Why you should care
Your single malt whisky is traveling to the U.S. faster than ever before.
Distilleries have taken to flying their whisky across the Atlantic in a rush to get bottles into the United States before President Donald Trump’s trade tariffs take effect.
Scotch usually arrives in the U.S. by sea since its weight makes airfreight too costly. There’s normally no need to hurry as there is with fresh produce such as salmon, another of Scotland’s big exports. But 25 percent tariffs, which recently took effect, have prompted some producers to take to the skies.
Among those taking off are Kilchoman, a distillery on the famous whisky-producing island of Islay. Anthony Wills, Kilchoman’s founder, sent about 3,000 bottles by plane this month.
“We’ve just airfreighted a shipment to get there just prior to the deadline,” Wills says. He estimates the expense of airfreighting is probably double that of shipping, adding about 10 percent to the overall costs. But this would still be cheaper than the looming tariffs.
Shipping by air is expensive, but it might make sense to do that.
Chris Rogers, analyst, panjiva
Single malts have emerged as a big loser from Washington’s tit-for-tat trade dispute with the European Union. The Trump administration this month received approval from the World Trade Organization to slap levies on $7.5 billion worth of EU goods annually in retaliation for Brussels’ aircraft subsidies.
Italian cheese, French wine and Spanish olive oil are also to be subjected to the tariffs. Among U.K. products, whisky is the biggest target. More than four bottles per second on average were exported last year to the U.S., the industry’s largest and most valuable market, according to the Scotch Whisky Association (SWA).
While blended Scotch is exempt, single malts accounted for $442 million worth, or about a third, of exports into the U.S. last year, according to the SWA. Bourbon and other American whiskey imports into Europe were hit in a previous round of EU tariffs. To get Scotch from the distillery to the shelf in the U.S. takes about four weeks by sea. Scotland lacks deep-sea facilities, so it is typically transported first by rail to ports in England.
Ahead of the tariffs, several other distilleries had been “running the numbers” on airfreight and some had found it was “working in their favor,” says a person close to the industry.
“Shipping by air is expensive, but it might make sense to do that for higher-end stuff,” says Chris Rogers, an analyst at trade specialist Panjiva.
While the scale of the whisky airlift could not be established, industry data show that producers have also been accelerating sea shipments. About 1,300 20-foot equivalent units arrived in the U.S. in September, according to figures from Panjiva, about a quarter more than the previous month and a fifth more than in the same period last year.
Diageo, whose single malts include Lagavulin, Talisker and Glenkinchie, accounted for almost a third of U.S.-bound sea shipments in the past year. It was followed by Glenlivet owner Pernod Ricard and then Bacardi, whose brands include Craigellachie and Aberfeldy. All three companies also have interests in blended whisky.
Industry lobbyists have warned of a detrimental impact of the tariffs on the Scottish economy. The Scotch whisky industry directly employs about 11,000 people in Scotland, according to the SWA.
OZY partners with the U.K.'s Financial Times to bring you premium analysis and features. © The Financial Times Limited 2019.