The origins of Scotch whisky are in the fourth century, and it has gone on to become the world’s most internationally traded spirit.¹ But how did it get there?

It is widely assumed that the distillation process was brought to Scotland by Christian monks in the fourth and fifth centuries.² The first mention of distilling in Scotland is in tax records from 1494, where whisky was described as aqua vitae³ – the water of life.

But it was the 19th century when Scotch first began to make its mark on the world. Entrepreneurs took Scotch to new markets overseas and several were so successful that their names live on today, gracing whisky bottles sold around the globe.

Now, Scotch whisky is a major part of Scotland’s economy, contributing £3.8 billion of gross value added (GVA) to it.⁴ The industry contributes £5.5 billion to the UK economy as a whole, accounting for 21% of the country’s total food and drink exports. Every second, 41 bottles are shipped to 175 global markets, with exports worth over £4 billion a year.⁵

Scotch whisky has built much of its success on the power of its brand, leveraging its heritage to establish a position at the forefront of a global industry. It’s something it works hard to protect. 

There are rules in UK law that govern how Scotch whisky is made. These include it needing to have been made in Scotland from only cereals, water and yeast, and matured for a minimum of three years in oak casks. Single malt whiskies must also be bottled in Scotland,⁶ before they can be carefully shipped to markets around the world.

This helps to build Scotch whisky’s reputation for quality and authenticity. These are powerful forces that not only help it to compete with whiskies made in other countries, but also help it to tap into emerging markets. 

A key one is China, where the regulations surrounding Scotch whisky production serve to bolster its high-end image. It has become an aspirational drink in the country, where there is a market among a new generation for products with quality and heritage.⁷ 

In 2018, the Scotch Whisky Association renewed its trademark protection in the country for a further 10 years,⁸ and this helps to illustrate the importance for other businesses of safeguarding their brand representation in markets far from home.

But the Scotch whisky brand is also creating new revenue streams in the domestic market too. Over 2 million people visited one of the 128 Scottish distilleries in 2018, up 6.1% on the previous year.⁹ The figure marks a 56% increase on 2010, with the total spend by tourists up over 12% to £68.3 million.

Developing a broad brand positioning can be important for any business, and this is something that the Scotch whisky industry has recognised. Just as in China, where the image of whisky is very different to how it is in traditional markets, other countries such as Mexico and Japan view – and consume – the drink in a way far removed from fireside drams on cold winter nights.¹⁰ 

But there is more than just branding for the industry to consider when looking for growth. In Brazil – the 10th largest market by volume for Scotch whisky – a growing economy is helping to increase diversity in the spirits market, opening up new possibilities for international brands.¹¹

And in India, which is the third-largest market by volume for Scotch whisky despite import tariffs of over 150%, an expanding market for premium spirits is fuelling growth.¹² Exports grew by almost 26% in 2018.¹³

Alongside economic factors, technology can play an important role in pioneering new sales channels and distribution methods for the Scotch whisky industry. 

E-commerce is a prime example. Figures from International Wine & Spirit Research (IWSR) show that 2% of global spirit sales were made online in 2018, while in China 6.5% of all off-premise alcohol sales are now made online.¹⁴

Future e-commerce growth looks exciting too, with online alcohol sales across 10 key markets (Australia, Brazil, China, France, Germany, Italy, Japan, Spain, UK and the U.S.) set to soar from almost $21 billion in 2019 to $45.5bn by 2024.¹⁵ 

For all the focus on its Scottish home, Scotch whisky does still rely heavily on products from other countries. In fact, an integrated supply chain is crucial to its success.

That’s because the oak casks that the whisky must be matured in have previously been used to store drinks made in other countries. Whether it’s sherry casks, bourbon casks, port casks or any other casks used in the industry, much of the flavour and character of Scotch whisky is down to the liquid that was previously stored in them.

And with the cask as much a part of the production process as any other, securing a reliable supply – mostly from the U.S. and Spain¹⁶ – is essential for its continued success. 

But it also illustrates how valuable it can be to seek out new suppliers from alternative markets, and how doing so can allow businesses to adapt their product range to target new customers or to bring more excitement to their existing audience.

It’s something the Scotch whisky industry could soon be doing even more of. A recent change to the law means that producers can now use a greater variety of casks to mature their whisky in, potentially paving the way for Scotch whisky matured in barrels previously used for drinks such as Mexican tequila or French calvados.¹⁷

There are many lessons that can be learned from the Scotch whisky industry, ranging from the power of brand representation in foreign markets to the importance of spotting new market opportunities and establishing – and constantly evaluating – effective supply chains.

And of course, it is all underpinned by the quality of the product and the entrepreneurial spirit that opened up global export markets in the first place.

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¹ https://www.bbc.com/reel/video/p07nn2v6/the-secret-to-whisky-s-global-success

² https://www.visitscotland.com/see-do/food-drink/whisky/history/

³ https://www.scotch-whisky.org.uk/discover/story-of-scotch/

⁴ https://www.scotch-whisky.org.uk/media/1591/final-2018-economic-impact-report.pdf

⁵ https://www.scotch-whisky.org.uk/insights/international-trade/

⁶ https://www.scotch-whisky.org.uk/insights/protecting-scotch-whisky/legal-protection-in-the-uk/

⁷ https://www.bbc.com/reel/video/p07nn2v6/the-secret-to-whisky-s-global-success

⁸ https://www.thespiritsbusiness.com/2018/02/china-agrees-scotch-whisky-trademark-until-2028/

⁹ https://www.bbc.co.uk/news/uk-scotland-scotland-business-48711399

¹⁰ https://www.bbc.com/reel/video/p07nn2v6/the-secret-to-whisky-s-global-success

¹¹ https://www.scotch-whisky.org.uk/insights/international-trade/

¹² https://www.livemint.com/industry/manufacturing/the-pricier-the-booze-the-faster-it-sells-as-india-s-wealth-grows-1552455812197.html

¹³ https://www.scotch-whisky.org.uk/insights/international-trade/

¹⁴ https://www.theiwsr.com/wp-content/uploads/Press-Release-IWSR-Impact-of-Ecommerce-on-Beverage-Alcohol-July2019.pdf

¹⁵ https://www.theiwsr.com/largest-markets-in-ecommerce-key-trends-china-france-us/

¹⁶ https://www.whiskyinvestdirect.com/about-whisky/scotch-whisky-casks-and-barrels

¹⁷ https://scotchwhisky.com/magazine/latest-news/26098/new-scotch-rules-aim-to-add-flexibility/