In the context of contemporary business environment, the assessment of demand and supply vital elements in business dissertation help, has been termed as a key approach to enhance the efficiency of product planning and profit maximisation in the context of adverse market conditions. As per the case, there has been stable growth identified in the global market of scotch whisky in which Europe is being termed as the key driver of the demand of scotch whisky and it contains the highest share for the production and consumption of whisky as compared to other parts of the world (MacKenzie, Gordon & Gannon, 2019). However, the Scotch Whisky industry is facing several challenges due to trade war between the China and United States of America (USA) and Brexit. Therefore, several companies involved in the Scotch Whisky industry have to consider several elements to enhance their profitability. In this context, the Diago Plc is being termed as the leading brand of United Kingdom that is involved in the production of Scotch Whisky in UK along with the USA (Smith, 2018). Therefore, the company is listed on both London Stock Exchange and New York Stock Exchange. For managing the profitability and sustainability related issues, the management Diago Plc is looking to expand its business in the United States. Therefore, this report carries out a systematic assessment of supply and demand trends of US markets for enhancing the effectiveness of managerial decisions.
As per the case, the popularity of Scotch Whisky has been enhanced a significant manner in all over the world. However, the change in global business environment has incorporated several challenges of companies that are involved in the Scotch Whisky Industry. In this context, the Diago Plc is addressed as the largest supplier of Scotch Whisky in the different countries with the market share of 38% (Top 15 Scotch whisky companies, 2021). In the context of supply theory, the low supply of a product or service will provide the better opportunities to an organisation for generating the higher profit margin. In the present case, the production level of whisky in the US has recorded near to 37 million case or 477.4 million liters in every year that is significantly lower than the 700 million liters of Scotland (Top Whiskey Producing Countries of the World, 2019). Therefore, the low supply of whiskey in US market will offer an opportunity to the management of Diago Plc for offering their premium products in high prices. Therefore, the supply of product plays a critical role in influencing the profitability and revenue generation opportunity of the business entity (Fraser & Francis, 2021).
In the Scotland, there have been several alternatives identified that may leave the adverse impact on the preference of customers such as Hedonism, Mortlach Rare Old, and Glenrothes Peated Cask. These products have gained huge popularity in all over the world as the best alternative Scotch Whisky. In similar way, the American single malt has been emerged as an important alternative or rival of Scotch Whisky (Cook & Fabel, 2020). For example, American Bourbon whiskey has become immensely popular within the last ten years due to huge increment identified it’s both domestic and global demand. Luckily, the major US distillers have been reacted by increasing supplies along with interest so as numerous craft distillers have sprung up in the last decade to add their unique twists on the national spirit of the US. In similar way, the Irish whisky has been found an important alternative of Scotch Whisky. In this regard, the economic theory determines the negative correlation identified between the availability of main products and its substitute because the increase availability of substitute may influence the reduction in its prices that plays a critical role in influencing the interest of customers (Bower, 2018). There, substitute products of Scotch Whisky have played a critical role in lowering the profitability of those companies that are associated with Scotch Whisky Industry like Diago Plc. For dealing with product substitution, the management of Diago Plc should focus on the product differentiation to establish the distinct image of the brand.
The neoclassical economic theory has determined that product differentiation influences the companies for providing the consumers with a variety of different products in the context of a particular industry, rather than a homogeneous product that would play a critical role in influencing the strengths of an organisation. Furthermore, the Neoclassical economics has recognized the several advantages of product variety aligned with the product differentiation brings because it would enhance the revenue generation opportunities for companies and would increase the profitability of companies (Giraldo & Gimenez, 2019). Furthermore, the approach of product differentiation must be aligned with interest of buyers that may have direct impact on customer’s preference while making purchase decision. Therefore, the consideration of product differentiation strategy in the US market of Scotch Whisky Industry will provide the new business opportunity to management of Diago Plc. In this regard, the top authorities of Diago Plc should have to consider multiple option of product differentiation such as flavoured whisky, organic whisky and many more (Smith & et.al., 2019). In the context of current industry trends, the demand for variety in scotch whiskey has been enhanced in significant manner from the fast-growing emerging markets and consumers focus on the on lower alcohol varieties and organic whiskey among health-conscious drinkers. Moreover, the increased focus on healthy living across the world has influenced buyers to consider some other verities of whiskeys. In this context, there has been huge increment identified in the supply of organic alcoholic beverages that was increased to 129.60% from the year 2013 to 2017 within Denmark (WHISKEY MARKET - GROWTH, TRENDS, COVID-19 IMPACT, AND FORECASTS (2021 - 2026), 2021). Companies like Bainbridge Organic Distillers have developed artisan-distilled spirits that are mainly extracted from the USDA-certified organics such as wheat, triticale, barley, and corn that are grown especially for their distillery. Therefore, the approach of product differentiation will provide an opportunity to the management of Diago Plc for attracting the health-conscious people in United States and it would support the business entity in managing different threats that are aligned with product substitution (Ju, 2019). In the context of economic theories, the product differentiation supports firms in establishing a unique image of brand with some unique products so as Diago Plc would be able to enhance its profitability with consideration of increased supply of some unique products and services.
In the context of US market, the low production of Whisky in the domestic market would provide an opportunity to Diago Plc to expand its business within the US market along with its profitability. Moreover, the consideration of the approach of product differentiation will help the management in enhancing the sales along with the business profitability in efficient manner and it would also support to Diago Plc for assessing the competitive edge over the other brands (Morgan, 2020).
The United States has efficient political stable system that would influence companies for expanding the business operations. It provides easy access to businesses so as companies would be able to manage the business operations in an efficient manner (Lee, 2018). In the context of macroeconomics indicators, the population is being termed as an important social factor that plays a critical role in driving the market demand of different products and services. In the current case, the population of USA is reached to 333,453,090 in 2021 that is equivalent to 4.25% of the world’s population and the country has gained the third rank in terms of population. The high population influences the demand of different products and services so as Diago Plc will find new business opportunities in US because the median age of people living in the United States is near to 38.3 years so as the people associated with these 35-40 years have been found the largest consumer whisky (United States Population. 2021). This thing influences the business entity for restructuring the targeting and positioning strategy. Moreover, US economy has recorded the stable growth rate of 1.6% in country’s GDP within the last five years that plays a critical role in influencing the market demand of different types of goods. However, US has addressed the downward trends in inflation that is reached to 1.2% in 2020 as compared to 1.7% of previous years (The World Bank Data., 2021). The thing determines increase in saving or consumable income of people that influences people for paying more extra attention on the premium brands and expensive products (Dollery & Wallis, 2020).
The low value of inflation and stable GDP growth would be emerged as a great opportunity to Diageo Plc to enhance the sales of its premium drinks and it also drivers the sales of Scotch Whisky (Jernigan & Ross, 2020). In the context of Unemployment, the US has recorded the downward trends in Unemployment that was the lowest in 3.67% in 2019 during the period of 2015-19 but the pandemic of Covid-19 has influenced the unemployment rate to 8.31% that would be reduced in upcoming years so as the business entity would find a significant increment in the market demand of different products and services (The World Bank Data, 2021). This is because low employment rate has been considered as key driver of higher average monthly earnings of people that have direct impact on the spending of people along with the market demand. It also provides growth opportunities to different companies. In this context, different economic theories have determined that stable economic conditions and increased earnings of people that drivers the market demand of different products and it also influences companies to expand the business operations (Pielech-Przybylska & Balcerek, 2019).
The US whiskey market is being driven by premiumization trends that influence companies for paying extra attention on the innovation and a diversification of their product ranges. Therefore, the increased interest of the American populations in premium products within the past five years has played a critical role in driving the demand of high-end premium and super-premium brands. Therefore, revenues of high-end premium whisky brands were being raised by 37% and super-premium were being raised by 136% that are playing a critical role in driving the whiskey market in the US (Benkard, Yurukoglu & Zhang, 2021). Moreover, the booming demand for spirits within the on-trade channels such as full-service restaurants and bars would be emerged as key driver of the demand of Whisky in the United States. The increase in the demand of premium products in the United States would provide an opportunity to Diago Plc for enhancing its sales within the highly competitive market trends (Fratini, 2020).
Further evaluation of demand trends of Whisky has recorded that the total value of the whisky market in United States was being recorded near to 15.19 billion USD in 2015. Furthermore, different forecasts determine that the whisky market in United States would be reached to 20.75 billion USD till 2025 with the CAGR of 2.74% per annum for the period 2020-2025. In addition to that, the average consumption per capita in value was reached to 47.81 USD per capita in 2015 and it would record the growth rate of the CAGR of 2.01% per annum till 2015 in US (Whiskey Market value to cross $85 billion by 2027, Says Global Market Insights Inc, 2021). Therefore, companies like Diago Plc would find a significant growth in its revenue and profitability within upcoming years. In similar way, the assessment of Global scotch whiskey industry has determined that this market is expected to reach over USD 33 Billion by 2027 with the growth rate of CAGR of 6.7%. In this context, the increase in the consumer’s demand for Smokey flavour will influence the demand for American whiskey over the forecast timeframe so as the management of Diago Plc would find tough competition from the domestic market players. Therefore, the global American whiskey market was being reached to USD 10 billion in 2020 and it would record the growth rate of CAGR of 5.4% in upcoming years. (Whiskey Market value to cross $85 billion by 2027, Says Global Market Insights Inc, 2021).
In this regard, several macroeconomics factors affect the demand of whisky such as the availability of whiskey products of different brands at a single location, consideration of the effective marketing tactics, income of people, interest of buyers, and discounts offers by hypermarkets and supermarkets. Therefore, it has been expected to enhance sales of whiskey with consideration of the off-trade distribution channel. In regard, the key industry players include Beam Suntory, Diageo Plc., William Grant and Sons, Pernod Ricard, and others. Moreover, the Unique taste profile along with the availability different flavours like caramel, orange, spice, peel and vanilla have been termed as key drivers that influence people to favour the consumption of Scotch whiskey (Visser, 2020). It would driver the sales and market share of Scottish distilleries. Therefore, the Diageo Plc should have to differentiate its products within both US and other countries for assessing the new revenue generation opportunities that would leave the positive impact on the profitability of the business entity.
Further assessment of external business environment has determined that the outbreak of pandemic in over the world has incorporated several market uncertainties due to disruption of supply chain within the US and other markets so as the needs and interests of people have been changed in some countries (Thomas, 2020). Therefore, the management of Diageo Plc several threats aligned with domestic and international business environment in the production planning and resource management. In similar way, the trade war between US and China also adversely affects the overseas investments of different multinational companies (Allio, 2020). Therefore, the management of Diageo Plc has to consider several factors of the business environment while taking different decisions related to export and product differentiation in different countries.
As per the above assessment, this report concludes that companies working in the Scotch Whisky Industry have to consider different elements related to supply and demand of different products and services while taking the investment and profit maximisation related decisions. This report carries out a detailed review of US market conditions in the context of the business operations of Diageo Plc that is termed as a leading brand of UK in the field of Diageo Plc and concludes that low level supply with reference to market demand plays a critical role in driving the profitability of business entity. Therefore, the management of Diageo Plc should pay extra attention on product differentiation and other strategies to enhance availability of high-quality whisky for US customers. Furthermore, the evaluation of macroeconomic factors of US markets concludes that the selected firm would find appropriate growth opportunities with stable growth and appropriate economic conditions. Therefore, Diageo Plc would find a significant increment in its revenue due to increase in population and increased spending of people in premium products. The above assessment has determined that macroeconomic indicators are playing a critical role in the product planning and investment decisions in the context of Scotch Whisky Industry.
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