Whisky companies are blaming current excise duties for a fall in investment, though analysts say the sector’s troubles extend beyond UK taxes.
Three in four distillers will defer investment in the UK, or move capital elsewhere, according to research undertaken by the Scotch Whisky Association (SWA).
The research, undertaken between February and June 2025, reveals the extent of concern companies face about the current levels of alcohol duty in the UK – with over two thirds of the average-priced bottle of Scotch Whisky collected in tax.
Following a 10.1% rise in duty in March 2023, and a 3.65% rise announced in October’s Budget, 87% of respondents to SWA’s members’ survey expressed concern that the rate of excise duty will rise once again in this Autumn’s Budget.
Any further rise in duty will have an impact not only on investment, but also recruitment, according to the companies – at a time where the whole industry employs or supports 66,000 jobs across the whole UK. A quarter of companies now expect their overall headcount to decrease given the current levels of alcohol duty.
Industry experts point out that the industry is also facing a downturn in consumer demand in some markets, leading to falling profits and some distilleries laying off workers and cutting output.
Edrington, owner of The Macallan, last week reported a fall in profits. In April, Isle of Harris Distillery announced plans to reduce its production capacity and workforce.
However, the sector’s woes are being felt around the globe. Diageo, producer of Johnnie Walker whisky, has paused production at the Roe & Co whiskey distillery in Dublin. In March, it announced it would pause production and barrel filling until June at its at its whiskey distillery in Kentucky, in order to “support our efficiency and productivity goals.”
In January, Brown-Forman informed investors that it would be laying off about 12% of its global workforce and closing its Louisville-based cooperage.
Mark Kent, chief executive of the Scotch Whisky Association, acknowledged that “global circumstances” are contributing to the industry’s current weakness.
As well as direct job impacts, there is increasing risk of knock-on job losses across the extended supply chain as distillers reduce production in the face of global tariffs impacting exports.
This research comes as the industry faces significant strain. At the start of the year, over half of those surveyed expected operational costs from Government policies – for example, EPR fees, NIC increases, and tariffs – to increase by 10%; with 40% now expecting that figure to be over 20%.
Despite the increased duty levels, HMRC data shows that Treasury spirits duty receipts have not increased and failed to deliver the forecasted revenue growth.
Mr Kent said: “The positivity of the industry is being severely tested by the relentless impact of domestic policies and global circumstances.
“The industry is facing the significant challenge of US tariffs and increasing domestic pressures at a time it would otherwise be looking to support the Prime Minister’s growth mission.
“This high tax burden is not delivering the expected additional revenue for the Government, but it is costing jobs and investment.
“At a time when the country needs economic growth, we cannot fail to back one of the UK’s longstanding successes.”
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