PARLIAMENTARY COMMITTEE TO CONSIDER SCOTCH WHISKY INQUIRY.

PARLIAMENTARY COMMITTEE TO CONSIDER SCOTCH WHISKY INQUIRY.

WIDER INVESTIGATION URGED INTO INDUSTRY,

The SNP MSP for Kilmarnock and Loudoun, Willie Coffey, has welcomed a confirmation from the Convener of the Economy, Energy and Tourism Committee, Iain Smith, that the Scottish Parliament committee will consider his request for an inquiry into the Scotch whisky industry.

Mr Coffey has written to the Convener requesting an inquiry following Diageo's announcement that it is to close its Johnnie Walker plants in Kilmarnock and Hurlford - both in Mr Coffey's constituency. In total 900 jobs are to be lost along with the closure of the Port Dundas distillery in Glasgow.

Mr Coffey said:

"I very much welcome the Convener's confirmation that the Committee will consider an inquiry into the Scotch whisky industry.

"When Diageo, one of the major players in the Scotch whisky industry, plans to shed so many jobs and ditch 200 years of heritage I believe it is right that they account to the wider community for their management of one of Scotland’s most important industries.

"Whisky forms a significant component of Scotland’s and the UK’s exports. And Scotland as the base of operations gives the Scotch whisky industry a major competitive boost in global markets in terms of reputation and brand loyalty, and I hope that the committee will be able to quantify such factors. It is right that the Scottish Parliament seeks to inform itself about the strategic direction of the industry and the issues it faces in growing its exports in the face of global competition.

"These are just some of the overall issues I hope the Committee will be able to investigate and I look forward to a positive response to their considerations for an inquiry."

Points Mr Coffey plans to put to the Committee:

o The volume of Scotch whisky produced in the 5-year period 1977-1981 and the period 2002-2006 showing an increase of only 1.14% (measured in Litres of Pure Alcohol (LPA))

o This represents a Compound Annual Growth Rate (CAGR) of just 0.045% per annum

o Other global economic indicators (e.g. world population and world GDP) have a growth rate over this period of 1.5% to 3.1%

o In the year 2000, Scotch contributed over 40,000 jobs to the Scottish economy through direct and indirect employment and impact on the wider Scottish economy

o At a growth rate of just 1.5%, the Scotch whisky industry could have generated an additional 17,000 jobs in Scotland over the 25 year period examined.

o Scotch is a truly global product, only 9% of the production of the Scotch whisky industry is consumed in the UK, while 91% goes overseas.

o Diageo accounts for 27% of the Scotch malt whisky production and 44% of the production of grain whisky

o 3 producers, Diageo, Pernod Ricard and Edrington account for over 50% of malt whisky production

o 96% of the production of grain whisky is controlled by just 5 producers; Diageo, Edrington, Whyte and McKay, William Grant and Pernod Ricard.

o in the period 1997 to 2006, the production of vodka increased at an annual average of 1.59% as against 0.52% for Scotch whisky.

o Analysis of figures from the Scotch Whisky Association (Statistical Report 2007) for the period 1975 to 2007 show that global releases of Scotch whisky (domestic and export) peaked in 1978 at 322 million LPA and this figure has been bettered only once, in 2007, at over 347 million LPA

o Releases to the UK market peaked at 52 million LPA in 1978 and, by 2006, had declined to just 28 million LPA – a fall of 24 million LPA

o The decline in sales of Scotch whisky to the UK market have coincided with a 30% increase in consumption of alcohol per adult in the UK

o Apart from a dip in the 1990s, spirits have maintained their share in the UK’s market for alcohol (around 21%), indicating that whisky has been losing out to other spirits in this market.