The alcohol industry, in broad terms, refers to corporations engaged in the development, production, distribution, packaging, marketing, and sales of alcoholic beverages and their representative trade associations (O’Connor, 2018, IAS, 2016; Jernigan, 2008). The alcohol industry is traditionally divided into three categories of producers (based on their products – beer, wine, and spirits) and two categories of retailers (on- and off-trade) (Jernigan, 2008).
PhD Thesis 2020 I. J. Amaeshi. Page | 40 Historically, there have always been strong boundaries between these categories (Christiansen and Kroezen, 2016) and these boundaries became more evident following industrialisation. For example, in the pre-industrialised era, the brewing, sales, and consumption of ale were merged. Brewing ale was predominantly done by women at home for family consumption before safe water and the excess was sold (Harrison, 1971). Home brewing of ale was a gradual process before it became commercialised, shifting from home to the workplace, and then the gradual detachment of breweries from public places of consumption which were created predominantly for men (Harrison, 1973; Hey, 1986). These changes are said to be driven by legislative, political, and economic interests (see Harrison, 1994; Warner et al., 2001).
Within the industry, there are also trade associations. Trade associations for the purpose of this thesis, are classed as industry actors because they are funded by their members (i.e. the alcohol producers and retailers), act as a governing body and informal regulators to their members, seek to influence policy decisions to the benefit of its members, and provide legitimacy (Rajwani et al., 2015). Trade associations are often able to influence policy debates more effectively than individual companies acting unilaterally, and their responses often represent the collective views of their members (Rajwani et al., 2015). Nevertheless, alcohol-producing companies remain the most prominent industry actor during alcohol- related policy debates, especially the global Multi-National Companies (MNC) (Aggarwal et al., 2011).
In discussing the Scottish alcohol industry, this section focuses on the producer sector of the industry (distillers and brewers) due to available data for measuring their economic impact. Scotland's brewing and distilling sectors play a vital role in the Scottish economy and Scotland is the whisky capital of the world, with hundreds of years of distillery expertise (O’Connor, 2018). The spirits industry contributes approximately 3% to total Scottish Gross Domestic Product (GDP), compared to 0.3% from the brewing sector (O’Connor, 2018). Scotland has the greatest concentration of whisky producers in the world and had £4.37 billion in sales of scotch whisky exports for 2017 (O’Connor, 2018). The scotch whisky and
PhD Thesis 2020 I. J. Amaeshi. Page | 41 gin sector has seen massive growth over the years compared to the brewing sector whose increase has been in the growth of micro-breweries in response to localised consumers choice in more expensive specialised beers (O’Connor, 2018).
Scotland is home to the largest distillers in the UK. According to SPICe report, a total of 1.23 billion bottles of scotch whisky were exported to 180 markets worldwide in 2017 (O’Connor, 2018). Scotch whisky is a protected name and only whisky produced or matured in Scotland can be called scotch whisky (O’Connor, 2018: 5). Some of the top spirit companies in Scotland are Macallan which is part of Edrington Group, Diageo, Whyte and Mackay, and Chivas Brothers. Diageo has its headquarters in London, and in addition to scotch whisky and other spirits, they also produce beer (Diageo, 2020). Diageo prides itself as a global leader in beverage alcohol – it has over 29 malt and grain distilleries across Scotland, and has a huge number of visitors to its distilleries and its visitor centre in central Edinburgh, which contributes significantly to Scottish tourism (Diageo, 2020). Its close rival, Edrington Group, is headquartered in Scotland and is also international in its composition (O’Connor, 2018). Edrington owns route to market in 13 countries and operates through joint ventures and third-party arrangements in the other countries and regions it trades in (O’Connor, 2018; 23). Whyte and Mackay, another significant player in the scotch whisky business, is based in Glasgow. In 2011, it formed an import company in the United States to handle its US portfolio, and in 2014, it was bought over by a Philippine based Emperador Inc (Whyte and Mackay, 2010). Chivas Brothers is the scotch and gin branch of French company Pernod Ricard. Chivas Brothers has its headquarters in Scotland and operates 13 malt distilleries, 1 grain distillery, and 2 gin distilleries across Scotland (Chivas Brothers, 2020).
Beer has been produced in Scotland for over 5,000 years (Archeo News, 2011). Scotland has seen a growth in the brewing industry since the twentieth century despite the global reduction in beer consumption (O’Connor, 2018). The SPICe reports state that “87% of UK brewing business are micro in size and only 2% can be classed as medium or large”. This trend applies to Scotland where 83% of breweries are micro-breweries specialising in premium beers which are sold locally (O’Connor, 2018: 27). Nevertheless, few Scottish
PhD Thesis 2020 I. J. Amaeshi. Page | 42 brewers, for example Stewart Brewing, BrewDog, and the C&C Group (following its acquisition of Tennent Caledonian in 2009), export their products to other countries (O’Connor, 2018). The Scottish Beer and Pub Association (SBPA10) lists 20 brewing companies as being members and some of these companies include Diageo, Molson Coors, C&C Group PLC, Caledonian Brewery company, Carlsberg UK, AbInBev, and Edinburgh Beer Factory. The SBPA members listed are some of the big players in the UK brewing industry and they are active within the UK alcohol policy arena (see DOH, 2011a). The SBPA states that their “members are responsible for around 20,000 pubs and account for 90% of beer produced across the UK (SBPA website 2020). This statement aligns with Abbott et al. (1998) and Harrison (1793) who believe that British brewers traditionally own the pubs that sold their beers prior to the 1989 Beer Order (See also O’Connor, 2018: 3511; Knowles and Egan, 2001; Hey, 1986; The Pub expert guide, 2020; House of Commons report, 2004). Such ownership was relaxed following the introduction of the government’s 1989 Beer Orders which stipulated that no brewer could own more than 2,000 licenced establishments (Abbott et al., 1998). This however led to the development of a new business model called pub companies, and these pubs are then leased out to potential licensees (Abbott et al., 1998; House of Commons report, 2004) under strict agreement that the licensees stock and sell their products. The Scottish alcohol industry however goes beyond its distillers and breweries to include close ties, for example with the agricultural and tourism sectors, all of which contribute to the tax revenue and Scottish GDP (O’Connor, 2018).