The Boston Matrix, whisky and booming exports

Don’t know why I keep using alcoholic beverages as examples in my lessons, but a recent discussion of the famous Boston Matrix got us all thinking which drinks belong in which Boston Box category. We decided that Guinness probably represents a cash cow for its producer, Diageo. In Europe, the market for beers is stable, or shrinking. But Guinness is a popular brand, with a large market share. It’s a good earner for the drinks giant.

But the Boston Matrix hints that there are better marketing opportunities out there: like grabbing a large share of fast growing markets – and developing star products. And that’s what Diageo have done, with whisky exports to China of popular brands like Johnnie Walker rising so fast the industry is struggling to meet demand.

According to The Guardian, in the last nine months whisky sales overseas climbed by 23% compared with last year. That is before Christmas and New Year sales are taken into account, putting the industry on course to shatter last year’s £3.4bn export record. Industry sources said this surge in popularity, built on the growth of an affluent, image-conscious middle class in emerging markets in South America and Asia, could mean that some distilleries and producers might temporarily run short of supplies, as whisky production has a lead time of 10 to years or more. The association calculated that this rate of sales meant the whisky industry was earning £125 every second for Britain’s balance of payments, making it the “stellar” export performer and the most successful of all “fast moving” products made in the UK.

The final overseas sales value of whisky, which helps support 10,300 direct jobs and 35,000 suppliers’ jobs, could be as much as £10bn. The best-selling brand is Johnnie Walker, made by Diageo, with 20% of the market.

The industry is a huge earner for Britain, but still held back by at least two legal constraints. The first issue is the normal process of the regulation and control of alcohol both here and abroad. The second is the behaviour of those countries who impose high tariffs (import taxes) to protect their own domestic drinks industries.