Whisky Galore, but who's it for?

Whisky Galore, but who's it for?

by Jonathan Stanley
article from Wednesday 13, September, 2017

A LONG, LONG time ago there was a wee country.  It had one big farm export. In fact it was the world's biggest exporter of this product.

Almost the entire industry was a foreign-owned monopoly. The locals just turned up to work and received pay. No profit, just pay.

The government of course took a slice of the profits and everyone who ‘mattered’ was happy. When the people elected a government that decided this arrangement was not cricket, it was slung out by the CIA and local goons.

This was Guatemala pre-1954, the original banana republic. If, heaven, forbid, we went independent tomorrow would Scotland be so different?

About 80 per cent of blended Scotch by volume is handled by three foreign giants. They also have incredible market share of the malts, more than enough to markedly distort and restrict the market.

We have Diageo's "Classic Malts" that heavily promotes some really forgettable drams. Does any Scot ask for Cragganmore as his go-to-malt? 

Ballantines is owned by Pernod Ricard, not to mention distilleries owned by Bacardi and Beam Suntory (makers of Bourbon and Japanese whisky).

The industry has high entry barriers and is an oligopoly and a foreign one too.

Imagine a populist bundle of policies that limited any company to 5 per cent market share of any malt and 10 per cent of any grain whisky by volume and gave voting rights to households within a malt distillery's ward or constituency once output exceeded a certain volume.

Add to that a building society to lend to start ups, funded initially by some of the billions raised in whisky duty.

There is no reason we need to live in a banana republic. Free markets are not oligopolies nor is it right companies benefit from restrictive laws on marketing in the name of a country that has very little stake in owner operations.

China insists on local ownership through joint stock enterprises. It seems to work well. Crucially it makes it harder for markets to be skewed by oligarchs.  

A mass closure of distilleries like Rosebank and Port Ellen was the result of bookwork accounting that could not see a long term vision.

Maybe insisting Scotch whisky must be made by distilleries part owned by Scots through joint stock companies and local democracy would even boost the brand strength?

It's called Right to Buy and it's popular capitalism. Just don't tell the CIA...

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