Scottish government vs. Scotch whisky

With some new legislation in the consultation process concerning the marketing of alcohol in Scotland, Ian Buxton takes a look at the often unhappy relationship between the Scotch whisky industry and the Scottish Government. 

“My off the record comments are probably unprintable,” says one Scottish distiller while another, acutely aware of the SNP’s legions of cybernats and concerned to remain absolutely anonymous, told me that “the scheme is a nightmare, [and] similarly the other proposals have not been thought through…”  A later, more anxious email quickly followed adding the sinister rider “please do not mention me, I do not want anyone from the SNP/Greens getting in touch as I am sure it will not be pleasant.  Much better to let the SWA take the flack.”

They weren’t alone. Normally loquacious PR teams were suddenly struck dumb: Chivas Brothers passed my enquiry back to the SWA (Scotch Whisky Association); William Grant & Sons declined to comment, and Diageo remained silent, on the grounds that their interim results are due very shortly (26 January if you’re an anxious shareholder) and this precluded comment. 

Speaking on the record

Fortunately, some others are willing to go on the record and their comments make stark reading.  “We will never see another new distillery being built in Scotland if this legislation is enacted, killing innovation,” maintains Paddy Fletcher, joint founder and co-CEO of the new and ambitious £12.5m Port of Leith (see photo in header) and Lind & Lime Gin Distilleries. 

His fellow founder and co-CEO Ian Stirling added another sombre note, telling me, “the proposals would extinguish the incredible furnace of creativity that supports the drinks industry in Scotland. Scores of designers from agencies across the country pour their imagination into exemplary products, and in doing so, capture and define something of our culture in a way that few other industries manage.”

Gosh, alarming stuff. So what is it that’s worrying them (and many others who, though clearly anxious, declined to comment)? 

The Deposit Return Scheme

Concern is growing over two separate proposals recently floated by the Scottish Government that affect the drinks industry. First there is the Deposit Return Scheme (DRS) which Scotland plans to adopt in August 2023, making it the first country in the UK with such a system. Under the proposals, consumers will pay a 20p deposit when purchasing a drink in a single-use container of between 50ml and three litres made from polyethylene terephthalate (PET – those big plastic bottles of fizzy drink), glass, steel, or aluminium.

This deposit will then be refunded by the drink’s producer when the container is returned for recycling at one of 30,000-plus return points (an impressive total, but note that most don’t actually exist yet). With an ambition to increase recycling, reduce litter and cut emissions it’s “one of the most environmentally ambitious” in Europe, according to Lorna Slater, Scotland’s minister for the circular economy. Sounds great for the environment, so what is worrying the whisky industry? 

What’s the problem?

Well, take your pick. First off, it’s not aligned with similar schemes proposed for England and Wales, which won’t launch until late 2024 at the earliest and don’t include glass containers, whisky’s package of choice. Then, to comply with Scotland’s DRS, drinks producers must register with the scheme by 1 March 2023, reporting the number of containers they place on the Scottish market, and tracking these with barcodes. Just imagine the complexity and cost, especially for smaller businesses. And products must also be registered six weeks before launch, which hits innovative and agile small-batch producers looking to move quickly to market and finally all retailers selling drinks covered by the scheme must operate as a return point, implementing a reverse-vending machine or an in-person setup. That, you may think, is something of a challenge for the average distillery visitor centre shop aimed at tourist visitors from distant lands (even England), let alone the more remote sites on, for example, a Hebridean island while online retailers must provide an online takeback service.  

Just to add to the hours of fun promised under DRS, hospitality venues must gather and store scheme containers sold on their premises for collection by the scheme administrator separate from other recycling. It’s not exactly what an embattled sector crushed by staff shortages, rapidly rising energy costs and consumers cutting back due to cost-of-living pressures would define as Government support. 

But that’s not all

But, secondly, ill-conceived though the DRS scheme would seem to be, the Scottish Government’s latest initiative seems worse. Their recent proposals on the advertising and promotion of alcohol – currently the subject of a consultation exercise here – have terrified many in the distilling industry. Taken at face value, the proposals would greatly limit in-store alcohol marketing, prohibit sports and events sponsorship, curtail branding on merchandise, ban all alcohol advertising in ‘public spaces’, and place further restrictions on traditional advertising and social media.  

Consider for a moment what full implementation would mean: no branded tasting glasses or baseball hats for your favourite single malt; the shop fronts of specialist whisky off-licences would come to resemble particularly seedy sex shops; whisky, and indeed wine and beer festivals would be all but impossible to run; any number of sports and cultural events would face severe financial cutbacks; a tasty whisky-soaked cake or marmalade would be forbidden; supermarkets would have to be redesigned…the list goes on.  If you’re partial to horror stories, checkout the legal implications here but don’t say I didn’t warn you – it makes for gruesome reading.

Put simply, there’s another word for this: prohibition, albeit by the back door and as more than one commentator has noted it looks like a plan to kill the industry in just five steps. Within the necessarily limited space available to a blog article it’s hard to convey the draconian nature of these proposals, so I’d strongly recommend checking out the details and providing your thoughts and comments to the Scottish Government: it’s a ‘consultation’ after all. 

The industry pushes back

However, there is industry pushback, led by the SWA and the Portman Group. In a lengthy response to the marketing consultation, Matt Lambert, Portman CEO said: “The majority of adults in Scotland are moderate or non-drinkers and it is encouraging that binge drinking, alcohol-related crime and underage drinking have all significantly declined. These recommendations are entirely disproportionate and inhibit consumers’ ability to make informed choices, and restrict the ability to trade for producers and retailers who ensure that alcohol is sold responsibly.” He continued: “The Scottish Government’s own Health Survey shows that average weekly intake has fallen to well below the official UK Government weekly guidelines. This has all occurred at a time when the amount of advertising spend has increased, suggesting that there isn’t an immediate correlation between them.”

That’s predictably diplomatic language, echoed in the official SWA statement whose spokesman had this to add: “We share many of the same goals, including reducing harmful consumption and protecting children from alcohol advertising. But we do have deep concerns regarding the sweeping proposals set out in the consultation. It is important that the Scottish Government consults all relevant stakeholders – including the alcohol industry – to obtain a broad perspective and understanding of the impact and to identify any unintended consequences.” It continues: “The Scotch Whisky industry has a robust marketing code in place, which regulates how brands are advertised globally. We want to share the lessons of regulations already in place so that there are no unintended consequences, including a reduction in the vital support the industry provides to communities across Scotland.”

The slow death of Scotch whisky

And that, at a time when the industry continues to invest in jobs, tourism, environmental protection and increasing the premium nature of Scotch as a global brand is at the heart of this debate. Only a cynic would suggest that the Scottish Government is indulging in some displacement activity here, anxious to deflect attention from embarrassing shortcomings in their procurement process (just don’t mention the ferries), appalling track record on illegal drugs, and continued fixation with independence.

But be in no doubt as to the potential impact of these two pieces of proposed legislation. As Paddy Fletcher concludes, put together they represent “the slow death of Scotch whisky, Scotland’s only truly global product”.