REFILE-Whisky makers fear loss of global network under Scottish independence

Fri Apr 11, 2014 8:38am EDT

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By Belinda Goldsmith

EDINBURGH, Scotland, April 11 (Reuters) - Scotland's lucrative whisky industry flagged its concerns over Scottish independence for the first time on Friday, saying its access to a global network for promotion and sales was vital after reporting flat exports last year.

Figures released by the Scotch Whisky Association (SWA) showed that exports in 2013 were steady at 4.3 billion pounds ($7.21 billion), representing around 85 percent of Scottish food and drink exports and nearly a quarter of the British total.

Since 2000, exports of whisky have increased more than 60 percent with whisky sold to about 200 markets worldwide, making it Scotland's second-largest export after oil and gas.

The SWA, which represents the 109 distilleries licensed to produce whisky, has steered clear of making any comment on the increasingly heated debate about Scotland leaving the United Kingdom that will be decided at a referendum on Sept. 18.

But, issuing the latest export figures, SWA Chief Executive David Frost stressed the importance of strong political support from government, whether to influence European Union negotiations or press other countries for better market access.

The United Kingdom has about 270 diplomatic posts in 160 countries with UK Trade and Investment (UKTI) using this network to promote British businesses, but an independent Scotland would plan to have 70-90 overseas embassies and consulates.

"Both the UK and Scottish governments have played an important role in this so far," Frost, a career diplomat who took over at the SWA earlier this year, said in a statement.

"Whatever the outcome of the Scottish referendum, as an industry exporting to around 200 markets, we will continue to need the backing of an effective diplomatic network with the necessary global reach, commercial expertise, and capacity to influence."

The SWA declined to comment further.

With pro-independence campaigners starting to gain ground in opinion polls ahead of the referendum, increasing numbers of businesses have gone public with the potential risks - and gains - they see if Scotland leaves the United Kingdom.

Many have voiced concerns about uncertainty about what currency would be used in an independent Scotland, financial regulation, taxation, and EU membership. Airlines have welcomed the planned abolition of air passenger duty.

Frost said unprecedented investment programmes by Scotland's whisky producers showed they were confident that demand would continue to grow despite some economic hurdles in the short-run.

Slower economic growth and government austerity measures hit sales to some parts of Asia last year, with direct exports to Taiwan and South Korea - Scotland's seventh and eight largest markets - and Japan all falling between 13 and 15 percent.

China fell out of the top 20 markets, with direct exports declining nearly 30 percent to 51 million pounds.

Exports of whisky to the largest market, the United States, grew 8 percent to 819 million pounds while sales to France, the second largest market, were flat at 434 million pounds.

Sales to Scotland's third and fourth largest markets, Singapore and Spain slipped three and eight percent.

(Reporting by Belinda Goldsmith)

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