Strategic Analysis of Scotch Whisky Industry After Brexit in UK

This case study provides a strategic analysis of the Scotch Whisky Industry in the United Kingdom, focusing on the impact of Brexit. It begins by introducing the Scotch whisky industry and the Brexit scenario. The analysis employs the PESTLE framework to assess the political, economic, social, technological, legal, and environmental factors influencing the industry post-Brexit. Key issues concerning the whisky industry, such as potential trade barriers and economic uncertainties, are discussed. The report also incorporates international marketing theory to explore opportunities and threats in chosen country as Italy. The PEST analysis of Italy is done to recommend whether the industry members will be able to perform well if they expand their operations in Italy. Finally, the study offers recommendations and a conclusion based on the analysis, highlighting potential strategies for the Scotch Whisky Industry to navigate the challenges and opportunities presented by Brexit.

Running head: SCOTCH WHISKY INDUSTRY
SCOTCH WHISKY INDUSTRY
Name of the Student
Name of the University
Author Note

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Executive summary
The Brexit has brought about considerable changes for the overall performance of all the
businesses and in line of this, it is required to be understood by the firm that if an organization
wants to ensure success in the long run, then in this case, it would be required to plan
successfully and take up considerable measure to ensure success with respect to the same. The
report is based on the Strategic Analysis of the Scotch Whisky Industry as based in the United
Kingdom. The Brexit is a global event which is bound to disrupt the different business as present
around the globe and in line of this, it can be understood that, in order to ensure success in the
long run, a business would be required to undertake considerable steps which will ensure that it
is able to face this scenario successful. The given report is based on the performance of the
Scotch Whisky Industry after the overall Brexit scenario and how the particular industry will be
affected with respect to the overall performance of the Scotch Industry after the exit of United
Kingdom from the European Union.

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Table of Contents
Introduction......................................................................................................................................3
About Scotch whisky.......................................................................................................................3
About Brexit case study 2017..........................................................................................................4
PESTLE Analysis of Whisky industry after Brexit.........................................................................5
Issues concerning the Whisky industry.......................................................................................9
International marketing theory......................................................................................................11
Opportunity and Threat Analysis of the chosen country...............................................................12
PEST of Italy.................................................................................................................................13
Summary....................................................................................................................................14
Recommendations..........................................................................................................................15
Conclusion.....................................................................................................................................15
References......................................................................................................................................17

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Introduction
The business environment can be stated to be highly dynamic in nature and it is with
respect to this, that it becomes considerably important for the businesses to adhere to the
demands of their forces lying in the external environment which will ensure that the firm is
successfully able to perform (Wheelen et al.,2017). Moreover, in strategic management, it is
considered extremely crucial for any business to ensure that, they are successfully able to
forecast the future possibilities as present in the business in the long run and be able to work as
per those possibilities in the favor of the long run of the business and to be able to ensure
adequate success. Hence, the report is primarily focused on the Scotch whisky industry as
present in the United Kingdom. The Scotch whisky industry can be considered to be one of the
largest industries in the United Kingdom and with respect to this, it becomes very crucial to
understand that, the exit of Britain from the European union is bound to have an impact on the
overall welfare of the industry and may increase the various taxation and other related policy
issues.
Hence, the main aim of the report is to highlight the overall performance of the Scotch
whisky industry currently, and the impact of the Brexit on the overall performance of the
industry. In addition to this, the performance of the industry in another country chosen as Italy
shall also be analyzed (Michael, Storey & Thomas, 2017). This will help in providing
recommendations to the industry members with respect to the fact whether they will be able to
perform well if they expand their operations in Italy. Theoretical frameworks, like PESTLE will
be chosen for the purpose of Environmental analysis.

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About Scotch whisky
The Scotch whisky is also known as the malt whisky or grain whisky which is made in
Scotland. The Scotch whisky is required to be made by a certain rule which is generally specified
by the law. The Scotch whisky was originally made from the malted barley and various
commercial distilleries were introduced which made use of wheat as well as rye back in the 18th
century. The Scotch whisky is divided into various categories like the single malt Scotch
whisky, single grain Scotch whisky, the blended malt Scotch whisky and the blended Scotch
whisky. The procedure of manufacturing the Scotch whisky can be stated to be quite oriented to
oak barrels for the last three years. In addition to this, the age statement of the whisky is
generally expressed in numerical form which then reflects the age of the youngest whisky which
is generally used to produce the particular product (Bbc.com ,2019). The Scotch whisky
industry is one of the largest industries as present in the United Kingdom and is bound to suffer
various barriers in case the Brexit scenario comes into action. At present the various owners of
the mills and refineries tend to export the product to various other countries as present in the
European Union and in line of this, it can be largely understood that, the industry is bound to
suffer various blows which will have an impact on the overall revenue of the industry.
About Brexit case study 2017
The Brexit is generally known as a common phenomenon which is referred to as the vote
of the United Kingdom to leave the European Union. The Brexit is considered to be one of the
most crucial events of the year 2016 and will have various consequences on the overall political
scenario of the country (Wheelen et al.,2017). Additionally, it will tend to impact the overall
operations of the various businesses as present in the country which can then have an impact on

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the overall economy as well. For this reason, it becomes relevantly important for any firm to
consider whether they will be successfully able to abide by the different forces as existing in the
external environment and make strategies which will help them to combat with these external
forces as present. The particular event is considered to be a highly controversial event as no other
country as present in the European Union earlier has left the country in this manner and the vote
out of the Britain from the Union was considered to be quite skeptical in nature. It was not
decided whether the any of the political parties will benefit from this act, but it is required to be
understood that, the separation from the EU can bring about any positive aspects for any of the
parties or not (David & David, 2016). Hence, this report aims to summarize the possible
consequences of Brexit for the different businesses houses.
PESTLE Analysis of Whisky industry after Brexit
In order to understand whether the Scotch Industry as present in the United Kingdom will
prosper or not, the overall environment of the Britain after the exit needs to be understood.
Hence, in his section, the PESTLE analysis will be carried out which will assist in understanding
the overall scenario of the country after the Brexit and this will be followed by an analysis of
how the whisky industry will be affected after the Brexit.
Political
In terms of the political environment it can be rightfully understood that, the European
Union will become quite difficult when the Britain choses to leave the Union. The United
Kingdom is predicted to become one most populated countries by the year 2040 and is also
estimated to possess one of the largest armies in the region (Morden, 2016). Hence, in relation to
this, it can be stated that the United Kingdom would be largely powerful in nature after leaving

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the European Union. In addition to this, the Brexit may also facilitate a domino effect which may
then encourage the other countries to leave the union which may then further lead to the
disintegration of the European Union.
However, with respect to the other countries, it might become relatively difficult for them
to maintain strong relationships with the United Kingdom as well as the European Union. Hence,
one activity like the Brexit might impact the overall economies is a proof of the globalized
business dynamics.
Economical
The Brexit will not bring about any positive consequences for the Union as well as the
United Kingdom as a country. The British economy is expected to face a serious decline and the
value of the British pound is estimated to reduce considerably in case of the success of the
Brexit. Even after the vote out the economy has already experienced a quick decline in its overall
operations (Forbes.com ,2019). This simply reflects the lack of investor confidence in the
country and the decrease in the foreign direct investment rates as present which then further
reduces the demand for the British Pound in the international market. The given figure reflects
the drop of the British Pound against the value of the U.S dollar back in the year 2016.

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Figure 1: The Pound Trend
(Source: Euronews.com ,2019).
The price of the goods which are imported within the United Kingdom can also increase
because the United Kingdom will miss out on the opportunity to conduct free trade with the
European Union which means that, the goods which will be exchanged within the two parties
which is the United Kingdom and the European Union might impact the introduction of tariffs as
well as the quotas between these two existent countries (TheGuardian.com ,2019). On an overall
basis, the Brexit has caused certain economic uncertainty around the European Union and
particularly in the United Kingdom.
Social
Once the Brexit will come into existence, it is expected there will take place certain
changes in the social structure of the economy. Firstly, the overall funding’s of the different

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industries in the United Kingdom might be comparatively lower once the United Kingdom
chooses to opt out of the Union (Michael, Storey & Thomas, 2017). Moreover, the scholarships
might be affected greatly and hence, the education can become harder to access for the different
students. Moreover, another important aspect which will get affected in case of the Brexit can be
stated to be the migration of the different individuals. In regard of this, the UK citizens are
highly concerned because those situated all around the Union will find it difficult to attain
permanent visas for their residents and in the same way other nationals, living in UK might find
it difficult to ensure that they are successfully able to find permanent resident permission back in
the UK. There shall take place new laws which will have to be followed by them and hence, limit
them to conduct the operations in their respect countries (Morschett, Schramm-Klein & Zentes,
2015). Even if the migration is kept active, the regulations shall become complicated in nature
and this shall lead to a high possibility that the refugees might not be accepted by the United
Kingdom once their shift is promoted. This shall impact thousands of employees and business
owners who have found their home in the United Kingdom.
However, the migration law is set to bring out a positive change for the country as in that
it will help in preserving the overall culture of the different British people and help in reserving
their tangible and intangible culture. Hence, in this manner, they will be able to promote
divergence.
Technology, law and environment
The United Kingdom can be understood to be the hub of technology and without the
efforts of the United Kingdom amidst the European Union, the country may find it very difficult
to compete with the innovativeness of such progressive countries. This simply means that
without the assistance of the United Kingdom, the European Union shall become stagnant in

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terms of development of the technology (Frynas & Mellahi, 2015). The laws and regulations
form a relevant part of the economy and in relation to this, it can be stated that, the trade laws
will go a considerable change and there shall exist a ban on the policy of free trade. Additionally,
the different unions will have to renegotiate the terms and affect the levels of export as well as
the import on the countries and lead to a rise in the price of the goods which can be stated to be
directly related to the Whisky industry. According to Euronews.com (2019), the Brexit and its
execution shall possess certain consequences for the environment as well as the United Kingdom
had established certain well defined laws and other related targets for the different environmental
aspects and has maintain a strict code of conduct with respect to it (Ansoff et al., 2019).
However, in line of this, it is required to be understood that without the strict laws as well as
regulations, the United Kingdom might not necessarily be able to carry out the environmental
restrictions in the right manner.
Issues concerning the Whisky industry
According to Aljazeera.com (2019), the Brexit will surely bring about considerable issues
between the relationships of the United Kingdom and the European Union. In addition to this,
when these two existing parties may find it extremely hard to compromise and carryout the
relationships adequately, in such a scenario, it may lead to negative consequences for the entire
world in terms of the conflicts in the third world countries, issues related to terrorism,
environmental crisis as well as the economic crisis. Moreover, there is no one industry which
might be affected from this move (TheGuardian.com ,2019). Instead there exists a large number
of industries which might face problems in this like the education industry, technological and IT
Industry, import and exposer regulations along with Scotch whisky industry. The section will

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now discuss the problem related to the Scotch whisky Industry in detail (Ethiraj, Gambardella &
Helfat ,2016).
With respect to the Scotch whisky industry, the opinions regarding the Brexit can be
stated to be divided in nature and many experts have claimed that the Scotch whisky producers
as well as the distributors will be greatly hindered by the Post Brexit regulations as well as the
related laws (Meyer, Neck & Meeks, 2017). Other experts, however, have contradicted this
statement and have stated that, the Brexit will being about new and better opportunities for the
Scotch Whisky Industry and make it reach the different parts of the globe. However, in order to
understand the overall implications of the Brexit, it is crucial to understand both the positive as
well as the negative aspects of the separation, in line with this, it can be rightfully understood
that according to whisky company findings like Diageo, the industry will face an increase in the
trade tariffs (Ft.com ,2019). The European Union with the UK helped the country in conducting
free trade with 27 other countries which shall be removed and this shall then lead to tariff rates as
high as 30% in South Korea and Indonesia tariffs such as 150% (Ginter, Duncan & Swayne,
2018). The Industry heavily relies on the membership of various key trading agreements which
are linked to the Trade union agreements with the European Union and hence, the tariff and non-
tariff barriers are bound to rise. However, there are estimated to be some good aspects as well
such as, the United Kingdom will not be bound to function under the Union and can secure some
favorable bilateral trade deals with the key export market itself. In this manner, they can ensure
that they are able to earn more than earlier and even expand to a large number of countries.
According to Lasserre (2017) , India is an attractive market for Scotch but they were not
being able to trade with India as there exists 150% tariff on Import and now with the United
Kingdom going out of the deal, they believe that, UK will secure a fresh approach and bring a

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positive agreement for the trade. Moreover, the Scotch Whisky Association also has plans to
eliminate tariffs and barriers with countries like Brazil, Burma, Vietnam, China, Angola and the
Nigeria. Moreover, the SWA believes that although there are estimates that leaving the Union
would cost it high, it is important for the country to have an open and liberating trade policy and
apply transitional arrangements in place so as to minimize the trade disruption that may exist
after Brexit and negotiate better deals globally.
The internal operations of the Whisky industry might also face a blow with respect to the
loss of 40000 jobs which benefited from the deal with the Union (Gov.uk ,2019). However, The
Scotch Whisky Association has stated that, European Union was the center of their success and
most of the giant firms like Pernod Ricard and Diageo believed that they should remain a part of
the Union. According to Aljazeera.com (2019), for the Scotch Industry to be in the Union, has
resulted in their positive performance since the last few years and got deals for itself as a part of
the Free trade agreements which would now be cut down. In addition to its deal with South
Korea and Indonesia as mentioned earlier, the United Kingdom also had a deal with Colombia
which discriminated against all other foreign spirits only to support the Scotch whiskey trade.
Although many experts are positive about this, there are various experts who believe that,
the Brexit will result in no positive effects for the Whisky industry except for the fact that it will
change the transparency laws (Hitt & Duane Ireland, 2017). Hence, the potential impact of the
Brexit on the Whisky Industry can be stated to be rather negative with higher tariffs, additional
paperwork and greater complexities are the part of the package along with the increased cost of
selling (Bbc.com ,2019).