Pricing Single Malt Whisky : A Regression Analysis

Abstract: This thesis examines the factors that affect the price of whisky. Multiple regression analysis is used to model the relationship between the identified covariates that are believed to impact the price of whisky. The optimal marketing strategy for whisky producers in the regions Islay and Campbeltown are discussed. This analysis is based on the Marketing Mix. Furthermore, a Porter’s five forces analysis, focusing on the regions Campeltown and Islay, is examined. Finally the findings are summarised in a marketing strategy recommendation for producers in the regions Campbeltown and Islay. The result from the regression analysis shows that the covariates alcohol content and regions are affecting price the most. The small regions Islay and Campbeltown, with few distilleries, have a strong positive impact on price while whisky from unspecified regions in Scotland have a negative impact on price. The alcohol content has a positive, non-linear, impact on price. The thesis concludes that the positive relationship between alcohol content and price not is due to the alcohol taxes in Sweden, but that customers are ready to pay more for a whisky with higher alcohol content. In addition, it concludes that small regions with a few distilleries result in a higher price on whisky. The origin and tradition of whisky have a significant impact on price and should thus be emphasised in the marketing strategy for these companies.