Australian Whisky Industry Essay
Abstract The following research study is discussing the critical challenges faced by the Australian whisky industry. Today, the Australian whisky has its own identity and place in the whisky market of Australia. The industry is young and is currently operated on small scale basis. There is presence of imported brands that has saturated the industry. There are several challenges to the market due to changing consumer behaviour and focus on quality and innovation. The study aims at understanding the current situation of the Australian whisky market and critical challenges faced by the industry. Further, recommendations are given for the improvement and growth of the industry. Both primary and secondary methods of data collection have been used for obtaining relevant and authentic information regarding the research question. The survey through questionnaire and the literature review are taken as the
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methods of data collection. Data analysis is done through graphical presentation of data and discussion is carried out with information collected from both the literature review and the survey through questionnaire. The research finds out that there are some critical challenges faced by the Australian whisky industry including heavy taxation in form of excise, competition from foreign imported brands, small scale production unable to meet the growing demand in the market and people’s perception of the Australian product. Recommendations are given for the improvement and betterment of the industry with consistent cash flow and focus on quality and innovation. Limitations and recommendations for future research are mentioned so as to carry on further research in the topic in concern.
Table of Contents
Introduction
Whisky is a famous alcohol type all over the world which is a distilled alcoholic beverage made up from fermented grain mash. Within the segment of international spirits, whisky forms the largest category. The characteristic of this brand of spirit is its exclusivity that is gained from its origins and the ageing process that provides the value added benefit to its consumers. These characteristics of whisky also make it register itself in the category of premium spirits and owing to this reason, it gains more profitability and attraction in comparison to other spirits. There are several different brands of whiskies that have gained accolades all across the globe and have made their niche in the global whisky market. However, the global whisky industry is facing challenges due to the changing customer attitudes and behaviour bringing in new requirements and changes in the risk profile. Moreover, the bargaining power of retailers is also on the rise along-with the financial burden being imposed by the maturing industries in the world. The affect of the changing customer demands and attitudes can make the
Background of the study The Australian whisky industry is growing in leaps and bounds but it is still less than just two decades old. There has been a huge and recognizable in the quality and popularity of the Australian whisky although according to the world whisky standards, the industry is young. There are certain whisky distilleries that are opening all over the country, but most of them are situated in Tasmania, which is a small island situated in the mainland of Australia. There is lots of demand for the whisky in Australia which creates the problem of demand and supply. There is lots of whisky in Australia but the problem lies in the fact that there is also a lots of demand for this distilled alcohol product which cannot be fulfilled by small boutique style distilleries in Australia which offer either small batches or single barrel bottling. The beer and wine industries receive a rebate in comparison to whisky industry due to which the industry is undergoing financial burden. Owing to this, there are critical challenges that the Australian whisky industry is facing in comparison to other sprit and alcohol industries. Australia is one of the biggest wine producers in the world. Thirty years ago, the wine industry was also in the same phase as the whisky industry is in today i.e. small scale production. The ingredients in the form of grains, the knowledge in the form of immigrants from Ireland and Scotland in early 1700s, and the equipments, such as barrels and pot stills, were present in Australia for a long time which could have been used by people in business to make whisky, but Australia did not take to whisky earlier which has resulted in the huge and vast growth of other spirits such as wine and beer; the whisky industry remaining only two decades older. Although, the Australian whisky industry is young in comparison to the wine and beer industry of Australia, the growing demand and popularity of Australian whisky can change the situation.
Research question The Australian whiskey industry is growing by leaps and bounds but still the production is low despite increase in the demand and popularity of this category of spirit. The research question identified for the study is as follows: ‘What are the critical challenges faced by the Australian whisky industry’.
Aim and objectives of the research The aim of the research is to identify the challenges that the Australian whisky industry is currently facing so as to understand the current level of the industry in overall spirit industry of Australia and understanding how the industry can grow and face critical challenges so as to become sustainable and more popular in the territory. In order to attain the aim of the research study, it is necessary to frame sound research objectives that can provide the guidance in setting a direction to attain the aim of the research. The objectives should not be vague. Following research objectives are framed for the study:
To understand the current level of the Australian whisky industry pertaining to its production, popularity and quality.
To identify the critical challenges faced by the industry.
To identify ways through which the Australian whisky industry can answer the challenges it is facing and becoming sustainable.
Significance of the research The research is aimed at identifying the critical challenges faced by the Australian whisky industry. The knowledge of these critical challenges can help the industry professionals to understand as to what are the challenges and how are they hampering the growth of the industry. Moreover, appropriate understanding of the reasons of facing these challenges, the industry professionals can find out appropriate solutions so as to make the industry grow further in a sustainable way. The reader gains comprehensive knowledge of the Australian whisky industry and gains an understanding of current situation of the industry regarding its production, growth and challenges. As Australian whisky is gaining popularity and is becoming known for its quality offerings, it becomes imperative to understand what critical challenges are hampering the industry and how they can be answered or done away with. The research will facilitate the researcher to evaluate the industry in a comprehensive way and identify the challenges critical for the industry and its professionals to face. The research is significant in terms of understanding the challenges and make measures taken by the industry professionals and players for facing the challenges and how successful they are in addressing the challenges. Recommendations can be made for the Australian whisky industry and how can they attain the required as well as sustainable growth.
Literature Review
Introduction
The literature review takes into account relevant literature available for the topic in research. Various textbooks, journal articles and current literature found on authentic websites of the internet are taken into consideration for gaining an understanding of the current situation of the whisky industry in Australia and the challenges faced by companies that exist in the industry and how can they face these challenges.
Australian Whisky Industry
Stockwell (2008) argues that the Australian whisky industry started in the small island of Tasmania but it is rapidly spreading across other areas of the country.
The distilleries are operated on small scale but the use of the ingredients and knowledge of the well established wine industry of the country is used for the development of this category of spirit in Australia. The use of brewer’s yeast, local peat specifically in case of Tasmania, and the use of wood which is sourced from the famous and recognized wine industry of Australia have given whisky the identity of its own in the market. The market is tiny and most of the distilleries are owned and run by family members, which means that the whisky industry is basically a family run business in Australia and has small scale operations.However, no matter how tiny is the production market is, every new whisky that is launched in the Australian market takes away the dominance and hegemony of the Scotch whisky, thus ensuring that the Australian whisky is having its own identity among drinkers in
Australia. According to Western Whisky Industry (2006), the founding father of the modern Australian whisky industry is Bill Lark from Tasmania. In the Tasmanian distilleries, there is use of local peat with ages in small casks and there is release of only single cask. There is presence of heightened aromatics that arouses the excitement among consumers and has, thus made its place among popular spirits in Australia. Use of yeast mix and fresh malt also adds on to the scent and aroma of the company. Tasmania is the major distillery site in Australia for brewing whisky. There are other distilleries as well such as Bakery Hill in Bayswater which started in 1999 and is a major distillery in the market started by David Baker. The aim of the company is to make a lightly fragrant whisky with banana like quality and use of sherry casks. One of the reasons for popularity of whisky in Australia is its focus on quality and constant innovation in the product that makes this category of spirit appeal to different generation of drinkers in Australia. The Australian whisky market has witnessed an extraordinary change in the past 50 years. In 1950s, domestic blended whiskies were dominant replaced by Scotch whiskey in 1980s and 90s and recently American whisky has replaced Scotch in dominance with 60% market share in the Australian whisky market in 2010 .
Critical Challenges
Chikritzhs et al (2009) sheds light on the constraints faced by the foreign brands and indigenous brands along-with self imposed constraints by some brands. The Scotch brand has the self imposed constraint that it has to comply with the statutory processes of production and codify its traditional methods so as to ensure that the historical practises as well as standards are upheld. The company is able enough to maintain this policy along-with bringing in innovation in their product. It is constraint and a challenge for the Australian whisky distilleries to bring in innovation in their offerings along-with upholding of the traditional methods and standards.
Most of the distilleries for whisky are owned by family in Australia and the main issue for the small scale players basically the family owned businesses is to create a balance between competitiveness and independence. The options for these small players rise stay within the range of joining competition with the other alcohol players in the industry so as to become cost leaders, or to sacrifice the size for attaining specialization so as to invest in the diversified portfolio. Middleton (2011) argues that the indigenous Australian is facing challenge in terms of innovation from famous western whisky brands such as Scotch that is continuing to offer innovative products to consumers with consistency and quality. Moreover, the production of Australian whisky is either in small batches or single barrel bottling, which make the industry run on small sale which is not able to meet the growing demand of consumers. The major reason for this small scale operation and limited production of whisky in comparison to other spirits, such as wine and beer, is the current taxation system that is applied to the Australian whisky industry. As per the Pre-Budget Submission 2007-08, for a bottle of 700 ml, the Australian distilleries have to pay the excise duty to the government that is up to $30. This financial burden has to be passed on to the consumer, thus making the whisky quite expensive in the market. It is a critical challenge faced by the Australian whisky industry as western brands also present tough competition in terms of innovation and quality.
Lee et al (2012) state that the market place of Australia is saturated with imported whiskies and the small scale distilleries have also to face the challenge related to the lack of quality barrel stock for different and varying styles of maturation. However, the high evaporation rates of Australian whisky presents and adds to the unique Australian style of malt. The Australian whisky industry is developing and is recognized for high commitment and passion of people involved in the industry such as Bill Lark. The unreasonable degree of excise and the perception of the Australian people about their own product present critical challenges to the Australian whisky industry.
Opportunities
As per the Australian Whisky Guide (2011), in contrast to the critical challenges for the industry in regards to excise, saturated market with imported whiskies, consistency in quality and small scale production, there are certain opportunities present for the whisky industry which includes development of great international appreciation for commitment to work, abundance of natural resources with high quality such as Australian malt, and increasing popularity of Australian whiskies . These opportunities are just required to be grabbed appropriately with the first initiative to educate the Australian consumer more about the characteristics and benefits of the Australian malts. The small scale firms can also maintain their cash flow by selling other exotic delights that are worth a taste as well, such as Vodka, cream and coffee liqueur, etc. as is done by some distilleries in Australia such as Timboon Railway Shed.
Research methodology
Introduction
The methodological framework is one of the most significant parts of a dissertation, as it explains the methods used for collecting the data and the logic behind the methods used in the context of the research study. This is one way of solving research problems in a systematic manner (Marczyk, 2005). In direction to this, the research methodology section of the research work covers some of the basic steps to be followed for determining a perfect research design and collecting data for revealing desired outcomes. In addition to this, the section covers information regarding participants, informants and procedure followed within the research work. Furthermore, it will also include the justification behind choosing this method.
Research design In order to reveal some crucial challenges related with the wine industry of Australia, there is a need of some in-depth and comprehensive information. For this purpose, Causal Comparative or Ex Post Facto Research Design is being used because this is the research design which allows the user find out the reason behind the current scenario of the problem. This research design attempts to explore cause and affect relationships where causes already exist, which is quite similar with the existing research design. The research design will enable the researcher to explain some critical challenges faced by wine industry of Australia. In addition to this, for the purpose of revealing the research work in the most effective and elaborative manner, there is a need of some comprehensive data (Jonker, 2010). In direction to this, mixed type of research work is considered for accomplishing the objectives. In this type of research both qualitative and quantitative measures have been taken into account so that an effective result of the paper can be revealed. In this research work, two prominent methods of research work can be taken into account:
Primary method of data collection:
These methods provide a base to collect data directly from the selected respondents. The primary method i.e. survey through questionnaire has been selected to conduct and organize the study. This method is one of the major methods through which data and information is collected in the quantified format. In this method an in-depth survey is conducted with selected and concerned respondents for the purpose of revealing their response and perception over different aspects of the research context.
Secondary method:
These methods prove to be beneficial in the collection of pertinent information from the secondary sources, such as books, journals, online articles, news papers and pervious research papers. Secondary method of data collection identified in concern to the study is literature review, which is helpful in analyzing different sets of regulations having direct or indirect impact on the business outcomes. The method is based on the review of the pertinent literature, so previously proved facts and information is obtained through this process. It is selected due to the reason that significant results cannot be obtained without becoming specific regarding theoretical information related with Australian wine industry (Taylor, 2006).
Ethical consideration:
Ethical considerations pave the way for the incorporation valid approach towards the identification of research methods to collect strong data base. Ethical guidelines described by the university are properly included in the research while collecting data. It has provided assistance in authenticating the research base by ensuring the analysis of the data in an unbiased manner. The key respondents included in the survey and interview process were assured about the confidentiality and privacy of the information provided by them. Any kind of personal information was not called for from the respondents, so that they can provide their responses easily without having concern for the disclosure of their personal information (Jonker, 2010).
Sampling
For undertaking the survey in the most effective manner, it is crucial to select an effective sample. In the research work, the survey of 50 marketing and administrative managers of different wine companies operating within Sydney has been taken. For the purpose of reducing errors and biasness, random sampling technique has been taken into account. In this sampling technique, no specific base has been taken into account for framing a specific sample. The selection of the respondents within the sample is undertaken on a random basis. In the context of this survey, respondents who are employed at managerial post are considered as the most suitable entities. It is due to the reason that only this entity can deliver some crucial and strategic information related with challenges in existing business environment of Australia for the long term sustainability of the wine industry within the country.
Data collection & management procedures For the purpose attaining information from respondents through survey method, a direct survey is conducted in which, the target sample is approached directly and questionnaire is got filled by him. The survey questionnaire is designed by including close ended questions, so that the vagueness of responses can be avoided. This approach is helpful in collecting the responses in lesser time, as participants are able in interpreting the queries properly. The validity of the survey will be ensured through the provision of easily understandable questionnaire, so as to avoid the issue of misinterpretation of the query by the different respondents (Jonker, 2010).
Data analysis procedures
The collected data has to be analyzed properly for finding out pertinent evidences in support of the research aims. It provides a base for supporting the key evidences identified from the literature review on the basis of the practical facts and figures (Taylor, 2006). This section requires utmost accuracy and care to reach at clarified and well interpreted findings. For making the data analysis more comprehensive and understandable, two different procedures have taken into consideration. These procedures are listed as below:
(1) Descriptive analysis: With the help of this method subjective data is analyzed on the basis of different important theories and conceptual framework. In this method, all the subjective information are checked and aligned with a conceptual framework prepared within literature review section of the paper (Scruggs, 2006).
(2) Graphical data representation: For the purpose of analyzing the quantitative data, graphical data representation method has been used. In this method, the responses retrieved from respondents have been identified in terms of percentage of respondents and represented as graphs and charts. Through the presentation of the collected data into graphs, the process of interpretation of the responses has become easier (Walsh, 2003). On the basis of this interpretation a specific trend regarding the research context has been revealed which will be used for the purpose of retrieving results of the research work.
Results
Introduction:
This chapter is quite important as it provides information about the results that are obtained through the research. The data is collected through primary and secondary sources by using literature review and questionnaire, respectively. The data collected through primary and secondary sources is integrated as per the research aim and objectives. The managers, i.e. respondents are approached directly to gather data that increases the validity and credibility of research data.
In order to reflect the research results, a systematic approach have been taken into account in which, results will be revealed under three different themes. In the section, perception of respondents is revealed with the help of graphs and charts so that a generalized trend can be reflected quite easily.
Results on the basis of personal information:
Figure
Figure 1 is showing the gender related information of respondents. As per the figure, it can be analyzed that the sample comprises of both male and female respondents. Male respondents (i.e. 82%) are among the majority of the survey respondents and female respondents (i.e. 18%) are less.
Figure
Figure 2 is showing the experience level of respondents within their respective organizations. The figure shows that 18% of the respondents had an experience of working in Australian market for less than 1 year, 28% of the respondents for 1-3 years, majority of the respondents (i.e. 48%) for 3-6 years and remaining 6% for more than 6 years of employment period.
Figure
Figure 3 is representing the designation of the respondents within its respective organization. In order to get effective and useful results, the survey is conducted only in two departments of companies, i.e. administration and marketing. As per the chart, majority of respondents participated in the survey are posted at managerial grade within their organization. In context to this, 36% of total respondents are employed at managerial grade within administration department of their company, and 42% respondents are the manager in marketing department. In addition to this about 8% respondents are the administrative executives within their company, while about14% respondents are the marketing executives. In this way, this information is reflecting that presented information is quite accurate and worthy for conducting the remaining research results.
Theme 1: Exploration of existing conditions of Australian whisky industry: In order to explore the theme related with the attractiveness of Australian whisky industry, some questions were asked to the respondents. The results of the survey in the specific context of this theme can be presented as below:
Figure
Figure 4 is reflecting the graphical representation of the experience of respondents with Australian business environment. As per the graph, majority of respondents (i.e. 62%) has stated that they neither have very good nor very bad experience while working in the country, i.e. Australia. In addition to this, 6% respondents are having good and 10% of respondents have excellent experience within the country. In similar to this, 8% respondent felt bad while remaining 8% respondents have worst experience within the country.
Figure
Figure 5 demonstrates the consideration of Australia as a lucrative market for whisky industry. Majority of respondents (i.e. 76%) have presented their positive views on this aspect, while 22% respondent has shown their negative perception on this aspect.
Figure
Figure 6 is reflecting the reputation of Australian whisky industry in the eyes of business organization. In this account, about 52% of respondents have denoted the industry as highly potential but challenging market. Around 16% of respondents consider it as highly potential market. In addition to this, about 20% of respondents consider it as a challenging and less potential market, while remaining 12% of respondents have denoted the industry as easily accessible market.
Theme 2: Challenge for the players operating within the industry
In order to reflect some critical challenge faced by the players operating within the industry, some intensive questions have been asked. The results of the survey in this context are presented as below:
Figure
Figure 7 is presenting some of the crucial type of challenges that have been faced by new entrant while entering into the market. Majority of respondents (i.e. 42%) have considered changed taste and preferences of local customer is the major challenge faced by their organization. Along with this, 18% of respondents have considered strict legal and regulatory regimes for whisky industry of the country as a prime reason. Moreover highly competitive market place is also considered by about 16% of respondents as a major challenge related with the industry.
Figure
Figure 8 reflects the perception of the respondents regarding affinity of socio economic environment of the country with whisky industry. As per the response of respondents, majority of the respondents (i.e. 62%) are agreed on the point that socioeconomic environment is the major challenging factors for whisky industry of the country. Among such population about 12% respondents are strongly agree on this perspective.
Figure
Figure 9 is the graphical representation of the perception of the respondents regarding the changes in the product offerings as per the needs and wants of the Australian customers. As per the graph, about 62% of respondents have stated that they have changed their offerings as per the differentiated needs and wants of Australian customers. About 20% of respondents have said that they brought some partial changes in their product offerings accordingly. Remaining 18% of the respondents are quite concerned about their unique identity within the market place and they have not made any of changed in its product offerings.
Figure The figure shows the extent to which, policies of government are in the favor of the whisky industry within the country. In the views of 60% of respondents there is high positivity in the government’s attitude towards the whisky industry. About 18% respondents have considered these governmental policies are not in favor of whisky industry within the country. Remaining 22% of total respondents are considered that government policies are helpful but only to a moderate level
Along with such close ended questions, one open ended question is also asked from the respondents, which is related with the three major challenges faced by the majority of respondents. As per the majority of the respondents, changed preference and drinking habits of people of the country is the major challenges while expanding within the country. Along with this, already prevailing competition is ranked as the second major challenge faced by the industry within Australian market by majority of respondents. In direction to this, tough entry norms, and governmental rules and regulation are considered as the third major challenge by the respondents.
Theme 3: Recommendations for mitigating such challenges Another important theme of the research work is to deliver some crucial recommendations for mitigating different challenges within the external business environment. For addressing this theme, one open ended question has been asked within the questionnaire. The question is asked for the purpose of inviting some crucial recommendations from the side of respondents for the purpose of making the industry favorable for whisky industry. In respect to this, changes in the existing policies of the government related with foreign investments within the industry are quite required. In existing conditions, the governmental rules and regulations are quite strict for the industry. These norms are required to be made more liberalized and attractive for foreign investors. In addition to this, another crucial recommendation can be given to the company, which is related with the changes and modifications in the existing product offerings as per the needs and requirements of Australian customers. Business organizations are required to be more innovative and creative so that they can be able to fulfill all the requirement of the customers. Moreover the company should also consider the social norms of the country while designing their operational and structural policies.
Discussion and analysis of results: The discussion and analysis of the results of the survey can be revealed by aligning the results with the findings of the literature review. The discussion and analysis section is aimed to analyze the results so that a competent and effective conclusion from the results can be implied. The discussion and analysis of the results can be undertaken in the context of three different themes.
Discussion and analysis of results from Theme 1st: The first theme of the research paper is related with the existing scenario of Australian market place in the context of whisky industry of the country. In relation to this theme, the survey has reflected that in the views of majority of marketing and administrative managers, Australia is a potential market but there are several critical challenges associated with the industry. Respondents have rated Australian market as a highly potential but challenging market place. This result of the survey can positively be supported with the help of different literatures. Literature review section has revealed that in recent period of time Australian whisky industry has grown at a rapid pace, which demonstrates the potentiality of the industry. In relation to this, existence of a number of different foreign multinationals in the whisky industry of the country also advocates the potentiality of the industry within existing business scenario. In this way, both the methods used for retrieving the results are confirming that there are intensive opportunities as well as threats available for foreign investors in the whisky industry of Australia (National Library of Australia & Commonwealth National Library (Australia), 1996).
Discussion and analysis of results from Theme 2nd The second theme for this research work is related with the exploration of different key challenges faced by business organizations operating within the country. In relation to this theme, the survey has reflected that different tastes and preferences of customers can be considered as a primary challenge faced by the company operating within the country. In relation to this, literatures have also revealed that tastes and preferences of Australian customers are quite different from the rest of the world. Owing to this reason, organizations from foreign market are required to face some critical challenges related with the establishment of the compatibility with existing business environment. In direction to this, negative attitude of government of the country for foreign business organizations operating within the industry is also identified as one of the major challenges faced by them. In direction to this, literature review section has also reflected that in the country there is an unreasonable degree of excise duty over export and import of whisky and related products, which is making the industry less lucrative (Association, Australian Hotels, 2010). In addition to this, the survey has also presented that another important challenges faced by business organization of this sector is the intensive competition provided by already established players operating within the industry. This finding of the survey is reflected quite clearly in the literature review section also. Literature has presented that different small scale players of the industry are making the competition quite hard for new players entering into the market (National Library of Australia & Commonwealth National Library (Australia), 1996).
In this way, it can be prove that existing scenario Australian whisky industry is quite challenging for new players and entrants of the market.
Discussion and analysis of results from Theme 3rd Third theme in the context of the paper is related with the recommendations for addressing different challenges. In the context of this theme, the survey has reflected some suggestion such as liberalization of governmental policies for foreign investors, and modification in the product offerings of the company. In relation to this, literature review section has also presented that Australian whisky industry is quite opportunistic and effective, which can be improved some critical changes in the existing policies (Association, Australian Hotels, 2010). In this way, third theme of the research work can also be proved quite positively.
Conclusion and Recommendations The Australian whisky industry is quite tiny and young in comparison to the other alcoholic beverages in Australia, such as wine and beer. The industry is characterized by the small scale operation that is basically representative of family run businesses. There is an increasing popularity of the Australian whisky due to the specific aroma and quality of the products the industry is offering to consumers. The whisky industry in Australia is saturated with imported products, such as Scotch whisky, but the Australian whisky has been able to carve its own identity and space in the market. The critical challenges faced by the industry in Australia are: heavy excise that is to be paid to the government as per the taxation system which makes the whisky quite expensive in comparison to other alcoholic beverages. The burden is passed on to the consumer and is a critical challenge. Another challenge for the industry is small scale production. Most of the distilleries operate in boutique style and produce the whisky in small batches that are not sufficient to meet the demand of quality whisky in the market. Scotch and American whisky are still the major brands in popularity and quality and capture 60% of the total market share of whisky in Australia. These brands continually innovate and are consistent in delivering quality products to their customers which make them popular and preferable among consumers in Australia. The changing consumer demands and preference for more and more innovation is another critical challenge for the industry because established foreign brands in the market are consistent in delivering quality products. Although, the Australian whisky has its own identity and place in the market, but it requires growing more and gaining recognizable market share in the industry. The recommendations for the Australian whisky market so as to improve their operation and growth are as follows:
There are several opportunities present for the Australian whisky industry to grow more such as presence of high quality natural resources, growing international appreciation for commitment of people in the industry, such as Bill Lark who has played a significant role in development of Australian whisky market, and the experience of people in the alcoholic beverages due to the old and well established industry of wine. These opportunities should be used for growth and increasing quality of the products of the industry.
Furthermore, there is need to educate Australian people about the peculiar characteristics and benefits of the Australian malt.
There should be opening of more distilleries all over Australia so that the demand can be met with adequate supply of the product with no financial loss to the distilleries. For ensuring that there is continuous cash flow, some other alcoholic beverages could be sold in combination with the whisky like premium vodka and other coffee or cream liqueur.
Limitations to the research The research is limited to the Australian whisky market which limits the results to the Australian territory. The results cannot be generalized and are specific for a market. There is specific research of the Australian whisky market. The actual position of the whisky industry in the overall alcoholic beverages market of Australia cannot be identified due to specific focus on critical challenges faced by Australian whisky industry. Another limitation of the research is related to the time for doing detailed analysis and collection of more literature. The confined approach in the literature review, as the information is proved and analyzed in the past, limits the research. The literature review may not relate exactly to the actual behaviour of the concerned research problem. The future research can be carried on comparing the situation of the whisky market with other alcoholic beverages market in Australia. The current growth and level of the Australian whisky market can also be compared with the data and facts gathered from other markets in the global industry of whisky.
Bibliography
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Appendix: Questionnaire
Part 1:
Personal information
Q. Please mention your gender:
A. Male B. Female
Q. Please mention your experience in the industry:
A. less than 1 year B. 1-3 year C. 3-6 years D. more than 6 years
Q. Please mention your designation in your organization?
A. Manager in marketing department
B. Executive in marketing department
C. Manager in administrative department
D. Executive in administrative department
E. Any other……………………………………………………………….
Part 2:
Q. How was your experience with Australian business environment?
A. Good B. Bad C. Excellent D. Worst E. Neither too good nor too bad
Q. Do you think that Australia is a lucrative market from the perspective of whisky industry?
A. Yes B. No C. Can’t say
Q. How can you define Australian market in one phrase from the perspective of whisky industry?
A. Highly potential market
B. Highly potential but challenging market
C. Challenging and less potential market
D. Easy accessible market
Q. What type of challenges have you faced while entering into the market?
A. Tough entry norms
B. Highly competitive market place
C. Changed taste and preferences of local customer
D. Political environment of the country
E. legal and regulatory regimes for whisky industry of the country
F. any other……………………………………………………………………………….
Q. Do you agree that socio economic environment of the country presents challenge in front of the company?
A. strongly agree B. Agree C. neutral D. disagree C. Strongly disagree
Q. Have you changed your product offerings as per the needs and wants of the Australian customers?
A. Yes B. No C. yes, but to a certain extant
Q. As per your opinion, to what extent, the policies of government are in the favor of the whisky industry within the country?
A. High B. Moderate C. Low
Q. Please list three major challenges faced by a whisky organization within the country?
1……………………………………………………………………………………………………..
2…………………………………………………………………………………………………….
3…………………………………………………………………………………………………….
Q. Please make recommendations to the company for overcoming such challenges?
………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Thanking you
methods of data collection. Data analysis is done through graphical presentation of data and discussion is carried out with information collected from both the literature review and the survey through questionnaire. The research finds out that there are some critical challenges faced by the Australian whisky industry including heavy taxation in form of excise, competition from foreign imported brands, small scale production unable to meet the growing demand in the market and people’s perception of the Australian product. Recommendations are given for the improvement and betterment of the industry with consistent cash flow and focus on quality and innovation. Limitations and recommendations for future research are mentioned so as to carry on further research in the topic in concern.
Table of Contents
Introduction
Whisky is a famous alcohol type all over the world which is a distilled alcoholic beverage made up from fermented grain mash. Within the segment of international spirits, whisky forms the largest category. The characteristic of this brand of spirit is its exclusivity that is gained from its origins and the ageing process that provides the value added benefit to its consumers. These characteristics of whisky also make it register itself in the category of premium spirits and owing to this reason, it gains more profitability and attraction in comparison to other spirits. There are several different brands of whiskies that have gained accolades all across the globe and have made their niche in the global whisky market. However, the global whisky industry is facing challenges due to the changing customer attitudes and behaviour bringing in new requirements and changes in the risk profile. Moreover, the bargaining power of retailers is also on the rise along-with the financial burden being imposed by the maturing industries in the world. The affect of the changing customer demands and attitudes can make the
Background of the study The Australian whisky industry is growing in leaps and bounds but it is still less than just two decades old. There has been a huge and recognizable in the quality and popularity of the Australian whisky although according to the world whisky standards, the industry is young. There are certain whisky distilleries that are opening all over the country, but most of them are situated in Tasmania, which is a small island situated in the mainland of Australia. There is lots of demand for the whisky in Australia which creates the problem of demand and supply. There is lots of whisky in Australia but the problem lies in the fact that there is also a lots of demand for this distilled alcohol product which cannot be fulfilled by small boutique style distilleries in Australia which offer either small batches or single barrel bottling. The beer and wine industries receive a rebate in comparison to whisky industry due to which the industry is undergoing financial burden. Owing to this, there are critical challenges that the Australian whisky industry is facing in comparison to other sprit and alcohol industries. Australia is one of the biggest wine producers in the world. Thirty years ago, the wine industry was also in the same phase as the whisky industry is in today i.e. small scale production. The ingredients in the form of grains, the knowledge in the form of immigrants from Ireland and Scotland in early 1700s, and the equipments, such as barrels and pot stills, were present in Australia for a long time which could have been used by people in business to make whisky, but Australia did not take to whisky earlier which has resulted in the huge and vast growth of other spirits such as wine and beer; the whisky industry remaining only two decades older. Although, the Australian whisky industry is young in comparison to the wine and beer industry of Australia, the growing demand and popularity of Australian whisky can change the situation.
Research question The Australian whiskey industry is growing by leaps and bounds but still the production is low despite increase in the demand and popularity of this category of spirit. The research question identified for the study is as follows: ‘What are the critical challenges faced by the Australian whisky industry’.
Aim and objectives of the research The aim of the research is to identify the challenges that the Australian whisky industry is currently facing so as to understand the current level of the industry in overall spirit industry of Australia and understanding how the industry can grow and face critical challenges so as to become sustainable and more popular in the territory. In order to attain the aim of the research study, it is necessary to frame sound research objectives that can provide the guidance in setting a direction to attain the aim of the research. The objectives should not be vague. Following research objectives are framed for the study:
To understand the current level of the Australian whisky industry pertaining to its production, popularity and quality.
To identify the critical challenges faced by the industry.
To identify ways through which the Australian whisky industry can answer the challenges it is facing and becoming sustainable.
Significance of the research The research is aimed at identifying the critical challenges faced by the Australian whisky industry. The knowledge of these critical challenges can help the industry professionals to understand as to what are the challenges and how are they hampering the growth of the industry. Moreover, appropriate understanding of the reasons of facing these challenges, the industry professionals can find out appropriate solutions so as to make the industry grow further in a sustainable way. The reader gains comprehensive knowledge of the Australian whisky industry and gains an understanding of current situation of the industry regarding its production, growth and challenges. As Australian whisky is gaining popularity and is becoming known for its quality offerings, it becomes imperative to understand what critical challenges are hampering the industry and how they can be answered or done away with. The research will facilitate the researcher to evaluate the industry in a comprehensive way and identify the challenges critical for the industry and its professionals to face. The research is significant in terms of understanding the challenges and make measures taken by the industry professionals and players for facing the challenges and how successful they are in addressing the challenges. Recommendations can be made for the Australian whisky industry and how can they attain the required as well as sustainable growth.
Literature Review
Introduction
The literature review takes into account relevant literature available for the topic in research. Various textbooks, journal articles and current literature found on authentic websites of the internet are taken into consideration for gaining an understanding of the current situation of the whisky industry in Australia and the challenges faced by companies that exist in the industry and how can they face these challenges.
Australian Whisky Industry
Stockwell (2008) argues that the Australian whisky industry started in the small island of Tasmania but it is rapidly spreading across other areas of the country.
The distilleries are operated on small scale but the use of the ingredients and knowledge of the well established wine industry of the country is used for the development of this category of spirit in Australia. The use of brewer’s yeast, local peat specifically in case of Tasmania, and the use of wood which is sourced from the famous and recognized wine industry of Australia have given whisky the identity of its own in the market. The market is tiny and most of the distilleries are owned and run by family members, which means that the whisky industry is basically a family run business in Australia and has small scale operations.However, no matter how tiny is the production market is, every new whisky that is launched in the Australian market takes away the dominance and hegemony of the Scotch whisky, thus ensuring that the Australian whisky is having its own identity among drinkers in
Australia. According to Western Whisky Industry (2006), the founding father of the modern Australian whisky industry is Bill Lark from Tasmania. In the Tasmanian distilleries, there is use of local peat with ages in small casks and there is release of only single cask. There is presence of heightened aromatics that arouses the excitement among consumers and has, thus made its place among popular spirits in Australia. Use of yeast mix and fresh malt also adds on to the scent and aroma of the company. Tasmania is the major distillery site in Australia for brewing whisky. There are other distilleries as well such as Bakery Hill in Bayswater which started in 1999 and is a major distillery in the market started by David Baker. The aim of the company is to make a lightly fragrant whisky with banana like quality and use of sherry casks. One of the reasons for popularity of whisky in Australia is its focus on quality and constant innovation in the product that makes this category of spirit appeal to different generation of drinkers in Australia. The Australian whisky market has witnessed an extraordinary change in the past 50 years. In 1950s, domestic blended whiskies were dominant replaced by Scotch whiskey in 1980s and 90s and recently American whisky has replaced Scotch in dominance with 60% market share in the Australian whisky market in 2010 .
Critical Challenges
Chikritzhs et al (2009) sheds light on the constraints faced by the foreign brands and indigenous brands along-with self imposed constraints by some brands. The Scotch brand has the self imposed constraint that it has to comply with the statutory processes of production and codify its traditional methods so as to ensure that the historical practises as well as standards are upheld. The company is able enough to maintain this policy along-with bringing in innovation in their product. It is constraint and a challenge for the Australian whisky distilleries to bring in innovation in their offerings along-with upholding of the traditional methods and standards.
Most of the distilleries for whisky are owned by family in Australia and the main issue for the small scale players basically the family owned businesses is to create a balance between competitiveness and independence. The options for these small players rise stay within the range of joining competition with the other alcohol players in the industry so as to become cost leaders, or to sacrifice the size for attaining specialization so as to invest in the diversified portfolio. Middleton (2011) argues that the indigenous Australian is facing challenge in terms of innovation from famous western whisky brands such as Scotch that is continuing to offer innovative products to consumers with consistency and quality. Moreover, the production of Australian whisky is either in small batches or single barrel bottling, which make the industry run on small sale which is not able to meet the growing demand of consumers. The major reason for this small scale operation and limited production of whisky in comparison to other spirits, such as wine and beer, is the current taxation system that is applied to the Australian whisky industry. As per the Pre-Budget Submission 2007-08, for a bottle of 700 ml, the Australian distilleries have to pay the excise duty to the government that is up to $30. This financial burden has to be passed on to the consumer, thus making the whisky quite expensive in the market. It is a critical challenge faced by the Australian whisky industry as western brands also present tough competition in terms of innovation and quality.
Lee et al (2012) state that the market place of Australia is saturated with imported whiskies and the small scale distilleries have also to face the challenge related to the lack of quality barrel stock for different and varying styles of maturation. However, the high evaporation rates of Australian whisky presents and adds to the unique Australian style of malt. The Australian whisky industry is developing and is recognized for high commitment and passion of people involved in the industry such as Bill Lark. The unreasonable degree of excise and the perception of the Australian people about their own product present critical challenges to the Australian whisky industry.
Opportunities
As per the Australian Whisky Guide (2011), in contrast to the critical challenges for the industry in regards to excise, saturated market with imported whiskies, consistency in quality and small scale production, there are certain opportunities present for the whisky industry which includes development of great international appreciation for commitment to work, abundance of natural resources with high quality such as Australian malt, and increasing popularity of Australian whiskies . These opportunities are just required to be grabbed appropriately with the first initiative to educate the Australian consumer more about the characteristics and benefits of the Australian malts. The small scale firms can also maintain their cash flow by selling other exotic delights that are worth a taste as well, such as Vodka, cream and coffee liqueur, etc. as is done by some distilleries in Australia such as Timboon Railway Shed.
Research methodology
Introduction
The methodological framework is one of the most significant parts of a dissertation, as it explains the methods used for collecting the data and the logic behind the methods used in the context of the research study. This is one way of solving research problems in a systematic manner (Marczyk, 2005). In direction to this, the research methodology section of the research work covers some of the basic steps to be followed for determining a perfect research design and collecting data for revealing desired outcomes. In addition to this, the section covers information regarding participants, informants and procedure followed within the research work. Furthermore, it will also include the justification behind choosing this method.
Research design In order to reveal some crucial challenges related with the wine industry of Australia, there is a need of some in-depth and comprehensive information. For this purpose, Causal Comparative or Ex Post Facto Research Design is being used because this is the research design which allows the user find out the reason behind the current scenario of the problem. This research design attempts to explore cause and affect relationships where causes already exist, which is quite similar with the existing research design. The research design will enable the researcher to explain some critical challenges faced by wine industry of Australia. In addition to this, for the purpose of revealing the research work in the most effective and elaborative manner, there is a need of some comprehensive data (Jonker, 2010). In direction to this, mixed type of research work is considered for accomplishing the objectives. In this type of research both qualitative and quantitative measures have been taken into account so that an effective result of the paper can be revealed. In this research work, two prominent methods of research work can be taken into account:
Primary method of data collection:
These methods provide a base to collect data directly from the selected respondents. The primary method i.e. survey through questionnaire has been selected to conduct and organize the study. This method is one of the major methods through which data and information is collected in the quantified format. In this method an in-depth survey is conducted with selected and concerned respondents for the purpose of revealing their response and perception over different aspects of the research context.
Secondary method:
These methods prove to be beneficial in the collection of pertinent information from the secondary sources, such as books, journals, online articles, news papers and pervious research papers. Secondary method of data collection identified in concern to the study is literature review, which is helpful in analyzing different sets of regulations having direct or indirect impact on the business outcomes. The method is based on the review of the pertinent literature, so previously proved facts and information is obtained through this process. It is selected due to the reason that significant results cannot be obtained without becoming specific regarding theoretical information related with Australian wine industry (Taylor, 2006).
Ethical consideration:
Ethical considerations pave the way for the incorporation valid approach towards the identification of research methods to collect strong data base. Ethical guidelines described by the university are properly included in the research while collecting data. It has provided assistance in authenticating the research base by ensuring the analysis of the data in an unbiased manner. The key respondents included in the survey and interview process were assured about the confidentiality and privacy of the information provided by them. Any kind of personal information was not called for from the respondents, so that they can provide their responses easily without having concern for the disclosure of their personal information (Jonker, 2010).
Sampling
For undertaking the survey in the most effective manner, it is crucial to select an effective sample. In the research work, the survey of 50 marketing and administrative managers of different wine companies operating within Sydney has been taken. For the purpose of reducing errors and biasness, random sampling technique has been taken into account. In this sampling technique, no specific base has been taken into account for framing a specific sample. The selection of the respondents within the sample is undertaken on a random basis. In the context of this survey, respondents who are employed at managerial post are considered as the most suitable entities. It is due to the reason that only this entity can deliver some crucial and strategic information related with challenges in existing business environment of Australia for the long term sustainability of the wine industry within the country.
Data collection & management procedures For the purpose attaining information from respondents through survey method, a direct survey is conducted in which, the target sample is approached directly and questionnaire is got filled by him. The survey questionnaire is designed by including close ended questions, so that the vagueness of responses can be avoided. This approach is helpful in collecting the responses in lesser time, as participants are able in interpreting the queries properly. The validity of the survey will be ensured through the provision of easily understandable questionnaire, so as to avoid the issue of misinterpretation of the query by the different respondents (Jonker, 2010).
Data analysis procedures
The collected data has to be analyzed properly for finding out pertinent evidences in support of the research aims. It provides a base for supporting the key evidences identified from the literature review on the basis of the practical facts and figures (Taylor, 2006). This section requires utmost accuracy and care to reach at clarified and well interpreted findings. For making the data analysis more comprehensive and understandable, two different procedures have taken into consideration. These procedures are listed as below:
(1) Descriptive analysis: With the help of this method subjective data is analyzed on the basis of different important theories and conceptual framework. In this method, all the subjective information are checked and aligned with a conceptual framework prepared within literature review section of the paper (Scruggs, 2006).
(2) Graphical data representation: For the purpose of analyzing the quantitative data, graphical data representation method has been used. In this method, the responses retrieved from respondents have been identified in terms of percentage of respondents and represented as graphs and charts. Through the presentation of the collected data into graphs, the process of interpretation of the responses has become easier (Walsh, 2003). On the basis of this interpretation a specific trend regarding the research context has been revealed which will be used for the purpose of retrieving results of the research work.
Results
Introduction:
This chapter is quite important as it provides information about the results that are obtained through the research. The data is collected through primary and secondary sources by using literature review and questionnaire, respectively. The data collected through primary and secondary sources is integrated as per the research aim and objectives. The managers, i.e. respondents are approached directly to gather data that increases the validity and credibility of research data.
In order to reflect the research results, a systematic approach have been taken into account in which, results will be revealed under three different themes. In the section, perception of respondents is revealed with the help of graphs and charts so that a generalized trend can be reflected quite easily.
Results on the basis of personal information:
Figure
Figure 1 is showing the gender related information of respondents. As per the figure, it can be analyzed that the sample comprises of both male and female respondents. Male respondents (i.e. 82%) are among the majority of the survey respondents and female respondents (i.e. 18%) are less.
Figure
Figure 2 is showing the experience level of respondents within their respective organizations. The figure shows that 18% of the respondents had an experience of working in Australian market for less than 1 year, 28% of the respondents for 1-3 years, majority of the respondents (i.e. 48%) for 3-6 years and remaining 6% for more than 6 years of employment period.
Figure
Figure 3 is representing the designation of the respondents within its respective organization. In order to get effective and useful results, the survey is conducted only in two departments of companies, i.e. administration and marketing. As per the chart, majority of respondents participated in the survey are posted at managerial grade within their organization. In context to this, 36% of total respondents are employed at managerial grade within administration department of their company, and 42% respondents are the manager in marketing department. In addition to this about 8% respondents are the administrative executives within their company, while about14% respondents are the marketing executives. In this way, this information is reflecting that presented information is quite accurate and worthy for conducting the remaining research results.
Theme 1: Exploration of existing conditions of Australian whisky industry: In order to explore the theme related with the attractiveness of Australian whisky industry, some questions were asked to the respondents. The results of the survey in the specific context of this theme can be presented as below:
Figure
Figure 4 is reflecting the graphical representation of the experience of respondents with Australian business environment. As per the graph, majority of respondents (i.e. 62%) has stated that they neither have very good nor very bad experience while working in the country, i.e. Australia. In addition to this, 6% respondents are having good and 10% of respondents have excellent experience within the country. In similar to this, 8% respondent felt bad while remaining 8% respondents have worst experience within the country.
Figure
Figure 5 demonstrates the consideration of Australia as a lucrative market for whisky industry. Majority of respondents (i.e. 76%) have presented their positive views on this aspect, while 22% respondent has shown their negative perception on this aspect.
Figure
Figure 6 is reflecting the reputation of Australian whisky industry in the eyes of business organization. In this account, about 52% of respondents have denoted the industry as highly potential but challenging market. Around 16% of respondents consider it as highly potential market. In addition to this, about 20% of respondents consider it as a challenging and less potential market, while remaining 12% of respondents have denoted the industry as easily accessible market.
Theme 2: Challenge for the players operating within the industry
In order to reflect some critical challenge faced by the players operating within the industry, some intensive questions have been asked. The results of the survey in this context are presented as below:
Figure
Figure 7 is presenting some of the crucial type of challenges that have been faced by new entrant while entering into the market. Majority of respondents (i.e. 42%) have considered changed taste and preferences of local customer is the major challenge faced by their organization. Along with this, 18% of respondents have considered strict legal and regulatory regimes for whisky industry of the country as a prime reason. Moreover highly competitive market place is also considered by about 16% of respondents as a major challenge related with the industry.
Figure
Figure 8 reflects the perception of the respondents regarding affinity of socio economic environment of the country with whisky industry. As per the response of respondents, majority of the respondents (i.e. 62%) are agreed on the point that socioeconomic environment is the major challenging factors for whisky industry of the country. Among such population about 12% respondents are strongly agree on this perspective.
Figure
Figure 9 is the graphical representation of the perception of the respondents regarding the changes in the product offerings as per the needs and wants of the Australian customers. As per the graph, about 62% of respondents have stated that they have changed their offerings as per the differentiated needs and wants of Australian customers. About 20% of respondents have said that they brought some partial changes in their product offerings accordingly. Remaining 18% of the respondents are quite concerned about their unique identity within the market place and they have not made any of changed in its product offerings.
Figure The figure shows the extent to which, policies of government are in the favor of the whisky industry within the country. In the views of 60% of respondents there is high positivity in the government’s attitude towards the whisky industry. About 18% respondents have considered these governmental policies are not in favor of whisky industry within the country. Remaining 22% of total respondents are considered that government policies are helpful but only to a moderate level
Along with such close ended questions, one open ended question is also asked from the respondents, which is related with the three major challenges faced by the majority of respondents. As per the majority of the respondents, changed preference and drinking habits of people of the country is the major challenges while expanding within the country. Along with this, already prevailing competition is ranked as the second major challenge faced by the industry within Australian market by majority of respondents. In direction to this, tough entry norms, and governmental rules and regulation are considered as the third major challenge by the respondents.
Theme 3: Recommendations for mitigating such challenges Another important theme of the research work is to deliver some crucial recommendations for mitigating different challenges within the external business environment. For addressing this theme, one open ended question has been asked within the questionnaire. The question is asked for the purpose of inviting some crucial recommendations from the side of respondents for the purpose of making the industry favorable for whisky industry. In respect to this, changes in the existing policies of the government related with foreign investments within the industry are quite required. In existing conditions, the governmental rules and regulations are quite strict for the industry. These norms are required to be made more liberalized and attractive for foreign investors. In addition to this, another crucial recommendation can be given to the company, which is related with the changes and modifications in the existing product offerings as per the needs and requirements of Australian customers. Business organizations are required to be more innovative and creative so that they can be able to fulfill all the requirement of the customers. Moreover the company should also consider the social norms of the country while designing their operational and structural policies.
Discussion and analysis of results: The discussion and analysis of the results of the survey can be revealed by aligning the results with the findings of the literature review. The discussion and analysis section is aimed to analyze the results so that a competent and effective conclusion from the results can be implied. The discussion and analysis of the results can be undertaken in the context of three different themes.
Discussion and analysis of results from Theme 1st: The first theme of the research paper is related with the existing scenario of Australian market place in the context of whisky industry of the country. In relation to this theme, the survey has reflected that in the views of majority of marketing and administrative managers, Australia is a potential market but there are several critical challenges associated with the industry. Respondents have rated Australian market as a highly potential but challenging market place. This result of the survey can positively be supported with the help of different literatures. Literature review section has revealed that in recent period of time Australian whisky industry has grown at a rapid pace, which demonstrates the potentiality of the industry. In relation to this, existence of a number of different foreign multinationals in the whisky industry of the country also advocates the potentiality of the industry within existing business scenario. In this way, both the methods used for retrieving the results are confirming that there are intensive opportunities as well as threats available for foreign investors in the whisky industry of Australia (National Library of Australia & Commonwealth National Library (Australia), 1996).
Discussion and analysis of results from Theme 2nd The second theme for this research work is related with the exploration of different key challenges faced by business organizations operating within the country. In relation to this theme, the survey has reflected that different tastes and preferences of customers can be considered as a primary challenge faced by the company operating within the country. In relation to this, literatures have also revealed that tastes and preferences of Australian customers are quite different from the rest of the world. Owing to this reason, organizations from foreign market are required to face some critical challenges related with the establishment of the compatibility with existing business environment. In direction to this, negative attitude of government of the country for foreign business organizations operating within the industry is also identified as one of the major challenges faced by them. In direction to this, literature review section has also reflected that in the country there is an unreasonable degree of excise duty over export and import of whisky and related products, which is making the industry less lucrative (Association, Australian Hotels, 2010). In addition to this, the survey has also presented that another important challenges faced by business organization of this sector is the intensive competition provided by already established players operating within the industry. This finding of the survey is reflected quite clearly in the literature review section also. Literature has presented that different small scale players of the industry are making the competition quite hard for new players entering into the market (National Library of Australia & Commonwealth National Library (Australia), 1996).
In this way, it can be prove that existing scenario Australian whisky industry is quite challenging for new players and entrants of the market.
Discussion and analysis of results from Theme 3rd Third theme in the context of the paper is related with the recommendations for addressing different challenges. In the context of this theme, the survey has reflected some suggestion such as liberalization of governmental policies for foreign investors, and modification in the product offerings of the company. In relation to this, literature review section has also presented that Australian whisky industry is quite opportunistic and effective, which can be improved some critical changes in the existing policies (Association, Australian Hotels, 2010). In this way, third theme of the research work can also be proved quite positively.
Conclusion and Recommendations The Australian whisky industry is quite tiny and young in comparison to the other alcoholic beverages in Australia, such as wine and beer. The industry is characterized by the small scale operation that is basically representative of family run businesses. There is an increasing popularity of the Australian whisky due to the specific aroma and quality of the products the industry is offering to consumers. The whisky industry in Australia is saturated with imported products, such as Scotch whisky, but the Australian whisky has been able to carve its own identity and space in the market. The critical challenges faced by the industry in Australia are: heavy excise that is to be paid to the government as per the taxation system which makes the whisky quite expensive in comparison to other alcoholic beverages. The burden is passed on to the consumer and is a critical challenge. Another challenge for the industry is small scale production. Most of the distilleries operate in boutique style and produce the whisky in small batches that are not sufficient to meet the demand of quality whisky in the market. Scotch and American whisky are still the major brands in popularity and quality and capture 60% of the total market share of whisky in Australia. These brands continually innovate and are consistent in delivering quality products to their customers which make them popular and preferable among consumers in Australia. The changing consumer demands and preference for more and more innovation is another critical challenge for the industry because established foreign brands in the market are consistent in delivering quality products. Although, the Australian whisky has its own identity and place in the market, but it requires growing more and gaining recognizable market share in the industry. The recommendations for the Australian whisky market so as to improve their operation and growth are as follows:
There are several opportunities present for the Australian whisky industry to grow more such as presence of high quality natural resources, growing international appreciation for commitment of people in the industry, such as Bill Lark who has played a significant role in development of Australian whisky market, and the experience of people in the alcoholic beverages due to the old and well established industry of wine. These opportunities should be used for growth and increasing quality of the products of the industry.
Furthermore, there is need to educate Australian people about the peculiar characteristics and benefits of the Australian malt.
There should be opening of more distilleries all over Australia so that the demand can be met with adequate supply of the product with no financial loss to the distilleries. For ensuring that there is continuous cash flow, some other alcoholic beverages could be sold in combination with the whisky like premium vodka and other coffee or cream liqueur.
Limitations to the research The research is limited to the Australian whisky market which limits the results to the Australian territory. The results cannot be generalized and are specific for a market. There is specific research of the Australian whisky market. The actual position of the whisky industry in the overall alcoholic beverages market of Australia cannot be identified due to specific focus on critical challenges faced by Australian whisky industry. Another limitation of the research is related to the time for doing detailed analysis and collection of more literature. The confined approach in the literature review, as the information is proved and analyzed in the past, limits the research. The literature review may not relate exactly to the actual behaviour of the concerned research problem. The future research can be carried on comparing the situation of the whisky market with other alcoholic beverages market in Australia. The current growth and level of the Australian whisky market can also be compared with the data and facts gathered from other markets in the global industry of whisky.
Bibliography
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Appendix: Questionnaire
Part 1:
Personal information
Q. Please mention your gender:
A. Male B. Female
Q. Please mention your experience in the industry:
A. less than 1 year B. 1-3 year C. 3-6 years D. more than 6 years
Q. Please mention your designation in your organization?
A. Manager in marketing department
B. Executive in marketing department
C. Manager in administrative department
D. Executive in administrative department
E. Any other……………………………………………………………….
Part 2:
Q. How was your experience with Australian business environment?
A. Good B. Bad C. Excellent D. Worst E. Neither too good nor too bad
Q. Do you think that Australia is a lucrative market from the perspective of whisky industry?
A. Yes B. No C. Can’t say
Q. How can you define Australian market in one phrase from the perspective of whisky industry?
A. Highly potential market
B. Highly potential but challenging market
C. Challenging and less potential market
D. Easy accessible market
Q. What type of challenges have you faced while entering into the market?
A. Tough entry norms
B. Highly competitive market place
C. Changed taste and preferences of local customer
D. Political environment of the country
E. legal and regulatory regimes for whisky industry of the country
F. any other……………………………………………………………………………….
Q. Do you agree that socio economic environment of the country presents challenge in front of the company?
A. strongly agree B. Agree C. neutral D. disagree C. Strongly disagree
Q. Have you changed your product offerings as per the needs and wants of the Australian customers?
A. Yes B. No C. yes, but to a certain extant
Q. As per your opinion, to what extent, the policies of government are in the favor of the whisky industry within the country?
A. High B. Moderate C. Low
Q. Please list three major challenges faced by a whisky organization within the country?
1……………………………………………………………………………………………………..
2…………………………………………………………………………………………………….
3…………………………………………………………………………………………………….
Q. Please make recommendations to the company for overcoming such challenges?
………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
Thanking you