One of Scotland’s oldest working distilleries, Glenturret has announced plans to phase out the use of peat in its whisky production, with a target to complete this transition as early as 2025.
“We have a duty of care to ensure our use of water is as efficient and responsible as possible.”
Ruth Piggin, SWA
Discussions over the UK and India’s forthcoming free trade agreement (FTA), which could remove the 150% import tax on whisky, are currently underway.
If approved, Chivas Brothers chairman and CEO Jean-Etienne Gourgues said the move could double the size of the Scotch whisky market in five years.
“More importantly in the long-term, there is a huge base of Indian whisky brands in the market, and that there is fantastic potential of innovation for prestige and luxury whiskies, where Scotch whisky is beautifully positioned,” he said.
Ballantine’s and Chivas Regal would be the focus for the business in India, with the first innovation to come from Ballantine’s Finest, followed by Chivas, and Royal Salute “down the road”, Gourgues explained. “We will really target more activities in the coming years for the two brands. The FTA will heavily support that.”
Last week, Pernod Ricard released its financial results for the first half of fiscal 2023, with organic sales up by 19%.
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The firm’s Scotch whisky arm, Chivas Brothers, reported a 23% organic sales increase during the six-month period. Chivas Regal, Ballantine’s, Royal Salute and The Glenlivet each experienced double-digit growth, with increases of 34%, 17%, 37% and 12% respectively.
Gourgues said the results were higher than pre-Covid levels, with “very broad-based growth”.
“It’s a good mix between mature markets, which are growing at 22% and emerging markets which are growing at 24%,” he said. “The quality of growth is very value driven, led by premiumisation, and the prestige part of the range is growing at 28%.”
The firm’s North American business saw a 6% sales increase. Gourgues said the US market is “normalising” after growing strongly over the last three years. “The US is growing at plus-6%, in line with the average growth of the market (3% to 5%), which is almost entirely value driven.”
Gourgues also highlighted a number of emerging markets for the business, including Brazil, which rose by 40%, and Mexico (up 21%).
He pointed to India – “the largest whisky market in the world, which is growing strong and has been plus-25%”.
Gourgues also cited Korea, where there is “real growth in the luxury part of the market”.
He added: “We have enjoyed very, very high growth of almost 60% to 90% in those markets.”
The Glenlivet has “historically been strong in the US, but is now growing at a very fast pace in Asia, in particular Taiwan and China,” he added.
The brand will celebrate its 200th birthday next year and Gourges hinted there will be several announcements planned for the coming year.
Gourgues also said the company is “globalising” the Aberlour whisky brand, citing markets such as the US and Asia.
Scotland’s consultation on restricting alcohol advertising and promotion is also due to close on 9 March.
“I think the fundamentals are right, the desire to have responsible consumption, not to target young people, pregnant women, etc. I mean, it’s absolutely right.”
However, he warned that the consultation could deter the industry of two things.
“The first one is to support our local communities,” Gourgues explained. “We have distilleries in many villages and small cities, and we have been providing local support to them for decades. We wouldn’t be able to do that.
“And the second thing is investment in tourism in Scotland. In pre-Covid times, there have been around two million visitors coming to Scotland for the whisky trade. Other industry players are heavily invested in tourism facilities and brand homes. So this [proposal] will prevent us from advertising anything to foreign visitors.”
Gourgues noted that supply chain disruption has been the biggest challenge over the last year. He added: “The implication of the cost of the energy crisis and the necessity to move into very tangible action with short-term concrete results on the decarbonisation roadmap. These two elements are linked together.”
He also cited the “tremendous” cost of freight, which has impacted the company’s exports to markets such as the US, Southeast Asia, Australia and South Africa.
The firm is looking at how it can reduce the amount of energy it needs across its distilleries, including using MDR technology to lower energy by 50% to 80%.
Gourgues said the company will “fast track a number of initiatives” and aims to reach carbon neutrality by 2026.
“We have a duty of care to ensure our use of water is as efficient and responsible as possible.”
Ruth Piggin, SWA
“The impact of the climate crisis is already being felt in Scotland’s water supply chain, and while distilleries manage this well, we understand that we have a duty of care to ensure our use of water is as efficient and responsible as possible. We’re committed to working closely with stakeholders including SEPA, government bodies and other relevant parties, to further improve the industry’s water stewardship.”
Nathan Critchlow-Watton, Head of Water and Planning at SEPA, said: “Scotland may be renowned for its rain but, as we’ve seen already this year, it can be extremely vulnerable to periods of prolonged, dry weather and with climate change these are expected to become more frequent in the years ahead.
“The businesses that thrive in the face of this challenge will be those that recognise the link between environmental and economic prosperity. They will work with SEPA and others in their industry to build resilience, reduce their water use and have a well-established plan for when we experience water scarcity. These actions will reduce the need for SEPA to impose restrictions on their business.
“It’s reassuring to see the whisky industry being proactive, taking their responsibility to help protect Scotland’s water environment seriously, and contributing to its long-term sustainability for all those who depend on it.”
Should the plans get the green light, they would see 12,000 solar panels capable of producing four megawatts of electricity installed on vacant land at the 150-acre plant, which produces 40 million cases of premium spirits each year.
The owner of brands including Johnnie Walker and Guinness said the move is part of its plans to achieve net-zero carbon emissions from its direct operations by 2030 – and it is working with energy company E.ON and Emtec Energy, a local Scottish business, to develop the solar-panel farm.
The latter would be entirely within the existing footprint of the Leven packaging plant site
“and is planned carefully to ensure minimal visual and environmental impact on the surrounding area.“
Gavin Brogan, operations director at the Leven packaging plant, said: “We have been on the journey to environmental sustainability at Leven for many years and we have made great progress, but this solar array would take us to another level, allowing us to generate our own renewable energy onsite and contributing to Diageo’s global ambition to achieve net-zero carbon emissions by 2030.
“We have planned this carefully and we are happy to engage our neighbours and local stakeholders during the planning application process.”
The firm added that in Scotland, three of its Scotch whisky distilleries – Oban, Royal Lochnagar and Brora – have already achieved net-zero carbon emissions. Diageo also recently confirmed that its Johnnie Walker Princes Street attraction in Edinburgh will open on September 6.
As world leaders gather in Glasgow for the COP26 climate conference, many will be sampling a dram or two of Scotland’s famous whiskies.
And they may even take note of how the industry is leading the way to create a carbon-neutral future.
One of Scotland’s most prestigious whisky makers, Oban, has been looking at ways of reducing its carbon footprint in the whisky-making process.
In 2018, the distillery switched from using fossil fuels to a rapeseed oil biofuel, reducing the distillery’s carbon footprint by 98 per cent.
“It’s given us a transition fuel to be carbon neutral quicker. We have been carbon neutral now since late 2020. It’s allowing us to make that transition step towards zero carbon,” says Callum Rew, the senior site manager of Oban Distillery.
“We wanted to be out there, we wanted to be pioneering, we wanted to be there first and try and do something and learn, so as the other distilleries within Diageo can learn from ourselves.”
“And biofuel was new on the market, so we thought we’ll try it, we’ll test it, it’s a very relatively small distillery here at Oban, so it’s maybe easier to try and integrate it here first.”
Whisky making can be taxing on the environment. A huge amount of energy is required to extract the sugars out of the grain in the mashing process before even taking into account transporting the products all around the world.
But the industry has been taking steps to lower the environmental impact.
According to the Scotch Whisky Association, since 2009, there has been a 34 per cent reduction in greenhouse gas emissions.
“A huge amount of energy is required to extract the sugars out of the grain in the mashing processs.”
Karen Betts, chief executive of the associations laid out the industry’s plans: “It’s really important to us that we are sustainable both now and into the future. We think that through collaboration, innovation, investment, ingenuity, and a bit of time, we can get there by 2040. And if we can get there by 2040, we absolutely should.”
On the western edge of the Scottish highlands, Ardnamurchan Distillery has been using sustainable energy sources since its opening in July 2014.
Shift leader in the distillery, Scott Stewart, says that Scotch whisky’s new green credentials will give it recognition all over the world.
“It’s what the country is famous for, it’s so famous for its whisky. So, if we can show that one of our major exports, or biggest export, is being as green as possible and as sustainable as possible and environmentally conscious, then it reflects fantastically on the whole country. And it can be an example to other industries to follow.”
It is estimated the Scottish whisky production is worth around €6.5 billion to the British exchequer and, with a little Dutch courage, the industry is aiming to reach net-zero emissions in its operations by 2040, ten years ahead of the British government’s 2050 target.
The Scotch Whisky Association (SWA) has become Scotland’s first trade association, and the UK’s first food and drink trade association, to be recognised as a Race to Zero partner in the lead up to COP26 in Glasgow this November. The partnership, which was approved by the UN High Level Climate Action Champions, recognises the Scotch Whisky industry’s commitment to robust net zero criteria in line with globally halving emissions by 2030.
The Scotch Whisky Association has achieved partner status because of the Scotch Whisky industry’s commitment to environmental sustainability, which is set out in the Scotch Whisky industry’s Sustainability Strategy. The Strategy, which was launched in January this year, commits the sector to reaching net zero in its operations by 2040, five years ahead of the Scottish Government’s target and 10 years ahead of the UK Government’s target. It also includes ambitious targets to drive down the industry’s environmental impact in key areas including water use, packaging and responsible land use. Scotch Whisky companies can now join Race to Zero through the SWA by publicly pledging to achieve net zero as soon as possible, producing a clear plan for how they will achieve these targets and contribute their share in the race to zero – all in line with the Scotch Whisky industry’s Sustainability Strategy.
 “I’m delighted that the Scotch Whisky Association has become a Race to Zero Partner. This recognises the hard work and significant investments that Scotch Whisky producers are making to transition away from fossil fuel use and to drive up the use of renewable energy in order to reach net zero. It also recognises how successful the industry is proving to be at working collaboratively towards net zero and in improving our environmental impact in the round.
“Our Race to Zero partnership status is something to celebrate as COP26 approaches, where we are looking forward to showcasing the Scotch Whisky industry’s environmental sustainability achievements and ambitions.”
Karen Betts
“We raise a toast to the Scotch Whisky Association as a new Partner in the Race to Zero. It’s great to welcome this industry into the campaign, and I commend the actions they are taking now to meet their ambitious target of achieving net zero by 2040. All of us across the global economy have a role to play in halving global emissions by 2030 – who will join us next?”
Nigel Topping
This work will culminate in a SBCC Pledge, to be announced during COP26, when other businesses will be invited to adopt the measures in the pledge. Following COP26, the group will meet on a biannual basis to share best practice, ensure the spirit of the SBCC Pledge is being observed and consider further ways to collaborate to work towards net zero.
