We're filthy stinking rich, is the problem.
Oh, alright. We tend to have a high disposable income compared to many other areas of Europe. At the end of the day, the price you pay for a product bears absolutely no relation to its actual value. The producer is pricing it at a level to maximise profit, and in the UK we're willing to pay higher prices.
If whisky is over-priced, it's more likely to be the retailer charging a greater price to the consumer.
So the question is, why does not, or cannot, the consumer find a cheaper retailer and buy from him instead.
Some of the possible answers:
is something which should probably be looked at. In recent years, the single-malt scotch industry has morphed in a similar way to the entertainment one. Diageo, Allied, Seagrams, United Distillers etc. control a surprisingly large slice of the market. I think I'm right in saying that none of the Islay companies are now completely independent (and many now share barley supply, for example). The old model of water supply + barley + malting + distillery as an independent entity has by and large collapsed. I can't remember the exact figures, but I remember reading a couple of years ago that there were only one or two operations in the whole of Scotland which still operated that way.
The UK has an unusually efficient supermarket sector, so I doubt that's the case. And small whisky specialists in England? Well they're going to be wanting to make a living, aren't they? And they'd rather compete on service and tasting than price. So it looks more like perverse incentives.[ Parent ]
But let's take a look at what happens if you shop around for the popular 70cl Balvenie Doublewood 2 Year Old
You can buy a bottle at Tesco for £26.99.
Or you could buy direct from the distiller for £26.99.
You could go to an off-licence chain like Oddbins, and pay £26.99.
However, if you go to posh grocery deliverers Ocado, you pay more. £27.00
If people wanted to pay a bit extra for poshness, you'd expect the posher retailers to charge a bit more.
To me, the way the prices are so close, suggest either:
Like I said, we are talking about maximising profits here, not necessarily maximising volume of sales.
I have no doubt that a distillery could sell massive amounts by flogging it dirt cheap, but that isn't really going to help them - the immensely long production times for whisky means that what a distillery wants more than anything else is some security of sales. That essentially means long term contracts with major retailers for the vast majority of their product, meaning control over the final price is in the retailer's hands, not the producer. (Confusingly, I class all of the filthy capitalists as the producers. It sounds better than "them bastards".) Perversely, I can see that this could mean there is only a very weak incentive to expand a distillery - the costs involved need to be carried for 8, 10, however many years before you start to get increased volume of product to sell.
Now the retailers have a very simple task - they have a relatively fixed amount of product, they have demand that can vary. I'm making the bold assumption that demand for Scotch whisky is greater in the UK than the rest of Europe. In which case, the retailer is able to sell for a higher price and still flog off all of their stock - while some consumers may go off to search for a cheaper price elsewhere, someone else will be right behind them to buy the bottle there and then.
I don't, however, understand why the big drink firms would, in such a scenario, continue to sell to the rest of Europe while there was still demand for whisky in the UK. But that's not a bad random guess, is it?
First, I don't see how an overall volume argument makes sense for that. As you say, quantity demand is probably less in Greece: why should that make it cheaper there? If it's a more specialist niche with fewer economies of scale, that ought to make it more expensive there.
Second, if the distillery is selling to a Greek retailer at a low price, why aren't mighty price-squeezers like Tesco and Oddbins insisting they pay an equally low, or even lower price?
Third, if consumers aren't sensitive to pricing as you originally said, why are all four outlets I checked charging identical prices? (To the nearest penny). [ Parent ]
You can't expect me to read the question.
As I rambled, I can only assume that the problem is in demand and expectation. In the UK, whisky (at least the decent stuff...) is competing with other whisky and the purchasers of it expect to pay a premium, whereas in Greece it is competing with other spirits, requiring a lower price to get any sales. Mind, I still don't know why they'd bother trying to flog it in Greece.
As to the competition between supermarkets in the UK... thedrinkshop.com will flog the Balvenie at £28.59, weespeydram.co.ukn flog it for £29.99, drinksdirect.co.uk for £29.99, etc. The Tesco Price Check site (search for whisky) seems to suggest there is a fair amount of difference in pricing on some whiskies - probably about as much as there is in other products.
I can only assume that as most of the distilleries (allegedly) are part of large drinks companies, they a) have enough power to refuse the demands of supermarkets - a bottle of Talisker is not substitutable for a bottle of Dalwhinnie, unlike milk from Cheshire and milk from Lancashire, and b) feel some insane need to try and expand into different markets. Don't know why - unless they are trying to create a whole new market and then push up the price.
So, in conclusion, buggered if I know.
