The Economic Impact of Scotch Whisky Production in the UK (25/1/17) Economic Impact* Scotland Rest of the UK UK

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1 The Economic Impact of Scotch Whisky Production in the UK (25/1/17) A. Economic factors Economic Impact* Scotland Rest of the UK UK Direct Indirect Induced Total Indirect Induced Total TOTAL GVA 1 mn 3,240 1, , ,930 Salaries mn , ,440 Employment people 10,540 19,430 6,880 36,850 2, ,340 40,190 * Estimate based on figures ranging from , calendar and financial year. 1. The Scotch Whisky sector directly contributes over 3.2 billion to the Scottish economy. When indirect and induced effects are taken into consideration, the industry s impact is 4.7 billion. 2. The industry is rooted in Scotland but benefits from a closely related supply chain in the rest of the UK. When the rest of the UK is taken into account, a further 268 million is injected into the economy leading to a UK-wide impact of more than 4.9 billion. Scotch Whisky's contribution to GVA Indirect impact, 1,090mn, 22% Direct impact, 3,240mn, 66% 4.9bn Induced impact, 330mn, 7% Rest of the UK impact, 270mn, 5% 1 Gross Value Added (GVA) is a measure of production used to measure growth and development in an economy and in individual industries.

2 3. Overall employment associated with Scotch Whisky in the UK is just below 40,200, an additional 100 jobs, a marginal (+0.2%) increase in comparison with previously released figures. Scotch Whisky's impact on employment in Scotland and the UK Scotland Rest of UK Employment 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5, ,340 36,850 Total 10,540 Direct (Scotland only) 2,430 19,430 Indirect 910 6,880 Induced 4. The hospitality sector was the predominant factor for increased indirect employment. While growth in the manufacturing sector has been slow, the service industry has provided a fillip to the industry overall. 5. Almost 1.3 billion is provided in wages (up 1.5% on previous results) in Scotland. 6. The Scotch Whisky industry remains a significant employer in rural areas supporting 7,000 jobs in less accessible areas. B. Scotland s key growth sectors 7. The Scottish Government s Economic Strategy identifies important sectors within the economy which represent potential for growth, employment and opportunity for international competiveness. They include Food and Drink; Financial and Business Services; Life sciences; Energy; Tourism and the Creative Industries (including Digital). 8. Scotch Whisky (direct impact only) accounts for approximately 60% of the entire Scottish Food and Drink sector GVA. The Scottish Food and Drink sector lies third behind energy and financial and business services. 9. Measuring Scotch Whisky on its own, it sits behind sustainable tourism and the creative industries which have both experienced rapid growth in recent years. 10. The Scotch Whisky industry is approximately 170% larger than Life Sciences in terms of GVA contribution.

3 Scale of Growth Sectors and Industries in terms of GVA, billion* Food and Drink (including Scotch Whisky) Finance and Insurance Energy (including renewables) 5.3 billion 7.0 billion 17.0 billion Scotch Whisky Creative Industries (including Digital) Sustainable Tourism 3.2 billion 3.7 billion 3.7 billion Digital Industries Life Sciences 1.7 billion 1.2 billion * Source: Scottish Government, ONS and SWA calculations. Data other than for Scotch refers to C. Scotch and the balance of trade 11. Scotch Whisky remained the single biggest net contributor to the UK s Balance of Trade in goods in Scotch Whisky made a positive contribution to the Balance in Trade of almost 3.7 billion, due to high volumes of exports and minimal imports (which are limited to casks and some raw materials). 12. In 2015, the UK exported more than 266 billion worth of goods (excluding oil) and imported over 378 billion resulting in a trade deficit of almost 112 billion. 13. Without the positive impact which Scotch provides, the Balance of Trade deficit in goods would have been billion, 3.3% greater than without Scotch 1.

4 Top Commodity Contributors to the UK Balance of Trade in goods, 2015 ( billion) Rank Commodity 1, 2 Exports (+) Imports (-) Balance 1 Scotch Whisky Mechanical machinery Organic chemicals Works of art Aircraft Fertilisers & other chemicals Beverages (including Scotch Whisky) Non-ferrous metals excl. silver Metal ores & scrap Scientific & photographic Iron & steel Toilet & cleansing preparations Medicinal & pharmaceutical products Cereals Crude oil Mineral manufactures less precious Plastics Textile fabrics Miscellaneous metal manufactures Paper & paperboard Fuels other than oil Cars Refined oil Road vehicles other than cars Clothing Source: ONS, SWA calculations 1 The list is based on the ONS Publication tables UK trade and specifically the Top 30 Commodities worksheet. (Shortened URL 2 Unspecified Goods was removed due to the ambiguous nature of the category. The trade in unspecified goods was significant with 10.3 billion exports and 6.9 billion of imports.

5 Top Commodity Contributors to the UK Balance of Trade in goods, 2015 ( billion) 6.0 Net contribution to balance of trade (exports - imports) billion Scotch Whisky Mechanical machinery Organic chemicals Works of art Aircraft Fertilisers & other chemicals Beverages (including Scotch Non-ferrous metals excl. silver Metal ores & scrap Scientific & photographic Iron & steel Toilet & cleansing preparations Medicinal & pharmaceutical Cereals Crude oil Mineral manufactures less Plastics Textile fabrics Miscellaneous metal manufactures Paper & paperboard Fuels other than oil Cars Refined oil Road vehicles other than cars Clothing Source: ONS Top 30 Commodities; SWA Background - The Scottish economy GDP in Scotland increased 2.1% in 2015, largely driven by the construction and service sector. The production industry is weighted at 18 per cent of the Scottish Economy (weighting applied in 2013) and includes industries such as manufacturing, energy and mining. In 2015 the production sector experienced zero growth and manufacturing, a sub-set of production, reduced by 1.7% year on year. The Scotch Whisky industry has shown a resilience and an ability to adapt given the challenging domestic and international economic environment which was has been prevalent. Note Comparisons with earlier figures produced are for illustrative purposes only. Multiple sources of information have been utilised, including data from the Scottish and UK Governments, the ONS, SWA members and other economic indicators from other financial institutions. As a result the sample and coverage is neither identical nor exhaustive. 1 In terms of total value of trade in goods and services (despite the UK exporting services to a value of 225 billion in 2015); Scotch becomes more important on the overall deficit. In 2015, the total value of UK trade in goods and services was a deficit of almost 32 billion. Without Scotch, the deficit would have been 35.7 billion or 12% worse. Scotch Whisky Association, January 2017