We’re all familiar with newspaper statements attributed to the Scotch Whisky Association regarding the disproportionate level of duty imposed on Scotch by the British government. However, while taxation is a key issue for the SWA, the industry’s trade association is about much more besides.Founded in 1917 in London as The Whisky Association, the organisation gained its present title in 1942, and, appropriately, the newly-formed Scotch Whisky Association moved its head office north to Edinburgh, where it is still located. The Association’s director of government and consumer affairs is Edinburgh-born Campbell Evans, who joined the SWA in 1991 and was based in London for two years before returning to his native city and the SWA’s grand Atholl Crescent offices.“We have 37 staff, two of whom are based in our London office, but I’m in London working for at least one day a week, four weeks out of five,” says Evans. Inevitably, when much of the SWA’s work involves taxation and government legislation, proximity to Westminster is an asset.The Scotch Whisky Association currently has 55 members, the number having fallen as consolidation has taken place within the industry. According to Campbell Evans, members come from the ranks of “distillers, bottlers, blenders and brokers. In fact, 98 per cent of anybody who does anything with whisky.” The Association is funded entirely by members’ subscriptions, and is governed by a council of 16, whose role is to give a voice to the smaller companies as well as the major players, and is currently chaired by Edrington’s Ian Good.Part of the Scotch Whisky Association’s mission statement is “To promote and protect the interests of the Scotch whisky industry at home and abroad.” Campbell Evans fleshes out that statement by discussing some of the most significant aspects of the SWA’s remit, along with recent and ongoing examples of its work. “One of our main concerns is regarding UK taxation along with the overall European Union tax level on whisky. Our Government and Consumer Affairs Department also looks at alcohol and health issues, and has a media relations function.“The Association is involved with breaking down trade barriers, too. Of the 200 countries in which Scotch whisky sells, 130 have some barriers to trade. We also play a role in protecting the integrity of Scotch whisky around the world. We have five lawyers working in the office, who deal with spirits being passed off as Scotch. At any one time we will have up to 50 court cases on the go. We lobby the government and EU on legislation concerning whisky.”So much for the theory, but what of the practice? Evans uses the issue of strip stamps as an example of a successful recent campaign the SWA led.In November 2000, the government announced that it was “favourably disposed” to the introduction of strip stamps on Scotch whisky bottles in an attempt to cut duty fraud.According to Evans, this would have cost the industry some £280 million, as tax would have to be paid up front instead of when the whisky is released from bond, and new machinery costing around £15 million to add the stamps during bottling would be required. It was also estimated that adding the stamps could slow down bottling lines by up to 10 per cent.Examples from other countries where the stamps had been introduced showed that forgeries were comparatively easy to produce, while each of the tiny stamps would have had a theoretical value of more than £5, posing a huge security headache.The SWA launched a campaign to stop the introduction of strip stamps but also suggested ways to work with government to reduce fraud. Chancellor of the Exchequer Gordon Brown was persuaded of the arguments against introduction, and instead set up a ‘spirits fraud tax force’.Evans also points to the fact that during the last eight years, UK excise duty on spirits has either been reduced or frozen four times, while tax on other drinks has risen, thus narrowing the duty differential that has been at the heart of the SWA’s taxation-related campaigns. “This is the
longest freeze since the 1950s,” says Evans. The Association lobbies energetically for a level playing field for the drink, noting that the UK tax structure continues to discriminate against home-produced spirits in favour of imported wine. It stresses that standard measures of beer, wine and Scotch contain roughly the same amount of alcohol, yet the duty payable per measure varies. On half a pint of beer it is 16.65 pence, on 125ml of wine 19.3 pence, but on 35ml of whisky, 27.38 pence.All drinks ought to be taxed according to alcohol content, claims the SWA. According to one of their campaigning leaflets:Tax reform at home would protect jobs in Scotland, and set a good example to those countries around the world that imitate the duty discrimination they see against Scotch in the UK. By cutting spirits duty at home the government would help to repatriate cross-channel sales to the benefit of retailers and Treasury revenue.There have been notable recent successes in eroding ‘duty discrimination’ in association with the World Trade Organisation in Chile, Japan and South Korea, and Campbell Evans says that the priority in terms of trade protectionism is now India. Indian import tax on foreign spirits was 700 per cent, though this has now dropped to a mere 400 per cent! Turkey is another country the SWA is targeting for improved trading opportunities, and Evans emphasises that it is seen as a potentially very significant market for Scotch.The SWA was also instrumental in ensuring that the EU’s Water Framework Directive, designed to protect the drier areas of Europe, was not applied on a ‘one size fits all’ basis including Scotland, where lack of water is rarely a pressing problem.The EU has given member states the right to apply exemptions to abstraction control in situations where water usage has no significant impact on overall water status, and the SWA’s lobbying machine has now moved on to tackle the Scottish parliament, making certain that it takes advantage of the exemption and uses common sense in the light of Scotland’s high level of rainfall.In the UK, high-profile cases of the SWA’s work to protect the integrity of Scotch whisky have included the legal judgement in 1997 that the Isle of Man’s Glen Kella could no longer call itself whisky. The SWA objected to its production processes which it successfully argued were out with the legal definition of whisk(e)y. The product is now called Manx Spirit. The following year, the Welsh Whisky Company was prevented from marketing Scotch whisky bottled in Wales as ‘Welsh Whisky’, though a new Welsh Whisky Company is now distilling in the Brecon Beacons with the blessing of the Association.Regarding overseas cases, Evans chuckles at the story of ‘Scotch Terrier Whisky’ distilled in Goa. The producer insisted that he had no intention of trying to suggest this was Scotch whisky, but rather that he was so fond of his dog he had named his whisky in its honour!Regarding the whisky industry’s relationship with government, Evans comments, “We want to make sure that we continue to be nurtured, not fettered.”The Association has a persuasive array of statistics at its fingertips to demonstrate the importance of Scotch whisky to the British economy. It provides employment directly for 11,000 people in Scotland, and as many as 30,000 indirectly. The industry spends £1 billion per year with local suppliers and supports one in 54 Scottish jobs. Scotch whisky is one of the UK’s top five manufacturing export earners, bringing in more than £2 billion every year since 1993.The SWA is also quick to point out that the government gains £1 billion per year in excise duty and VAT, and that it takes 66 per cent or more of the retail price of a typical bottle of Scotch whisky.For many years, the SWA has published a popular Scotch Whisky Questions & Answers booklet, an excellent introduction, available in various languages and regularly updated to reflect changing statistics.In 2001, however, the Association became bolder and produced a new publication called Forbidden Fruits – Wicked Whisky Cocktails. In an introduction that must have had crusty colonels from Cambridge to Craigellachie choking on their midmorning malts, the booklet declares:This little book of Wicked Whisky cocktails abandons protocol and dares to be different. It shows that Scotch can be mixed with more than just the usual suspects of water or ginger ale. Scotch and fruit juice or Scotch with milk may sound to some like sacrilege. Irreverent they may be, but the results are delicious.Recipes include Scotch Paradise – Scotch, coconut syrup and milk – and Berry Royale – strawberry syrup, Scotch and champagne.Addressing growing public awareness of environmental issues, the SWA has also published a new pamphlet entitled Scotch Whisky and the Environment, in which it stresses, “Scotch whisky is an entirely natural product”, noting the many ways in which the industry has enhanced its already commendable ‘green’ credentials. Production, by-products, emissions and packaging are all tackled, which makes informative, thought-provoking reading.But just spare a thought for those colonels, gamely trying to concoct Rolling Stones and Mint Spritzers. Thanks to the SWA, their drinking world may never be the same again … More information about the Scotch Whisky Association, its work, membership and current campaigns can be found at www.scotch-whisky.org.uk