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Scotch Whisky and Covid-19: The Rocky Road to Recovery

On June 4, 2020

There’s no doubt whatsoever about the fact that the Covid-19 pandemic of 2020 has been an enormously destructive force, altering many aspects of everyday life and business, and sending shock waves through what we understand to be normality which will be felt for years to come. The hospitality industry, which includes the spirits manufacturing industry, has felt the impact of Covid-19 and the social restrictions imposed right across the world perhaps more potently that others; bars and clubs have fallen silent, international trade has stalled, and distilleries have closed their doors.
However, despite the doubtless uncertainty and disruption which lies ahead, there have been some glimmers of hope for the spirits industry, not least in Scotland, where the Scotch whisky scene is a major player in the local economy, and a world leader in spirit exports. Make no mistake – there will always, always be a strong demand for high quality single malt whisky (especially, one would suspect, in times of crisis and recovery), and it looks as though the Scots are going to be leading the way out of the darkness, and into the sunny uplands of a post-Covid world.
With strong governmental support, a global audience of adoring fans and enthusiasts, and a culture of preparedness and resilience, the Scotch whisky industry is well equipped to get back to work after this unexpected pause to proceedings. Let’s take a closer look at what the future is likely to hold, and how Scottish whisky distilleries are laying the groundwork for industry-wide recovery.

A History of Resilience

Before we delve into what’s happening in the ongoing chaos of 2020, it’s well worth remembering that the Scotch whisky scene has thrived in the face of adversity since its very earliest beginnings. Indeed, the great distilleries of Scotland, from the Lowlands to the Highlands, and across all of the various island regions with their distinctive approaches, flavours, and characteristics have weathered droughts, taxes, outright bans, military intervention… the list goes on and on and on.
This perhaps goes some way towards explaining why Scotland’s distilleries are so poised to get operations underway once more – they know that their own history is peppered with difficulties, each of which has been overcome, and has actually gone some way towards enriching the journey that typifies the appeal of Scotch. Furthermore, all of our favourite Scotch single malt whiskies have never been in a rush to be released. Beneath the great distilleries of this proud and ancient country sit millions upon millions of barrels, biding their time, aging with grace and distinction, and waiting for their moment to be released upon the world. Scotch whisky isn’t going away any time soon… and that’s something well worth remembering during these uncertain times.

Uncertain Futures and Stormy Seas

Of course, while the majority of us Scotch whisky drinkers can take plenty of reassurance from the notion that we’ll always be able to get hold of our favourite whiskies, and that the great barreled supplies of Scotland aren’t going to dry up anytime soon, it’s understandable that the producers themselves aren’t having the best time right now. With the closure of bars,pubs, and clubs, and the complete lockdown of the ports used to transport whisky across the world, the cut to profits (which are always tighter than you might imagine) have been devastating, and the furloughing of distillery staff has threatened to cut even further into the heart of the workforce that makes this industry so special.

The official predictions for how the recovery of this crisis will look, launched by everyone from industry researchers to trade unions and the Scottish government, make for what at first seems fairy grim reading. The whisky industry is predicted to be unable to regain its 2019 standing until at least 2024, putting it in the same category as gin, and a year ahead of vodka following a resurgence in the popularity of Scotch whisky especially among new younger and female demographics.
Why is this the case? Well, it comes down to a number of factors. The first, and most significant, is that the loss in sales experienced throughout 2020 is set to blast a significant hole in the whisky industry’s finances in general – food and drinks businesses find it notoriously difficult to recover lost revenue – which will take some time to plaster over. Add tothis mix the fact that the majority of sales for the foreseeable future will be dependent on the shaky notion of direct-to-consumer sales (which are beset by wholesaler commissions and independent store percentages alike), the predicted loss of up to 60% of bars, pubs, and restaurants following the crisis and the impending economic fluctuations, and a drop in household finances… the prospects are looking more than a little bleak in places.
However, despite the storm clouds very much gathering on the horizon, the Scotch whisky industry is receiving generous support packages from the Scottish government, who have already provided ring fences and incentives to help shield the whisky scene from the impact of Brexit. This is, after all, a country which places almost a third of its economy in the hands of Scotch whisky producers, their overseas sales, and their impact on the country’s tourism industry, and they know full well how valuable the distilleries are to both the balance book and the country’s sense of identity and heritage. As such, there is a little light at the end of the tunnel, and it’s being brightened daily by new ideas, new approaches, and a thoroughly Scottish sense of resilience and inventiveness.

Signs of Recovery

Indeed, the signs of recovery are very much there already. Many of Scotland’s leading distilleries, including Edrington, Inver House, and industry giants like Grants and Diageo, have already become reopening distilleries and bottling plants, albeit with a dramatically scaled-back operation that protects workers and implements social distancing. Following three months of absolute emptiness, the tentative and partial reopening of these mega-distilleries has not been without controversy, with many trade unions claiming it’s too soon tobe bringing workers back into the plants. However, the head distillers have helped dispel many fears by working closely with healthcare experts and union representatives, and demonstrating the lengths they’ve gone to in order to keep workers safe.
This might all be well and good for the giants of the whisky world up in Scotland, with multi-million pound brands like Macallan more than braced for survival. How it will impact the recent flush of Scotland’s craft-oriented operations, smaller-scaled distilleries, and niche producers with far smaller war chests and audience figures, is yet to be seen. Government packages and sincere social media campaigns will surely play a key role in the survival of this diverse scene, and we can but hope that this proudest and most resilient of whisky industries makes the full recovery it surely deserves.