Alcohol Industry, External Environments
Diageo is a company that produces and distributes alcoholic beverages. Its products include all three branches of this industry – spirits, wine and beer. The brands that the company produces include well-known names like Smirnoff, Johny Walker scotch whiskey, Baileys, Captain Morgan rum, Tanqueray gin, Guiness beer, Don Perignon champagne, and many others. One can find the products produced by this company in nearly 180 countries all around the world. The company’s offices are located in 80 countries and employ 20,000 people. Manufacturing facilities are spread out all around the world, including Great Britain, Italy, Australia, Latin America, Canada, Ireland, United States, Caribbean and India (Diageo, 2011).
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Manufacturing and sale of the Alcoholic Beverages is taxed. “A tax is imposed upon the privilege of engaging in business as a manufacturer or as an importing distributor of alcoholic liquor” (USLegal, 2011). For example, in the year of 2008, the Alcohol and Tobacco Tax and Trade Bureau collected around $17,4 billion dollars in taxes. It made this bureau, the third largest tax gathering organization in the federal administration (Kwon, 2010).
There are several reasons why the excise taxes are imposed on the liquor products. First of all, it slightly increases the price of the products. According to the National Institute on Alcohol Abuse and Alcoholism, lower prices on the alcohol beverages lead to the increased consumption of the alcohol mainly among the underage drinkers. This usually leads to the traffic crash fatalities, increase of the level of crimes and alcohol associated health complications. The second reason for the taxation is the revenue that may be used for public health, safety programs, prevention of underage drinking, enforcement of liquor laws, and prevention and treatment of alcoholism (Center for Science in the Public Interest, n.d.).
Government enforces the three-tier alcohol industry products distribution system. Manufacturers and importers sell their products to the wholesalers, then the wholesalers sell them to the retailers.