Challenges Facing Scotch Whisky Industry Amid Tariffs, Demand Decline, and Production Cuts
The Scotch whisky industry is facing multiple challenges including tariffs, declining global demand, and production disruptions. US tariffs currently impose a 10% import cost on exports, with single malts potentially subject to a further 25% tariff next spring unless a trade deal is reached. Meanwhile, global demand weaknesses have been observed due to slower economic growth, higher taxes and costs, packaging regulations, and trade disruptions.
Exports to China fell sharply by 31% last year, causing China to drop from the fifth to the tenth largest market for Scotch whisky. Although in the first half of 2025 the export value to China advanced slightly by 1% to £2.5 billion, volumes decreased by about 4%.
The industry is also anticipating gradual tariff relief in India, where a very high 150% tariff on bottle value will be reduced in stages to 40%. However, ratification of the agreement is expected to take time, delaying immediate relief for exporters.
Demand for malted barley, a key ingredient in whisky production, is forecast to decline next year from 1.8 million tonnes to approximately 1.4 million tonnes. This has led some producers such as an Aberdeenshire co-operative to halve its barley contract with Chivas.
Production cutbacks are widespread, with Roseisle Maltings paused at least until June, and distilleries including Teaninich and Glenmorangie having production halted for months. Ardbeg, owned by LVMH, is also affected. These disruptions have caused job losses, such as around 20 at the Pencaitland facility, and impacted supply chains including hauliers and suppliers. Producers are attempting to redeploy staff where possible.
Industry bodies like the Scotch Whisky Association highlight these pressures from duty rises and tariffs, calling for policy measures to nurture growth and bolster supply-chain resilience. The used bourbon barrels market, crucial for maturation, is estimated to be worth about £200 million annually and integral to the industry's stability.
