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16.06.21

Australia Trade Deal Means a New Boost for Whisky Market

There are many factors that make Scotch Whisky such a great investment but one of the biggest is its global popularity. This benefits you as an investor because its value just keeps on growing, plus the added advantage of having the opportunity of selling your cask to whisky aficionados around the world when you decide to cash in on your investment.

This popularity is also big business for the whisky distilleries themselves and the British economy as a whole through exports to key international markets. One of those key markets is in Australia, which saw exports of £113m in 2020, despite the impact of Covid-19 on trade in general in that financial year.

Another positive sign that the future is bright for Scotch Whisky exports to Australia comes with a new UK-Australia trade deal that removes a 5% tariff as well as improved legal protections in that marketplace.

The Australian Whisky Market

36 bottles of whisky are shipped to 166 markets around the world each second, totalling over 1.14bn every year, and Australia is the eighth biggest of those markets by value. As with many markets, exports down under fell in 2020 because of the pandemic, but only by 3.17%, which is a much smaller drop than the rest of the top ten, including the USA, which fell by 31.8%.

This has been achieved despite the existing 5% tariff, so now it has been removed, there’s clearly room for further growth. For evidence of the impact of tariffs you only need to look to the US market, where a 25% tariff was brought in during a trade dispute between the two countries, which resulted in a 30% drop in exports, worth over half a billion pounds.

The tariff has now been suspended which means huge opportunities for distilleries, whisky drinkers and whisky investors alike.

Trade Negotiations

Karen Betts, Chief Executive of the Scotch Whisky Association (SWA) states: “It’s very good to see the removal of the five percent tariff on Scotch Whisky in the Agreement in Principle between the UK and Australia,” she said.

“This will help Scotch Whisky distillers continue to expand exports to Australia, which have almost doubled over the last decade, making Australia our eight largest market by value.  It’s also important to us that trade with Australia is now tariff-free for Scotch Whisky – our preference is always for tariff-free trade, which enables Scotch Whisky to compete on a level playing field and on the strength of our reputation for quality.”

“We await further details of the Agreement in Principle. A framework for addressing regulatory barriers to trade with Australia, to ensure greater legal protection and tax fairness for Scotch Whisky, is also important to us, and – if delivered in this agreement – will be a real boost for the industry.”

As whisky exports are still on a high despite the pandemic impact, there’s plenty of reasons to be optimistic for investors in the wake of this new trade deal.