UK whisky businesses are struggling to maintain optimism amid escalating domestic and international cost pressures, according to a major new industry survey. The annual food and drink report from Johnston Carmichael, the UK’s leading independent accountancy and business advisory firm, found that just 37% of whisky firms feel optimistic, compared to 56% of the wider food and drink sector.
The research questioned businesses about challenges and opportunities over the past 12 months. It highlights a range of pressures facing distillers as they fight to prosper without significantly raising prices for consumers.
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Labour costs represent the largest area of increases for whisky distillers, cited by 42% of respondents. Taxation is the top regulatory concern at 47%, closely followed by the impact of tariffs at 37%.
The importance of international trade remains central to the sector’s prospects. New export customers are the main growth driver for 37% of whisky businesses surveyed.
Trade sentiment with the European Union presents a mixed picture. While the EU remains a primary export market for 32% of firms, just 21% of respondents reported feeling more positive about EU trade than last year, with 58% saying sentiment was the same or worse.
Grant Roger, Audit Partner and lead of the Whisky Finance Director Club at Johnston Carmichael, said: “This year’s food and drink survey has laid bare the magnitude of challenges that are disproportionally affecting UK whisky distillers. The issues faced in international trading are in addition to domestic challenges with labour and taxation costs continuing to rise. This, combined with lower Gen Z alcohol consumption, has led to stagnation in the market and goes a long way to explaining why optimism levels are below 40%.”
The stagnation extends to workforce retention. Respondents said 37% of people who left the whisky industry did so because of stagnant salaries, with a further 27% citing a lack of progression. Energy costs also weigh heavily, with 21% of whisky firms reporting this as their largest cost increase, compared to just 9% across the wider food and drink sector.
There are, however, signs of defiance. Some 79% of whisky businesses are investing in new product development and innovation. Consumers have also been largely shielded, with 79% of firms reporting average price increases of just 0–5%.
Roger added: “The resilience of the UK food and drink industry shouldn’t be understated and there is positivity in the levels of innovation and new product development. But while the sector as a whole faces challenges, whisky distillers are experiencing major obstacles above and beyond what many others are. Whisky is crucial to the UK food and drink industry and remains the runway for all other producers to flourish. However, insights are clear that amidst widespread global uncertainty the sector craves greater clarity and stability.”
