Industry Analysis & Industry Trends
The Spirit Production industry has performed well during the past five years. Challenging economic conditions and the long-term decline in spirit consumption have constrained domestic consumption of spirits for most of the period. However, this has been more than offset by a boom in demand for exports, particularly of Scotch whisky. Demand for whisky has soared in emerging markets across Asia, Latin America and Africa due to aspirational spending by young affluent consumers. Robust export demand and product innovation are estimated to underpin growth of 6.4% in 2014-15. During the five years through 2014-15, revenue is estimated to grow at a compound annual rate of 4.9% to £5.6 billion.
Industry profitability is estimated to grow moderately over the period... purchase to read more
Industry Report - Industry Investment Chapter
Investment requirements in the industry are high. IBISWorld estimates the labour-to-capital ratio is 2.22:1, meaning that for every £1 invested in plant and equipment, about £2.22 is spent on labour. The majority of the production process is mechanised and little labour is needed. However, larger players such as Diageo and Chivas are also involved in wholesaling and marketing, which drives up their labour costs because they must pay additional workers such as salespeople and marketers. Like all large-scale manufacturing, spirits production requires substantial amounts of machinery. Stills, filtration systems, bottling lines and other machinery are bought when a plant is first established but require continuous maintenance and repair... purchase to read more