scotch cluster2012 gr7v6

( )ScotchWhisky Cluster 2012

Group 7

Aimée Tañón, Amit Rawat, Ataol Oktem, Loreto Scaff

1Wednesday, February 22, 2012

( )Scotland

⊛ Scotland

⊛ Scotch Whisky Cluster

⊛ World Scotch Whisky Market

⊛ Challenges for Growth & Recommendations


( )ScotlandCountry History ✣ Microeconomic Performance ✣ National Diamond


( )Scotland

Five periods that shaped the country

1. The Scottish Wars of Independence 1286-1328

2. The Age of Reformation, 1542-1603

3. The Treaty of Union, 1689-1740

4. Migration and Empire, 1830-1939

5. Impact of the Great War, 1914-1928


( )Economic Indicators

Indicator Objectives Today´s performance

Economic Growth

Productivity

Participation in the UK labour market

To raise the GDP growth rate to the UK level by 2011

2010,Q3: -1,1 2010,Q4: -0,8 2011,Q1: -0,5 2011,Q2: -0,4

To match the GDP growth rate of the small independent EU countries by 2017

2010,Q3: -1,22010,Q4: -1,72011,Q1: -1,82011,Q2: -2,0

To rank in the top quartile for productivity against theirs key trading partners in the OECD by 2017

2006: -17,9%2007: -16,7%2008: -17,5%2009: -13,7%

To maintain their position on labour market participation as the top performing country in the UK

2008: 73,9%2009: 72,1%2010: 70,5%2011: 71,4%

To close the gap with the top five OECD economies by 2017

2007: 3,3%2008: 3,7%2009: 5,0%2010: 3,7%

Source: Scottish Government website


( )National Diamond


( )The Scotch Whiskey ClusterIntroduction Scotch Whiskey Cluster ✣ History & Evolution ✣ Scotch Whisky Cluster


( )The Gaelic "usquebaugh", meaning "Water of Life", phonetically became "usky" and then "whisky" in English.


( )Historic Timeline

⊛ 1100 First distillation occurred in Scotland in the early Christian monastic sites.

⊛ 1495 - First written mention of Scotch whisky is in the Exchequer Rolls of Scotland. 'whisky' derives from uisge, which is an abbreviation of uisge beatha, the Scots Gaelic for 'Water of Life' and was used for medicinal purposes.

⊛ 1644 first taxation on scotch whisky, illegal moonshine era

⊛ 1770‘s first whisky export

⊛ Early 1800’s new taxation (financed the war with France, industrial revolution

⊛ 1920‘s Prohibition created a high demand for the export of whisky

⊛ 1995 tax was reduced on scotch whisky


( )"Why do some nations succeed and others fail in international competition?" Double Diamond Theory (Porter)


( )Scotland’s Food/Drink & Whisky Cluster ~ 2010 ~

• Fragmentation of the Food & Drink industry • Strengths are within the whisky industry

sector• Low investment in R&D and innovation• Little collaboration and cooperation • Weakness of links between organizations

and the whisky sector • Lack of connectivity between the areas of

strength and those of weakness


( )Scotland’s Food/Drink & Whisky Cluster ~ 2010 ~

Source: Scottish Government website


( )Scotland’s Whisky Cluster ~ 1500 to 2012 ~

Distilleries

Bottlers & Distributors

Farmers

Scotch Whisky

UK/Scotland

Media / Publishing

Tobacco

EU

Entertainment

Education

Tourism

GlasswareHospitality(Casinos,

Restaurants)

Transportation

Mixers (Soda/Juices)

Snacks (Chips)

Nuts

Supplier : Casks

Airline Industry

Corporations


( )World Scotch Whiskey Market Scotch Global Market ✣ Whisky Making Process ✣ The Scotch Regions and Their Distilleries


( )Global Sales Statistics Exports

Country/ RegionExports in million

Euros (2010)Exports in Million

Euros (2011)% Change

Asia

USA

France

Central & South America

Taiwan

Brazil

Total Exports

€317.7 €422.5 33%

€233.7 €267.6 14%

€192.5 €219.5 13%

€143.9 €214.4 49%

€48.2 €70.0 45%

€28.7 €44.8 56%

€1,470.0 €1,800.0 22.4%

Source: BBC


( )Top 10 Export Markets by Value[ January - June 2011 ]

Country Exports in Million Euros % Change

USA

France

Singapore

Spain

Taiwan

South Korea

South Africa

Germany

Brazil

UAE

€267.60 14%

€219.50 13%

€148.50 64%

€97.20 (-16%)

€70.30 45%

€65.80 (-13%)

€65.50 24%

€62.10 22%

€44.80 56%

€41.90 29%

Source: Scotch Whiskey association SWA


( )Scotch Whisky Process


( )⊛ Malting

⊛ Kilning

⊛ Grinding

⊛ Wort

⊛ Yeasting

⊛ Distillation

⊛ Condensing

⊛ Bottling

Steps to Making Whisky


( )Scotch Regions

Source: The Drinks International Report, 2011


( )⊛ Age

⊛ Small Batches

⊛ Organic

⊛ Best Comeback

⊛ Old Faithful

My Whisky Cellar


( )The Scotch Whiskey ClusterCluster Competitiveness ✣ Diamond Analysis


( )“Geographic concentrations of interconnected companies, specialised suppliers, service providers, firms in related industries, and associated institutions (for example, universities, standards agencies, and trade associations) in particular fields that compete but also co-operate” (Porter).


( )Scotch Cluster Diamond


( )The Scotch Whiskey ClusterInternational Competition ✣ Challenges for Growth ✣ Strategic Recommendations


( )International Competition

There was a reduced demand for cheaper products due to economic downturn, within the spirits market.


( )International Competition

Vodka and cognac are the best performers in sales within the premium spirit market.



( )International Competition : India

Whisky is the fastest growing spirit in India.



( )National Challenges

⊛ Poor Performance in UK market

⊛ Increased competition from other spirits

⊛ Trade barriers

⊛ Legal protection

⊛ Social responsibility issues

⊛ Minimum pricing

⊛ High Taxation

⊛ Foreign ownership

⊛ Movement of bottling operations overseas


( )Most Important Challenge? High Taxation

ABV 2008 2009 2010

284 ml Beer

125 ml Table Vine

25 ml Scotch Whisky

3.52% £16.14 £16.46 £17.31

12.50%£15.54 £17.12 £18

40.00%£21.35 £22.64 £23.8

Approximate amount of duty on a normal measure of three kinds of alcoholic drink, each containing

approximately the same amount of alcohol


( )Strategy & Recommendations

KEY CHALLENGES RECOMMENDATIONS

Increased competition from other spirits

Trade barriers

High Taxation

Align the price of whisky with the strategy of the cluster, and reduce price to prevent the increase in market share of other spirits (especially vodka and other whisky types).

Related parties will lobby international activities and improve regulations to eliminate discrimination through trade barriers.

UK Government apply a fair and responsible taxing schema for all alcoholic drinks as per their alcohol content.


( )Thank you! Go raibh maith agat!


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