23 Aug 2013

Is whisky the key to economic recovery?

It is a tough job but someone has to do it – to find out why Britain is not exporting more manufactured goods, I volunteered to travel around Scotland for #c4newspopup and visit whisky producers.

And I did find some good news – along with some fine single malts.

Even in the depth of recession we knew what we wanted the recovery to look like. This was a chance to rebalance the British economy. Move away from cheap consumer credit and start making things again.

Then sell those things overseas. An export led recovery is what we wanted. But that hasn’t really happened yet. The figures are fairly dire. We still have a yawning trade deficit as we import far more goods than we export. Our surplus in services doesn’t come close to making up the difference.

Back in 2010 George Osborne promised “a Britain held aloft by the march of the makers”. So what went wrong? The manufacturing sector does seem to be recovering; there has been some pretty optimistic data recently. But we haven’t yet succeeded in selling substantially more of these manufactured goods abroad. Why not?


To find out, I went first to Bruichladdich whisky distillery on the Isle of Islay. Their story perfectly illustrates how the recovery was meant to happen. An old disused distillery that had been mothballed for years was brought back from the dead by pair of entrepreneurial investors.

It’s now the biggest employer on the island. Sixty jobs is a lot on an island with a population of just over 3,000. Briuchladdich export 90 per cent of their product (the quadruple-distilled version is pictured above) – which helped them weather the UK downturn.

In 2010, George Osborne promised a Britain held aloft by the march of the makers. So what went wrong?

And some people argue that whisky is almost recession-proof anyway. But even these distillers have felt the head winds from the eurozone.

The chief executive Simon Coughlin admitted to me that they have lost business in Europe; sales in Italy, Spain and Portugal have fallen off a cliff. They are still doing well in Germany, Switzerland and the US.

But any management consultant would tell them that these days you need to be trying to get your product into the BRIC countries, the fast growing economies of Brazil, Russia, India and China.

Business culture

In Glasgow, Linn are another small Scottish firm making a premium product. They manufacture high end, high priced hi-fi systems. They are very eager to start selling to China but are finding it very difficult.

The managing director Gilad Tiefenbrum took his family to live in Shanghai for the last few months to try to better understand Chinese business culture and find a way to navigate the onerous Chinese rules and regulations that make importing electronic goods very difficult. He still thinks it will be a long time before he really breaks into that market.

Watch the rest of our #c4newspopup week reports here

Linn’s experience helps to explain why British companies still export more to Belgium than to all the BRIC countries combined. At a time when recession in the eurozone means it is vitally important to break into new, expanding markets.

Visiting Islay it was immediately obvious what the benefits of a thriving export sector could be. It’s not just the new jobs in the distillery.

Farmers across the island are getting boost from growing barley for Bruichladdich. The benefits filter through the whole community. This is one place that really is enjoying an export led recovery. But it has yet to spread across the UK mainland.