Scotland’s food and drink industry stands as a pillar of the nation’s economy, celebrated worldwide for its rich heritage and exceptional quality. From renowned Scotch whisky to premium seafood to artisanal cheeses, Scotland’s offerings hold a distinguished place on the global stage.
Nowhere was this more evident than in my recent business trip to New York where Scotland took centre stage in America’s busiest city as part of the annual Tartan Week celebrations.
Scottish Chambers of Commerce met with the leading players in the world of business and commerce to deepen the economic partnership between Scotland and USA. Engagements included the US Chamber of Commerce, the largest lobbying body in the USA, the American-Scottish Foundation, the USA Department of Commerce, the Greater New York Chamber of Commerce and leading businesspeople from across the US economy.
The common thread across all of our engagements was the deep appreciation of Scotland’s food and drink offering and recognition of its unmatched quality. Hearing stories from business leaders of their first experience of enjoying Scotch whisky on a trip to Scotland or a meal with the family which included Angus beef on the menu was a reminder of the immense role the sector has on our economic, social and cultural standing in the world.
It’s therefore no surprise, the sector is the largest industry for overseas exports, with a truly global reach, making up around 20% of all our exports. Exports of Scottish food and drink products reached a record export value of £8bn in 2022 according to HMRC stats.
This was an increase of £1.9 billion compared to 2021, an increase of 30.6%. The sector is at the beating heart of Scotland’s economic output, and vitally important to Scotland’s domestic and international markets.
Businesses from Aberdeen and the north-east are some of the major driving forces behind the sector’s growth. Firms such as BrewDog, one of Scotland’s flagship unicorn companies with a value of more than £1bn, the adored household ice-cream and savoury snack company Mackie’s of Scotland and of course our treasured Walker’s shortbread continue to see strong performance in international sales.
I was delighted during Tartan Week that a wide range of Scottish brands were showcased to American buyers and distributors. Of particular note was the outstanding tribute to the city by Walker’s which displayed a shortbread replica of the Empire State Building. The structure was constructed from 527 shortbread biscuits and celebrated the company’s relationship with the US which started to export to the country in 1976 and now sell around 50 million pieces of shortbread across the US every year.
Similarly, the USA is the largest export destination for Scotch Whisky, with a value of over £1bn in 2023. With the punitive 25% tariff applied by the USA on the single malt Scotch Whisky suspended since 2021, there is a risk that this could be re-introduced if a permanent agreement to resolve trade-related disputes at WTO is not reached by June 2026. It is critical the new UK Government ensures tariffs are avoided which would limit growth, exports and job creation.
Closer to home, food and drink tourism is also becoming increasingly popular, as our culinary specialities become as attractive as our rolling hills and glens to the social media generation, adding to the value of the sector to Scotland’s tourism market.
New research by VisitScotland has confirmed this, revealing growing visitor demand for Scotland’s food and drink experiences. Findings from the Scotland Visitor Survey 2023 showed that almost half of visitors (46%) took part in at least one food and drink activity (in addition to eating out) during their trip last year, with nearly a fifth (19%) of long-haul visitors now naming food and drink as the reason for choosing Scotland as a destination. Visiting a whisky, gin distillery or brewery (26%) was the most popular type of food and drink activity followed by farm shop or farmers market (22%), fine dining (14%) or other experience such as a cookery class or afternoon tea (9%).
Experiencing locally produced food and drink was important to all visitors, especially those from the USA (51%) who make up Scotland’s largest international visitor market.
Scotland’s food and drink sector is dynamic, innovative and world leading. However, it isn’t immune to the challenges that businesses are facing due to inflation, the cost of doing business and the rise in red tape.
Global supply chain disruption is still creating additional barriers to the smooth importing and exporting of goods around the world. Rapidly rising food and fuel prices, the driving force behind inflation, are causing further economic instability as consumers and businesses continue to feel the squeeze.
The workforce shortages that many farmers and food producers in Scotland and across the whole UK warned of because of Brexit is now a reality. That reality means current UK Government policies have increased the skilled worker salary threshold to £38,700, which is £11,000 higher than Scotland’s average wage. This single policy alone is making it difficult for businesses in Scotland to hire and grow and must be urgently reviewed by the next UK Government.
Broader than the workforce, business needs to see a long-term plan on our future relationship with the European Union which addresses access to the bloc and reduces lengthy customs checks. This is of particular importance to the food and drink industry who cannot afford fresh produce being held up in queues of lorries at checkpoints.
From a Scottish Government perspective, a re-think on its tendency to introduce industry regulations should be prioritised. For example, is now the right time to be introducing a tourist levy and adding more costs on already cost-sensitive consumers and adding more administrative burdens on small businesses?
Despite the challenges, the potential for export growth in Scotland’s food and drink industry and experiences-led inward tourism is immense. Key markets such as the United States, China, and emerging economies in Asia present significant opportunities.
That’s why clear growth plans from the UK Government are essential in taking Scotland to the world and boosting industry growth. I have seen first-hand the palpable global appetite for our produce and industry is well-positioned to meet international demand and fly the flag for Scotland.
The UK Government has a unique opportunity to work with industry to drive growth and create jobs. Will it take it up?
First published in the Courier and The Press & Journal, June 2024
