One in five Scottish distilleries ‘in financial distress’ – Daily Business

One in five Scottish distilleries is in financial distress as a result of falling sales and rising production costs, according to new data.

These include businesses that have existed for generations but are now facing a worldwide downturn in demand.

Worldwide scotch sales fall 3% in the first half of 2025, the third consecutive year of decline after decades of growth, according to alcohol data provider IWSR.

This is due to a range of economic factors including, rising operating costs, falling export sales and consumers ditching alcohol.

Research by financial advisory and restructuring firm BTG (formerly Begbies Traynor Group) shows that 19% (69) of all of Scotland’s distilleries are facing financial distress.

A further 217 across England, Wales and Northern Ireland, are facing significant or critical financial issues.

The number of Scottish distilleries in distress increased by 40.8 % in the last three months of 2025, well ahead of the UK average rise of 12.2 % according to BTG data. Year on year the rise was 17%, over 2.5 times the UK average rise of just 6.7%.

Thomas McKay, managing partner of BTG in Scotland, said: “Distilleries in Scotland… are facing a perfect storm of lowering demand, rising production costs and increased tariffs in key markets, factors that have already cost numerous brands their businesses over recent months.

“Previously thriving businesses that have existed for generations are facing distress, often through no fault of their own, and there is a case for additional support to the sector to preserve the heritage of the Scottish whisky industry in unprecedented times.

“This is especially clear when you consider that Scottish distilleries directly employ more than 10,000 people, well over half of the industry’s workforce in the UK.”

Demand for scotch whisky, gin and other spirits peaked in 2020 during the lockdowns in the UK and globally. As this demand fell away, the remaining over-supply led to falling prices just as additional costs of exporting to the biggest market for scotch, the US, have risen dramatically.

“The dynamics of these market forces are such that they are impacting otherwise healthy businesses that have used their cash reserves to stay afloat, and now need to restructure to survive this period of drastic downturn,” said Mr McKay.

“We’ve helped a number of distilleries and businesses to do this in recent months, but swift action is needed to help the industry in these very challenging times, especially if the threatened higher tariffs come into effect in the summer.

“Exports to China fell by over 30% last year, and it is still not clear whether US orders in 2025 were artificially high in order to build up stocks there before the new tariffs impact prices. If so, that could see exports of scotch to the US fall away precipitously, and it’s important for businesses to have a plan if that does happen.”

According to a Bloomberg Index, 46% of the value of the 50-leading beer, wine and spirits brands has been lost since the industry’s peak in 2021.

US exports fell by over 4% in 2025, after last year’s 10% tariff on US imports of all goods from the UK, and the looming prosect of a further tariff rise of 25% in June could see UK exports to the US drop further. 

The general fall in alcohol consumption in key markets is attributed to decreased appetite for alcoholic drinks, especially spirits, among Gen Z consumers, who on average drink 20% less than Millennials, who in turn consume less than older generations.