The whisky industry is facing a challenging winter, with tariffs and export stalls impacting sales and production. The US market, a key export destination, is hit by a 10% tariff, and single malts face a 25% charge when tariffs resume next spring. This downturn extends beyond the US, with weakened demand in other markets due to economic pressures and trade disruptions. Shipments to China fell 31% last year, and while Scotch exports increased by 1% in the first half of this year, volumes decreased by nearly 4%. The negative effects of US tariffs may take months to fully materialize as distillers built up stocks ahead of the tax introduction. However, there's a glimmer of hope in the form of reduced tariffs in India, the world's largest whisky market, which has replaced France as the biggest importer of Scotch by volume. The trade deal between London and Delhi includes a staged reduction to 40% tariffs, but ratification is expected to take time, providing only a long-term solution. The industry's demand for malted barley has slumped, with expectations of a significant cut from 900,000 to 1 million tonnes to 600,000 to 700,000 tonnes. This has led to challenges for grain farmers securing contracts for next year's harvest, with many diversifying into other crops. The industry is also facing pressure from companies that supply it, with distillers' demand for malted barley decreasing. The break-even point for barley is over £200 per tonne, and around half of it is sold in future delivery contracts. The spot price fell during September to £160 per tonne. The industry is also dealing with the impact of reduced demand, with companies like Diageo, the biggest producer of Scotch whisky, halting work at one of its main maltings and reducing production in some distilleries. The downturn in the industry is reflected in the pricing of whisky, with super-premium whiskies and premium single malts experiencing price drops and increased supermarket discounting. The industry is also critical of the UK Treasury's duty on alcohol, which adds to the challenges faced by the Scotch whisky sector. The Scotch Whisky Association (SWA) has been under pressure to develop more reliable and steady contracts for barley, and the industry is working to address the shared challenges with the farming sector to boost the resilience of the supply chain.
