This document discusses the Scotch whisky cluster in Scotland. It provides background on Scotland's economy, the history of Scotch whisky production, and the current state of the Scotch whisky industry cluster. It analyzes Scotland's national diamond and the competitiveness of the Scotch whisky cluster. It also examines challenges facing the industry such as international competition, national challenges like high taxation, and provides recommendations to address key issues.

1. ( Scotch
Whisky Cluster 2012
Group 7
Aimée Tañón, Amit Rawat, Ataol Oktem, Loreto Scaff
)
Wednesday, February 22, 2012 1

2. ( Scotland
)
⊛ Scotland
⊛ Scotch Whisky Cluster
⊛ World Scotch Whisky Market
⊛ Challenges for Growth & Recommendations
Wednesday, February 22, 2012 2

3. ( Scotland
Country History ✣ Microeconomic Performance ✣
National Diamond
)
Wednesday, February 22, 2012 3

4. ( 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
Wednesday, February 22, 2012 4

5. ( Indicator
Economic Indicators
Objectives
Today´s
performance
)
2010,Q3: -1,1
To raise the GDP growth rate to the 2010,Q4: -0,8
Economic Growth
UK level by 2011 2011,Q1: -0,5
2011,Q2: -0,4
2010,Q3: -1,2
To match the GDP growth rate of
2010,Q4: -1,7
the small independent EU countries
2011,Q1: -1,8
by 2017
2011,Q2: -2,0
To rank in the top quartile for 2006: -17,9%
productivity against theirs key 2007: -16,7%
Productivity
trading partners in the OECD by 2008: -17,5%
2017 2009: -13,7%
2008: 73,9%
To maintain their position on labour
Participation in the 2009: 72,1%
market participation as the top
UK labour market 2010: 70,5%
performing country in the UK
2011: 71,4%
2007: 3,3%
To close the gap with the top five 2008: 3,7%
OECD economies by 2017 2009: 5,0%
2010: 3,7%
Source: Scottish Government website
Wednesday, February 22, 2012 5

6. ( National Diamond
)
Wednesday, February 22, 2012 6

7. ( The Scotch
Whiskey Cluster
Introduction Scotch Whiskey Cluster ✣ History &
Evolution ✣ Scotch Whisky Cluster )
Wednesday, February 22, 2012 7

8. ( The Gaelic "usquebaugh", meaning "Water of Life", phonetically became "usky"
and then "whisky" in English.
Wednesday, February 22, 2012
)
8

9. ( 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
Wednesday, February 22, 2012 9

10. ( "Why do some nations succeed and others fail in international
competition?" Double Diamond Theory (Porter)
Wednesday, February 22, 2012
)
10

11. ( 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
Wednesday, February 22, 2012 11

12. ( Scotland’s Food/Drink & Whisky Cluster
~ 2010 ~
)
Source: Scottish Government website
Wednesday, February 22, 2012 12

13. ( Scotland’s Whisky Cluster
~ 1500 to 2012 ~ )
UK/ Tourism Transportation Entertainment
Nuts
Scotland
Supplier :
Farmers EU Glassware
Casks Hospitality
(Casinos,
Airline Media / Restaurants) Mixers
Distilleries (Soda/Juices)
Industry Publishing
Bottlers &
Corporations Tobacco Education Snacks (Chips)
Distributors
Scotch Whisky
Wednesday, February 22, 2012 13

14. ( World Scotch
Whiskey Market
Scotch Global Market ✣ Whisky Making Process
✣ The Scotch Regions and Their Distilleries )
Wednesday, February 22, 2012 14

15. ( Global Sales Statistics Exports
Country/ Region
Exports in million Exports in Million
% Change
)
Euros (2010) Euros (2011)
Asia €317.7 €422.5 33%
USA €233.7 €267.6 14%
France €192.5 €219.5 13%
Central & South
€143.9 €214.4 49%
America
Taiwan €48.2 €70.0 45%
Brazil €28.7 €44.8 56%
Total Exports €1,470.0 €1,800.0 22.4%
Source: BBC
Wednesday, February 22, 2012 15

16. ( Top 10 Export Markets by Value
Country
[ January - June 2011 ]
Exports in Million Euros % Change
)
USA €267.60 14%
France €219.50 13%
Singapore €148.50 64%
Spain €97.20 (-16%)
Taiwan €70.30 45%
South Korea €65.80 (-13%)
South Africa €65.50 24%
Germany €62.10 22%
Brazil €44.80 56%
UAE €41.90 29%
Source: Scotch Whiskey association SWA
Wednesday, February 22, 2012 16

17. ( Scotch Whisky Process
Wednesday, February 22, 2012
)
17

18. ( Steps to Making Whisky
⊛ Malting
)
⊛ Kilning
⊛ Grinding
⊛ Wort
⊛ Yeasting
⊛ Distillation
⊛ Condensing
⊛ Bottling
Wednesday, February 22, 2012 18

19. ( Scotch Regions
)
Source: The Drinks International Report, 2011
Wednesday, February 22, 2012 19

20. ( My Whisky Cellar
)
⊛ Age
⊛ Small Batches
⊛ Organic
⊛ Best Comeback
⊛ Old Faithful
Wednesday, February 22, 2012 20

21. ( The Scotch
Whiskey Cluster
Cluster Competitiveness ✣ Diamond Analysis
)
Wednesday, February 22, 2012 21

22. ( )
“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).
Wednesday, February 22, 2012 22

23. ( Scotch Cluster Diamond
)
Wednesday, February 22, 2012 23

24. ( The Scotch
Whiskey Cluster
International Competition ✣ Challenges for
Growth ✣ Strategic Recommendations )
Wednesday, February 22, 2012 24

25. ( International Competition
)
There was a reduced demand for cheaper products
due to economic downturn, within the spirits market.
Wednesday, February 22, 2012 25

26. ( International Competition
Vodka and cognac are the best performers in sales
)
within the premium spirit market.
Source: The Drinks International Report, 2011
Wednesday, February 22, 2012 26

27. ( International Competition :
India )
Whisky is the fastest growing spirit in India.
Source: The Drinks International Report, 2011
Wednesday, February 22, 2012 27

28. ( 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
Wednesday, February 22, 2012 28

29. ( Most Important Challenge?
High Taxation )
Approximate amount of duty on a normal measure of
three kinds of alcoholic drink, each containing
approximately the same amount of alcohol
ABV 2008 2009 2010
284 ml Beer 3.52% £16.14 £16.46 £17.31
125 ml Table Vine 12.50%£15.54 £17.12 £18
25 ml Scotch Whisky 40.00%£21.35 £22.64 £23.8
Wednesday, February 22, 2012 29

30. ( Strategy & Recommendations
)
KEY CHALLENGES RECOMMENDATIONS
Align the price of whisky with the strategy
Increased competition of the cluster, and reduce price to prevent
from other spirits the increase in market share of other spirits
(especially vodka and other whisky types).
Related parties will lobby international
activities and improve regulations to
Trade barriers
eliminate discrimination through trade
barriers.
UK Government apply a fair and
High Taxation responsible taxing schema for all alcoholic
drinks as per their alcohol content.
Wednesday, February 22, 2012 30

31. ( Thank you!
Go raibh maith agat! )
Wednesday, February 22, 2012 31