Last year SPICe published a detailed briefing on ‘Brewing and Distilling in Scotland – Economic Facts and Figures’. This blog updates many of the figures in last year’s briefing. It is recommended that this blog is considered in conjunction with the original briefing for wider policy context.
A key trend since our original publication has been the uplift in employment in both brewing and distilling. In the last year alone, brewing employment grew by 150%, going from 1,000 to 2,500. And distilling increased by 25% from 8,000 to 10,000. That’s 3,500 additional jobs across both industries in the year to 2018. Furthermore, the growth in the business base of both has continued at pace. Since 2010 the number of breweries has increased by 213% and distilleries by 93%.
Distilling the Scottish spirit
Nine in ten distilling jobs in Britain are based in Scotland. Employment levels in the industry received quite a boost over the year to 2018, increasing by 25% to 10,000 from 8,000 in 2017. This is the highest Scottish figure on record within the available data series. Prior to this, employment levels varied between 7,000 and 8,000 over the last eight years. About 40% of this employment is shared between Moray, Glasgow, and Fife. The full list of local authority employment can be accessed here.
Given that some of the large Scottish distilling enterprises produce numerous brands of spirits at different sites, the distinction between enterprises and local units is important. In 2019, Scotland had 280 distilling related business local units. This figure represents growth of 93% in the business base since 2010. Much of this growth has been over the last three years, where on average an additional 30 local units are coming on stream annually.
The structure of the UK’s distilling sector has shifted significantly over the last decade. This is linked to the unprecedented boom in independent craft distilleries serving up an eclectic mix of whiskies, gins, and vodka.
The majority of growth in distilling enterprises has been in England, driven by gin production, which has surpassed Scotland in terms of UK share of distilleries since 2010 (Scotland’s share fell from 50% of the UK total in 2010 to 28% in 2019). However, in terms of revenue share and employment intensity, Scotland is still dominant. It shouldn’t be surprising that Scotland is leading the way, as it is the whisky capital of the world with hundreds of years of distillery expertise.
Twenty-three of Scotland’s 32 local authorities have a distilling business presence – up from 15 local authorities in 2010. The Moray area, which includes most of what we consider Speyside, has the highest intensity of distilling related firms, with a fifth of Scottish distilling activity based there. Over the last decade the Highlands, Perth & Kinross, Stirling, and Edinburgh have been growth hotspots for distilling. And in the last 12 months there has been noticeable uplifts in the number of firms in Glasgow, Renfrewshire, and Perth & Kinross. The full local authority data list can be accessed here.
Average turnover for Scottish distilleries was approximately £5.3 million in 2019, compared to average turnover of £689,000 for all businesses in the Scottish economy.
The spirits industry contributes approximately 1.4% to total Scottish GDP. GVA at basic prices for Scotland’s ‘spirits and wines’ industry was £1.8 billion in 2016. This was down from a record high of £2.1 billion in 2013. The three most recent years of available data (2014-16) show an emerging downward trend.
Scotland is home to 133 malt and grain distilleries, making it the greatest concentration of whisky producers in the world. While many countries in the world produce whisky, only Scotland can make ‘Scotch’. In 2018, the value of scotch whisky exports reached a record £4.7 billion. To put this into perspective, total expenditure by international visitors to Scotland in 2018 was £2.2 billion. Scotland’s national drink accounts for 70% of Scottish food and drink exports, 21% of all UK food and drink exports, and 1.3% of all UK exports.
There are over 170 Scottish gins (up from 110 last year), and over 90 distilleries currently producing gin within Scotland (up from 60 last year). Three of the world’s bestselling gins: Hendrick’s, Gordon’s and Tanqueray, are all made in Scotland. Increasingly Scotland whisky distillers are looking to gin because it’s quicker and easier to make, and gives them a faster return while waiting for whisky to mature. It is estimated that some 70-80% of UK produced gin comes from Scotland. Gin’s popularity has seen an onslaught of new ‘Scottish’ brands hit the market. This has resulted in concerns from industry experts about what is truly a Scottish gin.
The last year has seen strong growth in brewing employment. Employment in Scotland’s brewing sector had averaged 1,000 between 2009 to 2017. However, in 2018 this rocketed by 150% to 2,500. Scotland’s brewing employment went from 6% of total British employment in the sector to 15% in the space of 12 months. Much of this brewing employment growth was recorded in Aberdeenshire (up 300). Other hotspots were Glasgow (+150). Highlands (+150), the Scottish Borders (+145), Argyll and Bute (+105), and Edinburgh (+100). The full list of local authority employment can be accessed here.
Back in 1840, Scotland boasted 280 breweries. However, by 1910 this had been reduced to 92 and a continuous decline eventually reduced that number to just 11 by 1970. Now with 125 local unit breweries the industry has increased massively from the 1970s. Year-on-year over the period 2010 to 2019, the number of breweries has increased. This rapid period of expansion has resulted in the beer manufacturing business base increasing by 213% between 2010 to 2019 (the comparable UK rate is 153%).
Nineteen of Scotland’s local authority areas had a brewing industry presence in 2019 (up three on the previous year). This is a significant increase from just four local authorities in 2010. Both urban and rural areas have benefited from the rapid growth of the sector. Edinburgh, Glasgow and Highland local authority areas have the highest intensity of brewing activity in Scotland. The full local list can be accessed here.
GVA at basic prices for Scotland’s ‘manufacture of beers and malts’ industry was £109 million in 2016. Since 2011 the economic value of the sector has increased by 58%. Despite this growth, the brewing industry contributes a relatively small proportion of total GDP, at approximately 0.1% of total Scottish GDP.
Knock-on economic impacts
Based on Scottish Government’s Input Output modelling, both brewing and distilling have relatively high employment multiplier effects, with brewing ranked 9th and distilling ranked 10th, across the 98 industry groups modelled. Both sectors are important drivers of wider economic activity due to intrinsic links with other sectors.
Alison O’Connor, Senior Analyst, Financial Scrutiny Unit