective of cask investments. Constrained supply, through distilleries temporarily halting production, will have a lasting impact for years – ensuring that the supply and demand imbalance for whisky will have an even greater impact in the price appreciation of casks for years to come.
The coronavirus pandemic has hit the Scotch malt whisky market as it has everywhere else however, on a more positive note, 33% of Scotch malt whisky exports markets held steady or increased regardless of Coivd-19 during 2020.
The export destinations that increased by value last year:
Export Destination | 2019 | 2020 | % Increase |
|---|---|---|---|
Latvia | £142m | £176m | +23.6% |
China | £89m | £107m | +20.4% |
Western Europe (non EU) | £82m | £93m | +11.5% |
The export destinations for Scotch Whisky (defined by volume, 70cl bottles) that increased in 2020 were:
Export Destination | 2019 | 2020 | % Increase |
|---|---|---|---|
Poland | 33m bottles | 37m bottles | +14.6% |
Latvia | 35m bottles | 39m bottles | +11.9% |
Brazil | 43m bottles | 45m bottles | +5.7% |
France | 173m bottles | 176m bottles | +1.5% |
Irrespective of the export market, the most important thing to remember is that for cask investors it has no bearing on them.
Trade agreements
Recent free trade agreements signed by the UK government will provide a major boost to the Scotch whisky market ensuring trade continuity having left the EU. So far 60 of these agreements are in place and the Free Trade agreement that was signed with Japan mirrored the existing arrangements that were in place when the UK was part of Europe meaning there will be no impact from a tariff perspective. Japan imported 45 million bottles of Scotch in 2020 and was worth £114m in exports.
In addition, Britain is aiming to join the Trans-Pacific Partnership. The partnership involves 11 countries such as Japan, Australia, Canada and Vietnam. Currently, Asia and Oceania makes up 25% of total export market for Scotch worldwide.
Vietnam free trade agreement:
This will lead to the gradual elimination of the 45 per cent import tariff in Vietnam. This development is also an important step forward to the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which will deliver new opportunities for Scotch whisky, as well as other products, in key markets in Vietnam.
Mexico:
The Mexico-UK spirits agreement was made in December giving post-Brexit protection to Scotch whisky and Mexican spirits in both countries. Last year, Mexico was in the top ten export markets for Scotch whisky by value-£120.9 million and was the sixth largest market for Scotch whisky by volume globally.
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The impact of Covid on cask investments
