Hidden in the Scottish countryside on the edge of Kirkcaldy, Cluny bond is essentially a small town built to store whisky. When the latest warehouses are completed on the former opencast coal mine, Diageo’s 220-hectare (544-acre) maturation site will be able to hold nearly 3 million casks of Scotch. The drinks multinational needs the space.
After a 15-year boom supercharged by the Covid-19 pandemic, demand for Scotch whisky has slumped worldwide. Distilleries across Scotland have paused production to avoid adding to the oversupply, known as a “whisky loch” – the equivalent of a “wine lake”.
Last week, the community-owned GlenWyvis Distillery in the Highlands announced it would appoint administrators after sustained financial pressure in the whisky market. On Monday, workers at Cameronbridge, Diageo’s largest distillery, a short drive from Cluny bond, began strike action against the company’s plans to cut hundreds of jobs across its Scottish operations.
Diageo produces about one in three bottles of Scotch globally, including popular brands such as Johnnie Walker. Dozens of Scotland’s 156 active distilleries are rumoured to be up for sale.
“Strangely, Scotch has had a really good time since the 2008 financial crisis,” said industry veteran Nick Morgan. “But people have stopped buying at the crazy rates they had been.
“People who bought whisky during the pandemic because they had nothing else to do realised they probably had enough at home for two or three years. There’s increased awareness of health issues, many are choosing to drink less, and alcohol got very expensive during the good years for the business.”
Fluctuations in Scotch whisky’s £5.36bn export market have proven particularly hard to navigate. By law, the drink must be matured for at least three years in an oak cask in Scotland, with high-end speciality Scotch aged in barrels for up to 40 years. Such lengthy maturation periods, used to create a wide range of flavour profiles from sweet to sulphurous, can make production hard to plan.
Despite Donald Trump’s decision to remove duties on Scotch exports to the US after the King and Queen’s state visit to the White House earlier this year, the industry had already suffered a significant hit. The US president’s “liberation day” tariffs in April 2025 resulted in a 15% fall in Scotch exports to the US, according to the Scotch Whisky Association.
Demand in France – until recently the largest market by volume – has fallen, while the market in China has never really taken off as hoped. Optimists point to early signs of a tentative recovery, however, with the industry returning to growth in the first half of this year. Exports to India in particular have surged – but have not yet offset declines elsewhere.
A line chart shows Scotch sales growing in India and falling in France, the US and the rest of the UK outside Scotland. Brazil also shows slight growth, but after a large dip.
The downturn is by no means limited to Scotch. Many drinks manufacturers are experiencing a post-pandemic slump, with five of the biggest publicly listed alcohol producers sitting on a record $22bn of aging spirits, according to the Financial Times.
Holyrood Distillery, in the shadow of Arthur’s Seat in Edinburgh, is among those to have paused production while its owners wait out the difficult period. Its bulbous copper stills, which would usually be hard at work producing single-malt Scotch, sit idle. Co-founder Rob Carpenter says he does not know when that will change.
“Anecdotally, my understanding is that the industry might be producing around a third of its normal level right now,” he said. “No one has a crystal ball, so nobody knows what is going to happen 10 years from now. You try to anticipate”It’s a curse of the industry in a way — knowing where things are going to end up.”
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Unlike many of its rivals, Holyrood Distillery benefits from tourists visiting the Scottish capital. About 40,000 people a year tour the stone building, which is almost 200 years old and once supported the Innocent railway. Tours make up about half of the company’s current revenue.
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Rob Carpenter, Holyrood Distillery co-founder. Photograph: Holyrood Distillery
“It’s not really that people have stopped drinking spirits,” Carpenter added. “But consumers are nervous. We all see what’s happening in the world. There isn’t much predictability right now, and people are just being careful about what they spend their money on. This is a luxury spirit.”
The current industry downturn is nothing new. In the 1980s, the Scotch whisky industry faced a similar mix of weak demand and chronic oversupply, leading to a wave of distillery closures across Scotland. The rise of Japanese whisky producers, a global economic downturn, and overconfidence from a 1970s boom caused a prolonged slump.
Today, few believe the latest downturn marks a permanent shift in the industry’s fortunes. When Holyrood Distillery opens for tours, visitors file in, browsing the single malts on the shelves.
“Whisky is a waiting game,” said Morgan, who chronicled Johnnie Walker’s 200-year history in a 2020 book. “If you look at the sales data, every time you have one of these downturns, it comes back stronger. Right now, the business is in a trough. I can pretty much assure you that in five years, when demand really picks up again, they’ll find they don’t have enough whisky, and they’ll have to switch everything on.”
Frequently Asked Questions
Here is a list of FAQs based on the news that Scotch distilleries are halting production due to a surplus of unsold whisky
The Basics
What is the whisky loch
It is a nickname for the massive amount of unsold Scotch whisky currently sitting in warehouses Just like a lake the supply has grown too big and has nowhere to go
Why are distilleries stopping production
They are stopping because they have too much whisky already If they keep making more they will run out of space to store it and the price will crash because supply is higher than demand
Is there a shortage of Scotch whisky
No the opposite There is a surplus There is more whisky available than people are currently buying
Which distilleries are affected
This affects the entire industry but especially smaller or independent distilleries Big names like Diageo and Chivas Brothers have had to slow down or pause production at several of their sites
The Causes
Why did they make so much whisky in the first place
A few years ago Scotch whisky was extremely popular Sales were booming especially in the US and Asia Distilleries ramped up production to meet that expected demand but the demand didnt grow as fast as they thought
Did people stop drinking Scotch
Not entirely but the growth has slowed down The main issues are
1 Economic slowdown People have less money to spend on luxury items
2 Changing tastes Younger drinkers are exploring other spirits like tequila gin and alcoholfree options
3 Trade issues High tariffs in the US made Scotch more expensive to buy
Why cant they just sell it cheaper
Scotch whisky is a premium product If distilleries slash prices they hurt the brands reputation and make it hard to raise prices again later Also many distilleries have contracts with retailers that prevent sudden price drops
Technical Industry Questions
What happens to the whisky that is already made
It stays in barrels and continues to age Unlike milk whisky doesnt spoil In fact it often gets better with age The problem is that storing it costs money
