House of Commons - Scottish Affairs

Select Committee on Scottish Affairs First Report

THE DRINKS INDUSTRY IN SCOTLAND

12. Policy support, image and tourism

134. In June 1999, following what it described as "a rigorous programme of research, consultation and analysis",[187] Scottish Enterprise National (SEN) launched a major new policy support strategy for Scottish Food and Drink,[188] based on SEN's existing cluster approach. We sought to establish whether, with the increasingly global nature of industrial competition, there were any signs that the strategy was beginning to make any impact in improving the ability of Scottish companies to compete internationally.

135. SEN has developed a number of activities designed to upgrade the competitive base of food and drink companies in Scotland. The table below indicates something of the range of programmes designed by SEN to meet the five key objectives it has set for the cluster strategy.

Key Objective	Specific Programmes
Grow leading companies	Graduate Placement Mentoring Learning journeys
Building Scotland's reputation in food and drink	Scottish Food and Drink International Consumer and Market intelligence Centre Market Advantage Meet the Buyer
Exploiting Technology	Food Innovation Network Functional Food
Building an Efficient Supply Chain	Loadshare Seafood Scotland Quality Meat Scotland
Human Resource Development	Food Skills Group Scottish Food Skills Food Learning Network

136. We recognise that the strategy developed by SEN aims to assist the development of the Scottish food and drink industry over the long-term, and that we are presently only at the early stages of this process. But we had some reservations about two aspects. Firstly, there appears to be a paucity of information over how the approach will progress. Secondly, we were not completely convinced that the philosophy underlying the strategy necessarily represents the best way to take matters forward. With regard to this second point, it seems to us that the strategy does not always aim to realise the full potential of the drinks industry.

137. The memorandum submitted by SEN[189] was optimistic in tone. The actual targets set by SEN for food and drink growth, most notably a trebling of exports, seem to us to be ambitious. The adoption by SEN of what subsequently proved to be very unrealistic, indeed unachievable, targets for the growth of new enterprises was recently heavily criticised in a review of its flagship new firm formation policy, the Business Birth Rate Strategy (BBRS).[190] The target of trebling exports looks even more ambitious than those set by the BBRS.

138. SEN were unable to provide evidence of progress towards the very ambitious growth targets it has set, a problem attributed to the time lag before official statistics are published. However, this reliance on official statistics means that there will always be a considerable lag before SEN can assess the success or otherwise of its approach. We were surprised that SEN did not appear to have even some basic internal method, perhaps through the use of its own food and drink contacts, by which it could measure progress. SEN is a public agency and so the spending of public money is involved in its activities. A basic requirement should be that SEN was able to measure progress towards targets. In the absence of information of this sort it is difficult to determine what level of resources are required to support the strategy. Additionally, while the relatively short time that the strategy has been running may be relevant, SEN could only provide limited anecdotal evidence of instances where companies had benefited from its assistance.

139. One item on which almost all of those who submitted evidence agreed was the premier position of whisky as Scotland's best-known product in the international marketplace. Several witnesses argued that the positive image of Scotland which whisky helps promote could have important spin-off benefits for other Scottish products.

140. The first of these was in helping to promote Scottish tourism. Several tourist bodies clearly recognised the distinctive position whisky holds in relation to international perceptions of Scotland. The Scottish Tourist Board itself, for example, argued that whisky is an important Scottish icon, that people recognised whisky as a quality product that comes from Scotland and that it helps keep Scotland at "front of mind", especially in overseas markets.[191] The Highlands and Islands Tourist Board employs the "iconic element"[192] of whisky in its promotional literature.

141. The other important way in which this image of whisky generates spin-offs benefits for other sectors is in helping create an image of Scotland as a producer of natural, high quality and high value goods. SEN was well aware of the importance of whisky in this respect:

193

We find it curious then that SEN's policy framework does not attempt to make greater use of whisky, both to promote the sale of other high quality Scottish food and drink products in international markets, and as a means of increasing tourism to Scotland.[194]

142. Operation of the cluster policy excludes the large whisky producers, on the grounds that public sector support is inappropriate given the scale of these companies. We do not argue with this proposition. The SWA itself said "We do not need massive support from Scottish Enterprise".[195] SEN does have a long-term aim of developing closer involvement between the large whisky companies and the wider food and drink cluster,[196] but this is mainly in order to allow small companies to supply more to the industry majors. However, limiting the involvement of the large whisky companies in this manner seems to us to miss the major opportunity of using the positive image benefits generated by whisky to support sales of other Scottish products. It also ignores the salient fact that whisky accounts, according to SEN's own figures, for 35 per cent of all sales of the Scottish food and drink industry.[197] SEN seem to recognise that other Scottish producers could piggy-back on the activities of the whisky majors, and could make much more of this potential.

143. The evidence given by SEN stated that Scottish companies, and therefore SEN's own strategy, will only succeed through the development of high value-added, differentiated, niche products.[198] Scotch whisky is very evidently an example of exactly this sort of product, and one in which Scotland has unique image advantages in international markets. We firmly believe that SEN should treat the whisky industry as an integrated whole rather than a sum of segregated parts. A section of SEN devoted to Scotch whisky might be a step forward. Promoting the distinctive, high quality aspects of whisky would benefit both the industry majors and smaller niche whisky companies. There are clear possibilities for extending the approach to both beer and bottled water, and over time to cover a wider range of Scottish products. We therefore urge SEN to consider how it might take greater advantage of the unique position of whisky to increase international sales of other quality Scottish goods, and to increase tourism to Scotland.

187 Ibid. p.166, para 2.1.1. Back

188 The strategy is described in detail in Ibid, pp.166-171. Back

189 Ibid, p.166. Back

190 "Promoting Business Start-ups: A New Strategic Formula". Report by the Fraser of Allander Institute for Scottish Enterprise National, June 2001. Back

191 HC 114-v, Session 2000-01, p.263. Back

192 Ibid. Back

193 HC 114-iv, Session 2001-01, Q.544. Back

194 Regarding tourism, the Highlands and Islands Tourist Board argues that "there is not as strong a link as might be expected between Scotland's two great consumer products". See HC 114-v, Session 2000-01, p.263. Back

195 HC 973-ii, Session 1999-2000, Q.181. Back

196 HC 114-iv, Session 2000-01, p.169. Back

197 Ibid. Back

198 HC 114-iv, Session 2000-01, Q.537. Back