All of the countries in the union must abide by these tax and trade regulations. In January of 2004, Denmark and Sweden were forced to remove import restrictions on alcohol purchased for personal consumption (EPHA, 2007).
A recent decision by the European Court of Justice (ECJ) determined that the Swedes have attained a monopoly on alcohol. They are attempting to limit the general consumption and limit underage drinking in their country. Alcoholism is considered to be problematic in Sweden and lawmakers see a need to take measures to attempt to curb overall consumption of alcoholic beverages.
The effects of this decision are two-fold, when one considers the impact on expanding Olde Distillerie products to Sweden. The first affect is that this decision supports alcohol as an imbedded cultural construction in Sweden. It means that alcohol has a large market and a large market acceptance. However, this action also means that there is a concerted effort to reduce the size of the market in Sweden. The government is likely to launch a campaign in the next several years that will attempt to limit alcohol consumption among Swedes, promoting the negative impact of alcohol abuse. This will harm alcohol sales in the country by both domestic and foreign and domestic producers. It was determined by the ECJ that these new rules will not discriminate against products from other EU states, but it will effect overall alcohol sales (EPHA, 2007).
Commercial imports of alcohol are restricted by the "alkohollag" which controls all aspects of trade and production of alcohol. This organization allows a retailer monopoly (EPHA, 2007). However, the internet and the ability of individual consumers circumvents these restrictions. Sweden cannot prevent individual consumers from importing alcohol for their own personal use (EPHA, 2007). However, Olde Distillerie products would still have to comply with commercial laws and would be restricted by the Swedish retail monopoly.
Sweden has a total estimated population of 8,878,085 as of July 2003 estimates (CIA, Sweden, 2007). The largest segment of the population is between 15- to 64-year-old at 65% of the population. Seventeen percent are above 65 years of age (CIA, Sweden, 2007). His translates to a population for marketing of approximately 683,000 potential consumers. Male and female populations are relatively evenly distributed in the 15- to 64-year-old age group. The potential for sales is significant. However, the new crackdown on drinking may have a negative impact on the potential target audience.
The tax scenario in Sweden favored domestic companies. However, the EU has forced compliance with rules that prohibit actions such as this. At the current time, custom rates based on the final value of the product are at 25% (FedEx, 2007, "Sweden"). The current sales plan is to market Olde Distillerie whiskys as a premium brand, which means that they will be subject to a higher customs tax than lower priced brands. However, when one factors in the profit potential of higher priced brands, this evens out the effects of the higher taxes. A lower priced brand is subject to the same tax rate, but the taxes consume a higher percentage of the profits than do higher priced brands.
The market potential in Sweden is high at the present time due to the ingrained nature of drinking in their culture. However, it is expected that marketability to alcohol products will be significantly reduced in the future as a result of anti-drinking campaigns that are being undertaken by the government. High customs taxes in Sweden will further compound the ability to attain profits. This eliminates Sweden as the final candidate for expansion.
Italy
Italy is proud of their own traditional Italian wines, which predominate the Italian drinking scene. Approximately 66.4% of the 58,147,733 Italians are between 15-64 years of age (CIA, "Italy," 2007). This population is significantly higher than the potential target audience in Sweden. Drinking is a culturally accepted practice that has no limitations due to culture or religion. The median age of the Italian population is 42.5 years old (CIA, "Italy," 2007), which makes them the perfect target for the marketing if premium Scotch whisky.
Italy has recently experienced an event that indicates market readiness of the population. Campari has recently purchased the Morayshire Distillery in Scotland (McKean, 2006). This is the distillery that produces Glen Grant, a popular Brand on the global market. This move indicates that Scotch whisky has a significant enough place to make this purchase feasible based on market. Olde Distillerie whiskys are priced significantly higher than Glen Grant. However, this also represents an untapped market for premium brands. This coupled with the fact that...
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