Scotch whisky exports top record as new rules take hold

Thu Apr 15, 2010 4:46pm EDT

* Scotch exports up 3 pct in '09 to 3.1 bln pounds

* Scotch makers agree to new rules to protect industry

By Martinne Geller

NEW YORK, April 15 (Reuters) - Global exports of Scotch whisky rose 3 percent to a record 3.13 billion pounds ($4.85 billion) last year, just as the industry took steps to clarify its labeling and protect itself from fakes.

Scotch whisky accounts for about a quarter of all food and drink exports from the United Kingdom and over 80 percent of those from Scotland.

It ranges from single malts like The Glenlivet from Pernod Ricard (PERP.PA), in which all the whisky comes from one distillery, to blended types like Diageo's (DGE.L) Johnnie Walker, which includes whisky from two or more distilleries.

By volume, exports of Scotch whisky rose 4 percent to the equivalent of 1.1 billion bottles shipped in 2009, according to the Scotch Whisky Association.

The United States remained Scotch whisky's largest market by value, with shipments rising 13 percent to 419 million pounds. That is equal to the highest previous shipment value level, achieved in 2007, despite the weak economy which kept many drinkers away from bars and restaurants.

The value of Scotch exports also rose 6 percent in Africa and 18 percent in Central and South America, with a 73 percent increase in Venezuela.

Exports to the European Union fell 1 percent, as the weak economy in Spain led to a 5 percent decline there. Exports to Asia fell 9 percent, fueled by a 24 percent drop in South Korea.

Gavin Hewitt, chief executive of the Scotch Whisky Association, said he expects the industry's overall growth to continue, helped by the new rules which he said will help distillers as well as consumers.

"This is very much to protect Scotch whisky from fakes and also to help the consumer understand what he's drinking, what he's choosing and to make sure that if he's choosing something he wants, he gets what he wants," Hewitt said in an interview.

The new rules, passed in November, include requirements that single malt whiskies are bottled in Scotland and clearly state what distillery it comes from.

Most single malts are named for their distilleries, which are often named for their locations, but Hewitt said there have been some whiskies named for towns without distilleries in order to make it seem like they come from there.

There are also rules about how to label whiskies, including statements about the category of whisky and how long it has been aged.

For example, Hewitt said distillers can no longer use the word "pure" to describe a malt, since that does not make it clear whether something is a single malt, a blended malt or a blended whisky.

Blended malts include a variety of single malts but none of the grain whisky that would otherwise turn it into a blended whisky. A popular blended malt is Johnnie Walker Green Label, whose slogan was "The Art of Pure Malt".

Diageo's marketing director for Scotch, Dan Kleinman, said the brand changed its label to adhere to the new rules but that consumers may continue to see the older labels on shelves until they are restocked with the newer packages.

Diageo Chief Executive Paul Walsh is also chairman of the Scotch Whisky Association.

Whisky makers have a two-year transition period during which they can change their labels to reflect the new rules. (Reporting by Martinne Geller; Editing by Bernard Orr)

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