Scottish whisky market slides into supply glut amid falling sales and US tariffs
The Scottish whisky market has slipped into a supply glut as US tariffs and falling demand weigh on the country’s distilleries.Global scotch sales fell 3% in the first half of 2025, marking the third consecutive year of decline after decades of growth, according to the alcohol data provider IWSR.Distilleries have been grappling with uncertainty around Donald Trump’s trade tariffs, as well as declining rates of alcohol consumption.While Keir Starmer secured a trade deal with Trump in May, whisky imports from the UK into the US are still subject to a 10% tariff.The Scotch Whisky Association (SWA) has estimated that it costs the sector £4m a week.
The shake-up has forced some of the biggest manufacturers to freeze or scale back production.Diageo, the FTSE 100 drinks group behind a number of whiskies such as Johnnie Walker, Talisker and Lagavulin, has reduced production at some of its malt distilleries to “balance capacity against current demand”.The company has scaled back production at some distilleries from seven days a week to five, with operations paused at Teaninich Distillery in the Scottish Highlands.It has also halted production at its Roseisle Maltings site in north-east Scotland until at least June 2026, with future production under review.Diageo’s proposed redevelopment of its Talisker distillery on the Isle of Skye is also uncertain.
Its full planning application is awaiting permission from the local council, although it is understood the company does not currently have definitive investment plans for the area,A spokesperson for Diageo said it remained “confident and committed to the long-term growth of scotch whisky” but was managing capacity after a period of sustained investment and stock buildup,This year the SWA warned that US tariffs are costing the sector almost £20m a month in lost sales, and more than 1,000 jobs,Overall scotch sales in the US, the biggest market for the drink, fell 6% in the first nine months of 2025, according to IWSR,That was an improvement on a 9% fall in 2024, but well below growth rates in 2020, when sales rose by 4%.
Luke Tegner, of IWSR, added that a broader decline in alcohol consumption was also feeding the slump.“Scotch has had a boom in the last 35 years,” he said.“But more recently it has been hit by tariffs, by affordability and by people moderating how much they drink.”In August, a poll by Gallup found the share of Americans who say they consume alcohol was at its lowest in nearly 90 years, at 54%.“But the scotch industry is very creative – it will find a way out of it,” Tegner added.
“We are still forecasting growth by the end of the decade.”In the meantime, some producers are investing in extra storage space to house unsold stock.International Beverage, which owns scotch brands Old Pulteney, Speyburn and Balblair, spent £7m this year on six new warehouses, adding capacity for 60,000 casks.In the US, other distilleries have cut back on production: the bourbon brand Jim Beam, which is owned by the Japanese drinks company Suntory Group, has said it will shut down production at its main site in Kentucky for all of 2026.While the market for scotch has been weaker this year, the broader whisky market has been more resilient, with volumes up 3% in the first half, according to IWSR.
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