By the Blouin News Business staff

Boom for Irish whiskey exports to developing world

by in Europe, Global Economy.

Imported whiskies at a supermarket in Moscow, Russia, Aug. 21, 2014. Bloomberg/Bloomberg via Getty Images

Imported whiskies at a supermarket in Moscow, Russia, Aug. 21, 2014. Bloomberg/Bloomberg via Getty Images

On January 14, the Irish Food Board announced that exports of Irish whiskey have risen 60% over the past five years and that it continues to be the fastest-growing spirit in the world. Exports of the standard 9-liter cases hit 7 million in 2014 (worth around $416 million), having averaged 12% annual growth in the past decade. Ireland aims to double current exports by 2020, and expects to reach 25 million cases by 2030 — this even as much of the world experiences slow economic growth.

Luckily for Ireland, the demand for its whiskey is growing modestly in developed countries, and is taking off in the developing world thanks in particular to its expanding middle classes. Ireland’s top whiskey market is the U.S., though growth registered a mild slowdown in 2014. Ireland’s internal consumption of whiskey is the second largest market, but huge increases in excise taxes (totaling 42% over the past two years) have seriously reduced sales. Between June 2013 and June 2014, domestic Irish whiskey sales dropped 19.3%, raising concerns that such exorbitant prices will scare off tourism.

Yet investment is still pouring into the industry, with the nine currently active distilleries set to increase to seventeen by the end of the year. About $360 million has been invested in the past two years in Ireland’s overall beverage sector, and $1.14 billion more is projected over the next ten years.

Exports of Irish whiskey to the U.K. and other European markets did very well in 2014 even as exports of other Irish alcoholic beverages such as cream liqueur, cider, and beer fell.  And the Irish Food Board’s report noted the particularly impressive growth of whiskey exports to Russia and South Africa.

The trend makes sense; the rising numbers of middle class consumers in the developing world have more disposable income and increasing desires for premium Western-style goods. Irish whiskey, like Swiss chocolate and French wine, is as much a status symbol of affluence as it is a beverage, which gives it a long-term advantage over homemade brews elsewhere. The Shanghai Office of the Irish Food Board reported in May 2014 that total sales of whiskey in China were set to reach $2.73 billion in 2017, representing a vast opportunity for Irish exporters. While corporate gifting by wealthy state entities and officials accounts for a large portion of China’s whisky consumption, the growth is being driven by young consumers readily adopting a “western drinking culture.”

In Russia, where vodka has been dominant forever, there is also a desire for greater variety, which resulted in 48% growth of whiskey imports in 2012. India has a strong history of producing and consuming its own “whiskey,” which does not meet the European definition of the drink. However, Indian consumers have already acquired a taste for European varieties and are expected to significantly increase demand for premium Irish versions. It’s in developing countries, then, that Ireland can expect to ensure long-term growth for its whiskey exports — to the delight of producers and consumers alike.