‘A Perfect Storm’: 1 in 5 Scotch Whisky Distilleries Face Significant Financial Issues

The Prince of Wales known as the Duke of Rothesay when in Scotland, during a visit to Johnnie Walker Princes Street to officially open the new global visitor whisky experience in Edinburgh. Picture date: Friday October 1, 2021. (Photo: Press Association via AP Images)

Nearly one in five Scotch whisky distilleries is facing financial distress, according to new data from restructuring firm BTG.

A December business distress report found that 69 distilleries in Scotland are dealing with “significant or critical” financial issues. That represents 19% of the country’s distilleries and marks a sharp rise in the final months of 2025. The data was reported by The Spirits Business.

The increase in distress among Scottish distilleries reached 40.8% in the final three months of 2025. By comparison, the UK average across sectors was 12.2%. Year over year, scotch distillery distress rose around 17%, compared with a national average increase of 6.7%.

More than 200 distilleries elsewhere in the UK also reported financial strain. A further 217 distilleries in England, Wales and Northern Ireland said they were facing financial difficulties.

Demand Drops After Pandemic Peak

Thomas McKay, managing partner of BTG in Scotland, said the sector is facing several pressures at once.

“Distilleries in Scotland, where the majority of the UK’s whisky production is based, 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,” McKay said, according to The Spirits Business.

Demand for Scotch whisky and other spirits peaked in 2020 during Covid lockdowns. Since then, demand has fallen. That shift has left producers with excess stock and falling prices.

At the same time, production costs have risen. Energy, raw materials and logistics remain expensive. Many producers used cash reserves to manage the downturn. Some now need to restructure to remain viable.

“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,” McKay said.

Tariffs Add Export Uncertainty

Exports remain central to the scotch industry, especially in the United States and China.

McKay pointed to tariffs in the U.S. as a growing risk. He said some American buyers may have increased 2025 orders to build stock before higher tariffs take effect.
“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,” he said.

The U.S. is one of Scotch whisky’s largest export markets. Any drop in orders could place added strain on distilleries already managing lower demand.

Employment and Industry Impact

Scottish distilleries directly employ more than 10,000 people, according to BTG. That represents more than half of the UK whisky industry workforce.

“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,” McKay said.

The latest data highlights growing financial pressure across the UK distilling sector, with Scotland accounting for the largest share. As export markets shift and costs remain high, distilleries may need to restructure operations to navigate 2026.