- By Region
Diageo is investing £1bn over five years and creating hundreds of jobs in Scotland to slake the global thirst – not least in Latin America, Asia and even sub-saharan Africa – for Scotch whisky.
The investment will go into new distilleries, warehouses and infrastructure, as well as expanding existing facilities: all told, it is expected to boost capacity at Diageo, the world’s biggest spirits company, by 30-40 per cent
But while the economic booster plays to Scotland’s natural advantages – Scotch must by definition mature in oak casks in the country for at least three years – it also highlights a more fundamental split in UK food and drink.
Westminster and Holyrood have each put the industry – the UK’s biggest manufacturer, employing up to 400,000 workers and generating £76bn in sales – firmly on their radars.
But while Scotland has appointed a go-getting food minister, earmarked funding and availed itself of European grants, many in England fret that the playing field tilts favourably north of the border. Grumbling has intensified as the industry strives to export more to offset cash-strapped consumers at home.
Scotland has made food and drink part of the “political narrative” to a greater extent than England, says Tom Hind, who lobbies on behalf of the National Farmers’ Union.
He also points to Scotland’s approach to using European rural development grants, which have allowed Scottish farmers to upgrade facilities to meet new regulations; in contrast, English poultry farmers have had to invest millions in meeting new egg cage rules without grant support.
Westminster launched a package of financial and administrative help to encourage exports and provide a fillip to the small and medium sized enterprises employ more than 90 per cent of the industry’s workforce.
However, the welter of funding pots makes it harder to know where to target requests for funds, SMEs say – and even the Food and Drink Federation struggles to calculate an aggregate value.
Either way, the numbers stack up more favourably in Scotland where the industry (including Scotch whisky) had annual sales of £9.5bn of sales in 2010, roughly 40 per cent of which were exported. Across the UK, roughly one-seventh of the £76bn generated in sales last year went overseas.
Richard Lochhead, Scotland’s food minister – a role that does not even exist south of the border – reckons industry and government alike have played their part.
On his appointment in 2007 he set about developing a Scottish food and drink policy and focusing on “getting people to enjoy Scotland’s larder”.
Scotch whisky last year generated more than £4bn from shipments but there are also more traditional producers like Baxters and Walkers Shortbread that “have very successfully shown how it can be done and capitalised on being iconic Scottish products,” he says.
Nature undoubtedly helps: Scotland’s biggest exports are Scotch, lubricated by a rich history going back to the ancient Celts and clear babbling brooks – and salmon, up 22 per cent last year to nearly 100,000 tonnes.
But even more prosaic and elemental foodstuffs are carted across the globe and bringing cash into Scotland. Take oats. PepsiCo, the US snacks and beverages giant, this year put an extra £14.4m into its Fife plant to satisfy global demand for porridge. Oats are even proving popular in Muslim countries, helping people bulk up ahead of the Ramadan fasting period.
South of the border, however, the focus is more on government help. Jim Moseley, FDF president, is keen to ape Scotland’s ambassador network, designed to woo students to join the industry and teach schoolchildren more about food, again with government funding.
Others retort that there is simply more dynamism among Scottish companies, which have been quicker to parlay salmon, shortbread and even porridge into covetable items overseas.
“I honestly believe it is not so much about the help that’s available,” says James Walker, who runs the eponymous Walkers Shortbread. “It’s more about having the right product and commitment to exports coming from within the company itself.”
And, at least in the eyes of the ruling Scottish National Party, this will only be enhanced further by an independent Scotland.
“I have no doubt whatsoever that not only will the powers that independence will bring benefit how we can support the food and drink sector in Scotland through business policy and economic policy,” says Mr Lochhead.
“But also Scotland’s profile will rocket around the world and it will be such a big advert for Scotland that the food and drink industry will benefit hugely.”
The family-run company that makes Walkers Shortbread has been making an overseas push since the 1970s.
Today, some 40 per cent of the sweet crumbly biscuit manufactured in Scotland’s Speyside is exported, to 75 countries.
“It’s taken us 40 years to be an overnight success,” jokes James Walker, managing director and grandson of the founder.
Starting with the English-speaking markets of the US and Canada, Mr Walker has built up distribution to China and Germany. As his quip suggests, the process has not always been smooth and he attributes success to consistency and a long-term approach.
No market is a walkover. Germany initially proved less receptive to non-German food while the US, despite being an easier sell, was for that very reason more competitive.
But Mr Walker is adamant that success in exports is down to the individual company and quality. “If you are going to send something around the world it is going to be expensive and must deliver in taste every time,” he says.
But he concurs that the Scottish heritage – the bagpipes and tartan – is a definite plus when it comes to selling abroad.
“Scottish shortbread is more than a packet of biscuits. It is part of the heritage and the fact it’s made in Scotland is important to people.”