Tom Whitelaw FBL 17J

Shealtain: The
Shetland Islands’
new Single Malt
Scotch Whisky
1
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Contents (relevant points covered in each slide are stated in each footer)

1. Title 18. Information Search: Existing Market 34. Packaging, Colours, Logos
2. Contents 19. Choosing Shealtain 35. Reference Price and Pricing
3. Shealtain Whisky 20. Customer Lifetime value: Overview 36. Price sensitivity, clout, and vulnerability
4. Customer needs 21. Perceptual Maps 37. Demand of Service Outputs (of
5. Focus on Customer needs 22. Perceptual Map: Price and Brand Size Channels)
6. Senior Leadership 23. Perceptual Map: Distinctive branding vs 38. Distribution Channels
7. Employee support of customer needs Complexity of Taste 39. Implementation of market coverage
8. Involving Customers 24. Perceptual Map: Personality vs Sense of 40. Communication objectives
9. Brief Summary of Shetland Islands Adventure 41. Use of Social Media
10. Objectives 25. Targeting: Young Professionals 42. Budget for Advertising
11. Shealtain’s KPIs 26. Targeting: Creatives 43. Messaging and Media
12. KPI: Profit Summary 27. General Positioning Statement 44. Measurement and attribution
13. Market Research: New Market 28. Points of Parity and differentiation 45. Demand prediction
14. Market Research: Existing Market 29. Competition: Glenfiddich 46. P&L
15. Consumer Journey: New Market 30. Competition: Kilchoman
16. Information Search: New Market 31. Branding Portfolio
17. Consumer Journey: Existing Market 32. Product Name and Brand associations
33. Jack Daniels: A human face of the brand
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Shealtain Whisky
The Name: Shealtain is the Gaelic name for the Shetland Islands.
The Products
• Blended Whisky: This signature blend from Shetland will
be the initial product produced by the distillery. This is
because Single Malt Scotch must be aged for 3 years at least.
This will continue after the Single Malt is produced as a
lower cost alternative.

• The Single Malt: this will be the flagship product for

Shealtain. There will be variants based on age, type of cask
(bourbon, sherry etc), and level of peat.

• Merchandise/Tours: There will be branded bottles, glasses,

decanters, clothing sold on site and on line for those that
make a strong connection with the brand. The distillery will
also have a visitor centre and all products will have an invite
to come and visit Shetland
Points 3.3
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Customer Needs
• The Need for sophistication: “Man cannot live on bread
alone”. People need to add sophistication to their lived
experience and consuming luxury products is a way to meet
this need. The craftsmanship and strong cultural heritage
associated with Scotch makes it an elaborate and deep product
that allows the consumer to invest time to create a meaningful
bond between the product and themselves that extends
beyond the taste and simple act of drinking. Beer, for
example, cannot offer this same cultural connection.
• The need to pamper: Treating oneself is also important and
the complex taste and exclusivity of Scotch make it a treat
which is reserved for special occasions and gift giving.

Points 1.1
 5

Focus on Customer needs:

Senior Leadership
• The senior leadership have an important role to play in
meeting customer needs. Primarily, they need to ensure a high
quality product but also strong brand with vivid associations
to Scotland and a strong human element of the story behind
the founders of the distillery
• Monthly journal/vlogs about their life in Shetland and how
the distillery is going
• Supporting the community and environment in Shetland:
Recruiting locally, sourcing locally, partnering with local
community organisations: sponsored charity events

Points 1.2
 6

Employee support of
Customer needs
• All employees work in the distillery for at least 1 day every 6
months, following the production of a “run” of whisky. They
will then record which barrel of whisky they helped make and
will receive a bottle from that barrel, so it needs to be good!
• Employees to feature in the monthly journals about the
distillery. Making a large subset of the employees a ‘face’ of
the product will motivate them to ensure it is high quality and
satisfying to customers
• The human image of the brand is also satisfying to new
customers who may not know much about whisky but like
interesting stories/people and are curious about the process

Points 1.2
 7

Involving our Customers

• All full size bottles come with an invitation to have a free glass
of whisky at the distillery on Shetland. Even though uptake of
this is low, it creates a connection between the consumer, the
bottle, and the place.
• When blends are purchased, customers can choose to reserve
a bottle of a single malt (which is still aging). This helps with
cashflow and helps customers understand the long process of
making whisky.

Points 1.2
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Brief summary of the

Shetland Islands
• The Shetland Islands are the most distant part of Scotland,
being closer to Norway than the mainland. This gives them
unique cultural significance as the most prescient example of
the remote, rugged, and ancient landscape of Scotland.
• There are ancient stone circles and remains of the Viking
settlements (it used to be Norwegian) that remind us that
these islands have been inhabited for millennia.
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Objectives
• The primary objective is to become profitable within 5 value Shealtain’s position as one of only a few
years. This seems like a long time, but Scotch takes Single Malts from Shetland and the most remote
time to age so there is a long time before the large Scotch in existence. They will be attracted to the
revenue generating product lines are available. personalised story of the distillery’s development
and the ability to get involved.
• Within this time frame the distillery will probably not
be selling large quantities of product so significant
market share is not a short term objective. • The Existing Market of regular single malt whisky
• The primary market is henceforth referred to as The drinkers is expected to be a source of sales as some of
New Market. This is located in UK, North America, this segment will respond to elements of Shealtain’s
Australia, and New Zealand: places with a cultural and brand. However, they will be a secondary target
historical connection with Scotland/Britain rather than compared to the New Market. This market, however, is
the Asian markets that focus more on the brand value very big so a small fraction could become worthwhile
of highly advertised mass-market brands. in revenue terms to a new player like Shealtain. In 2015
Global Whisky sales were ca.£7bn.
• There are two main target groups in the New Market
• Young Professionals: This group already drinks
some whisky and responds to the cultural
heritage of Scotland and Scotch, but will be
attracted to the ‘craft-beer’ and ‘start-up’ aspect
of this new whisky.
• Creatives (of all ages): This group values
uniqueness and distinctiveness and will therefore

Points 1.3
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Shealtain’s KPI’s See Summary

Key: Share of
New Market Size requirements

Revenues Unit Sales N. Market share

Traditional Market Global Scotch
Size Whisky Sales ~£7bn
Market Share

Visitor Centre/ Average spend Physical store

Merchandise
Number of
Web store
Profit visitors
Advertising
Royalties Website traffic

Revenue per Ad

Property, Plant,
Start Up
Equipment
Sales Force
COGS
Production
Costs Operations Maintenance
Advertising

Discounts Points 1.4

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KPI: Profit, summary

• The Costs are fairly predictable and difficult to reduce, so the

revenue is the only variable part of profit.
• With the New Market of non/little-whisky drinkers, we seek
to gain loyal customers that build a strong connection with the
brand. As a result, we are looking for a high share of
requirements and a heavy utilisation
• Increasing market share amongst existing whisky drinkers is
mainly based on penetration share: We are intentionally
appealing to their sense of adventure to try something new, as
a result we do not expect loyalty from these customers as they
may then continue to try new whiskies after they try Shealtain

Points 1.4
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Market Research: New

Market
• Conduct exploratory research into the preferences of the
target groups that do not drink much whisky. What drink
preferences could a whisky, positioned in the right way,
satisfy?
• What non-flavour aspects of drinks are attractive? If we
assume the consumers will not become expert tasters in the
short – medium term, what would attract them to a brand and
make them stay, besides a taste that was good enough?
• What is the likelihood that these customers would buy other
products from the brand or engage with the people
represented in the marketing materials? Are these other
products a way in to the brand?
• How aware are these consumers of existing brands?

Points 1.5
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Market Research: Existing

Market
• Conduct Confirmatory research into the factors that make a
drinker loyal to a brand and what could make them try a new
whisky. Are there preferences which are not currently served
by the market (geographic origin, taste profile, corporate
personality)
• Where would Shealtain fit into their collection?
• Where (marketplace) are they most likely to try a new whisky,
as opposed to the place they go to replenish supply of their
usual drink.

Points 1.5
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Consumer Journey: New Market Points 1.6

Consumers are Shealtain is advertised Consumer either selects Shealtain becomes the
browsing one or several with a personal story Shealtain as their luxury only Whisky they are
relevant subjects about the founding of product or buys it exposed to and loyalty
(sophistication, luxury, the distillery, branded alongside related offers and company
Scotland) products are bundled or products (Scottish engagement maintains
offered holiday) loyalty
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Information Search: New Market Points 1.7

These consumers do not often look for whisky directly: They need to be offered whisky at a time when
they are looking for sophisticated products (for themselves or a gift), looking to pamper themselves,
looking into travelling to Scotland (or currently travelling there), especially Shetland (and the Orkneys, a
nearby archipelago), or otherwise in a situation where a luxury purchase is relevant.
Advert, Post Purchase:
Relevant online Purchase
Sponsored Online Store Loyalty
activity
Story discounts
Tourist Post Purchase:
Office/flyer stand Visitor centre Purchase Loyalty
in Scotland discounts
Post Purchase:
Airport Duty Free Sample Purchase Loyalty
free (in UK) and promotion discounts

Post Purchase:
Online store,
Receive as gift Enjoy! Purchase Loyalty
Visitor centre
discounts
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Consumer Journey: Existing Market Points 1.6

Consumers browse a Shealtain is advertised Consumer either Shealtain joins their set
medium-large range of with an introductory switches to Shealtain or of familiar brands from
familiar brands for next offer or bundled with adds it to their basket which they select
purchase: They have a their familiar purchase: purchases
routine foot in the door

Points 3.3
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Information Search: Existing Market Points 1.7

These consumers already have whisky buying patterns (online, at airport duty free etc) so they need to
be offered Shealtain when they are doing this.
NB: Post purchase loyalty offers are not included here because, although they will be offered to all Shealtain customers, we
do not expect experienced whisky drinkers to be significantly interested

Relevant online Advert, Purchase

Online Store
activity Discount

Online Store,
Whisky Festival Information Visitor
Storecentre
at Purchase
stand card
Festival

Airport Duty
free (in UK) Free Sample Purchase
and promotion
Liqueur store
Points 3.3
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Choosing Shealtain
Product Characteristics Existing New Market Main Shealtain
Market Preference competitors
Preference
Price M M High Medium
Flavour Complex Medium Complex Medium
Distinctiveness L H Low High
Traditional Brand value H L High Low
Independent L H No Yes
Personal Brand identity L H None High

• Existing consumers have experience with the category and will be able to weigh up compensatory factors, but will be attracted to
the brands which are most prominent.
• New consumers have little awareness of the existing brands and so can be captured by distinctive marketing and branding.
• Shealtain is positioned to appeal to non/low Whisky drinkers by emphasising its independent nature, its non-traditional branding
and the personal nature of the story of its creation.

Points 1.8
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Customer Lifetime value:

Overview
• Existing Market: The lifetime value of these customers is low
as Shealtain will struggle to retain them when faced with such
large competitors and their strong branding which appeals to
this customer segment
• New market: Because Shealtain introduced these consumers
to whisky, there is an opportunity to strengthen that bond and
retain them over a long period, upselling merchandise and gift
bottles and potentially inducing them to visit.

Points 1.9
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Customer Lifetime value

• Existing Market: As Shealtain is not aiming to gain customer
loyalty, we expect that a customer that purchases one bottle
may buy only around 1 bottle of the single malt per year.
Life time value (Contribution: £63.20)
• New Market: once loyalty is established, we expect 3 bottles
per year and 2 further purchases as gifts in addition to some
merchandise.
Life time value (Contribution: £1,142)

Points 1.9
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Perceptual Maps
• The following perceptual maps will plot the main target
segments for Shealtain (in boxes) as well as a generalised view
of traditional Single Malt scotch drinkers (for comparison)
and the most meaningful competitors to Shealtain.
• Although there are more competitors as well as more market
segments, a subset was chosen to avoid redundancy on the
perceptual map
• The brand positions are based on author’s opinion
• The target market segment sizes were calculated using UK,
Canadian, USA, Australian, and New Zealand census data and
extrapolations from UK demographic and employment trends.
Spot checks for accuracy supported this method’s validity.
Points 2.1
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Perceptual Map: Price and Brand Size

Large Established Brand

Johnnie Walker
Famous JW: Red JW: Black JW: Green JW: Blue
Grouse
Jameson Trad. Single malt Glenfiddich
Scotch Drinkers Laphroaig
Jack Daniels Talisker

Bruichladdich
Edradour
Inexpensive The English Expensive
Whisky
Kilchoman

Young Prof

Creatives Shealtain

New Brand Points 2.1

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Distinctive branding vs Complexity of Taste

Traditional Whisky Branding

Edradour
Jameson Glenfiddich
Famous The English Trad. Single malt
Grouse Whisky Scotch Drinkers
Laphroaig
Jack Daniels Kilchoman
Talisker
“Acquired” or complex
Easy Drinking
Taste
Johnnie Johnnie
Walker Red Walker Blue
Shealtain
Shealtain Future products

Creatives Young Prof Young Prof in future

Bruichladdich

Alternative/distinctive Points 2.1

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Personality vs Sense of Adventure

Personality: Human face of brand

Creatives Young Prof

Jack Daniels
Shealtain

Edradour Kilchoman

Stability Johnnie Adventure

Famous Walker
Grouse Bruichladdich
Jameson Trad. Single malt
Laphroaig Talisker
Scotch Drinkers
Glenfiddich
The English
Whisky

Institutional Brand Points 2.1

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Targeting: Young
Professionals
• Young professionals have a sense of luxury, and have a
willingness to pay for it. So the overarching strategy for targeting
them is to aim this taste for luxury towards Shealtain, as opposed
to other luxury products
• They prefer brands that are not ‘stuffy’ (established, large
corporations, perhaps seen as unimaginative). The ‘start-up’
nature of Shealtain is a big draw.
• They also value a human face to the brand. Being introduced to
the personal story of the founders of the brand is very appealing.
• As their tastes develop, it is important for Shealtain to offer them
products that follow their changing preferences.
• YPs were defined as those between 21-34 years old with a
Socioeconomic classification 1-1.2 on UK ONS scale and number
4.9m across the targeted regions. A 0.4% penetration would make
this segment worth £2.35m/year (see Demand Prediction)
Points 2.2
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Targeting: Creatives
• Creatives have an appreciation for special, unique, and
distinctive products but these do not have to be especially
luxurious and need not be expensive.
• They value the creativeness of a brand more than its age and
position in the market.
• Brand integrity is very important to creatives: they need to feel
that the brand is creative too. Shealtain will need to
continuously update its products (perhaps with limited
editions) in order to retain the interest of creatives.
• Defined as those working in a subset of creative industries as
defined by UK ONS. Adjusted to avoid overlap with Young
Professionals. They number 1.05m across Shealtain’s target
regions. A 0.3% penetration would make it worth £0.38m/yr
Points 2.2
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General Positioning
Statement
• Shealtain is a new whisky from an ancient place. It
is starting something exciting and wants to bring its
customers along to enjoy the experience. It is a
‘start-up’ Whisky and this is a big draw for creatives
and young professionals
• Shealtain shares some similarities with other brands.
For example, Talisker (see next slide) also has a
strong sense of adventure in its marketing and
Bruichladdich (right) has a very modern image
• However, it is the combination of these attributes at
the same time which sets Shealtain apart

Points 2.3
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Points of Parity and

differentiation
• Shealtain is a luxury. It is a Single Malt Scotch Whisky: a
product that takes years to produce and requires a very
specific set of ingredients. We cannot deviate from the Scotch
recipe or production method without forfeiting the right to
call it Scotch. It will have a premium price and will not, in its
core range, be an ‘acquired’ taste. Like other whiskies, it will
also exploit its Scottish roots
• Where Shealtain aims to differentiate itself is with non-
traditional branding, a strong human face of the brand, and
sense of adventure. No other brand combines all of these,
and it is Shealtain’s view that only this combination will entice
the targeted New Market into purchasing and enjoying Scotch.
Talisker: an established brand with a send of adventure

Points 2.3
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Competition:
Glenfiddich
• Glenfiddich is representative of the
large well established single malt scotch
brands
• It has a strong heritage and unchanging
set of products that are well known in
the existing market
• Glenfiddich is a market leader, however
Shealtain is not challenging it directly.
• Glenfiddich does not attract many new
consumers to Scotch so Shealtain is
targeting these non-regular drinkers.
• Once Shealtain becomes more
established, we will target some of
Glenfiddich’s customers, but this will
require a period of brand building.
Points 2.4
 30

Competition:
Kilchoman
• Kilchoman is a new whisky set up
within the last 15 years. It therefore
has a roughly comparable ‘creation
story’ to Shealtain. It is also a
challenger to the major brands.
• However, Kilchoman is marketed
as a mainstream whisky brand and
there has been no effort to make a
personal connection with the
founders and staff, nor to attract
new consumers to whisky.
• These are points where Shealtain
will be more appealing to the New
Market Points 2.4
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Branding Portfolio
• Shealtain is the name of the distillery and will, over time, increase the
number of separate products offered. This will be a Branded House
structure
• Initially there will be a Signature Blend (whilst the first Malts age) and the
visitor centre and Merchandise shop will be operational. The Retail price
will be £30, pricing it well below the typical Single Malt range of £40-£60
• After 3 years the flagship products, the Single Malts, will become
available. These will start from £50, increasing in price with age and
limited editions.
• The Single Malts will available to buy before they are ready. Customers
will be told from which barrel they will receive their bottle(s) to create a
connection and an appreciaton for the craftsmanship of the process.
• The strong Shealtain brand will allow us to launch new products that can
benefit from this strong start.

Points 2.5, 3.3

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Product Name and Brand

associations
• The Distillery will be called Shealtain (Scottish Gaelic for
Shetland) and all the products will carry this name.
• As Shealtain will be a Scotch distillery on Shetland, it will
evoke the ancient, noble heritage of Scotland as well as the
adventure of the beautiful and rugged landscape on Shetland.
• The modern branding and human story of the distillery will
induce comparisons with the energy of start ups and the
craftsmanship of the ‘craft beer’ movement. Jack Daniels,
despite being an old and very large business, creates this
human image very well and Shealtain will seek to achieve
similar success.

Points 3.1
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Jack Daniels: A human face of the brand

• Jack Daniels is not a new
company but they have managed
to establish a strong brand
connection both with Jack
Daniels himself as well as the
current staff at the distillery.
• Shealtain aims to create this same
human story of the brand to
create a loyal and persistent bond
with our customers

Points 3.1
 34

Packaging, Colours, Logos

• The Shealtain Single Malt bottle is break from the traditional
whisky designs it has a monochrome design, modern, eye
catching text, but still evokes the romance and heritage of
Scotland with its image of a standing stone (this is Skellig
Rock from Shetland)
• The main colour schemes for all products will be the
contrasting black and white with each release having a
different single colour incorporated in the image. In this
example (left) the streak of mist are light blue and this appears
again on the lid of the bottle to allow easy identification.

Points 3.2
 35

Reference Price and Pricing

• The price for an ‘standard’ 70cl bottle of Single Malt Scotch
Whisky starts at around £40 and rises to around £55 before a
noticeable increase in prestige, quality, or exclusivity need to
be signalled.
• Distilleries release Whiskies that are incrementally different
(different age, different barrel) and the prices move between
bands.
• Shealtain’s first Single Malt will be £50 showing that it is not
the cheapest in its band but not the absolute most expensive.
Kilchoman, a young distillery prices its main Malt at £50.
• The blends will be £30, signalling their lower luxury

Points 3.4, 3.6

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Price sensitivity, clout, and

vulnerability
• Shealtain’s main brands (Blends and flagship Single Malts) will
be price takers as the market prices are relatively well
established. Being priced accurately also increases chance of
existing Whisky drinkers from adding it to their basket.
• In the luxury industry, price is a strong indicator of quality
and prestige so Shealtain is not expected to be sensitive to
reductions in competitors prices, however, if the rest of the
market increased its price then we would have to follow, lest
we become left behind as a low cost option
• Limited edition releases have more freedom with pricing as
there are no strong benchmarks.
• Shealtain, like all other single players, has no clout to increase
the standard prices within each ‘band’ of Whiskies.

Points 3.5
 37

Demand of Service Outputs (of Channels)

Bulk Spatial Delivery Variety Customer Informati Channel
Breaking Convenie Service/ on Yes/No
nce experience
Online Yes Yes Yes Yes Good Good Yes
Airport Yes Yes* Yes Yes Good Good Yes
Whisky Yes No Yes No Good Good No
specialist
General Yes No Yes No Adequate Adequate No
Liquor

• Our distribution channels need to offer small quantities (single bottles) of Shealtain and location is important as our main target segment (the
“New Market”) will not seek out remote specialist stores: so we need to be in places where they already come into contact with luxuries. The
airport stores (*) are spatially convenient because the potential buyer is passing time in the departure lounge anyway so the store needs to be in a
part of the terminal with high footfall.
• Variety is crucial because our target market does not start their customer journey looking for specifically whisky, so our products need to be
amongst other products that may have been initially of interest for the consumer (like other spirits or luxuries)
• A good customer experience with an attractive display and informative staff that can introduce buyers to Shealtain is also very important as the
customer is trying something new and may have questions. Excellent adverts can ease these concerns upfront online.

Points 3.7
 38

Distribution Channels
• The main distribution channels will be mainstream online market
places (Amazon etc), our own web store, and duty free shops in
large airports
• These have been selected because this is where non-whisky
drinkers are most likely to come into contact with Whisky:
browsing duty free luxuries at the airport or following a targeted
advert online.
• The airport stores have high visibility and are limited in number
and can therefore be realistically stocked with Shealtain’s limited
supply. They are as much for display as actual sales.
• Specialist stores are not a priority because our target market, by
definition, does not shop here.
• When Shealtain becomes more established and production scaled
up, we will seek to be stocked in specialist shops and large alcohol
retailers.

Points 3.7, 3.8

 39

Implementation of market
coverage
• As mentioned previously, Shealtain will initially be distributed
in the UK, Canada, the North East United States, Australia,
and New Zealand. This is because all these places have
cultural connections to the UK/Scotland and will respond to
this aspect of the brand. Demographically they are also similar
so the same population of young professionals and creatives
can be reliably found in all locations.
• The physical presence in major UK airports will lead the
others by 6-12 months to give time to pilot displays and
branding material.
• The online adverts can be easily expanded to cover individuals
that fit a target profile, regardless of location.

Points 3.9
 40

Communication objectives
• The main communication objective is to create awareness of
the brand.
• Establishing an interest in the people of the distillery, their
story, and the ‘start-up’ adventure taking place at the northern
edge of Scotland will bridge the gap between the New
Market’s existing interests and Scotch Whisky.
• The brand and the story is the main message being
communicated so as to not be seen to be simply pushing a
product. The consumer will look further into the brand and
will hopefully be keen to acquire their own piece of the story:
by buying a product.

Points 3.10
 41

Use of Social Media

• The advertising will be via social media and targeted adverts. The
initial campaigns will be brand building: telling the story of the
distillery and encouraging consumers to find out more. The
personal nature is intended to create a lasting connection that also
spreads by ‘word-of-mouth’ within social groups. This will make
the investments go further.
• Shealtain does not have the budget to run a meaningful physical
advertising campaign. Social media usage (as in, the specific sites
used: Facebook, Instagram etc) are common across all our target
regions so this is the best place to advertise.
• Browsing social media (and certain topics like vacations) is also
when individuals will be most likely to respond to a personal
story, rather than whilst browsing an online store, for example.

Points 3.11
 42

Budget for Advertising

• The combined New Market size is 5.9m and the cost of 1000 impressions for a 30s
promoted video on most social media platforms is roughly £24 ($30) and £16 for a
picture. This means it would cost c£100k for the entire New Market to see our post
once.
• The sales targets are between 5000-15000 for the first few years, so posts can be focused
on a narrower, more optimal social profile: “New Market” but also interested in other
luxury products, adventure holidays, or Scottish vacations.
• The total advertising budget will be £70k in first 2 years rising to £150k in the year
before the Single Malts are ready then £200k when the operation has increased in size in
year 6. This will be split 70%-30% between sponsored posts on social media and targeted
adverts on websites such as travel sites or articles related to Shealtain.
• The increase in spend coincides with the Single Malts because this is the main, most
exciting product and it is not feasible to sustain a 3 year run-in to their release, whereas
announcing they are 1 year away is a short enough time-gap to sustain excitement

Points 3.11
 43

Messaging and Media

Social Media
• Shealtain will work to reach out to new customers via a personal story told on
social media (and on the website). This is intended to create lasting connections
with consumers that reduces the need for repeated advertising to the same
individual.
• Because these consumers have not previously been very attracted to whisky itself,
the advertising will try to appeal to their sense of adventure, their appreciation of
authenticity, and the pleasure of being part of a personal story.
• For example, an advert may say “Would you make whisky at the end of the
earth?” [referring to Shetland’s remote location]. The “end of the earth” part of
this sentence is that which captures their attention, and it brings the “whisky”
aspect along with it. The advert may invite the reader to “Join us” either literally by
visiting or by purchasing some product.
Targeted adverts
• Adverts would target individuals with the New Market profile differently depending
on what website they are on. If they are browsing other luxury products then the
advert will be more aimed at making a sale, whereas someone researching an
adventurous holiday would be invited to learn more about Shetland on the
Shealtain website

Points 3.12
 44

Measurement and attribution

• As Shealtain will use online advertising mainly, there are increasingly
sophisticated ways to attribute sales. Some services allow it to be known
what adverts a purchaser has been exposed to, so this would be tracked in
real time whether they clicked through to a sale straight away or returned
to website later
• As we are initially trying to just increase awareness, sales would not be the
only way to measure success. The number of clicks on the advert to our
own website or social media profile, and how often each user returns to
the profile or website would also be tracked to see which types of media
create the strongest connections. In addition to this, overall traffic to our
website, as well as ‘likes’ of our Facebook page, Instagram pictures, and
‘shares’ or our posts will also be used as proxies for engagement.
• A/B testing will be employed to see which adverts create the strongest
response
• Each new campaign will be run for 4 weeks at a time and cycled through
each region (UK Canada etc) so that regional preferences can also be
revealed.

Points 3.13
 45

Demand prediction
• Kilchoman released their first Single Malt Scotch in September 2009 and sold all 8,000 bottles in 2
weeks.

• 8000 bottles is therefore the target for Shealtain for the first 6 months (to be conservative). In the years
leading up to this we expect to sell a smaller amount of our signature blend. The brand is much younger
at this time and the blends are less luxurious and will not excite the target market as much. But it is
important to have a product to offer.

• We expect loyal customers to purchase 3 bottles/year once loyalty is established. For example, this
means that we need 5,300 loyal customers to sell 16,000 bottles. This drives our estimation of the value
of the different target segments.

• The Single malt will be available to pre-order whilst it is aging. So this will help increase orders.

• We expect sales to grow as the brand becomes more well known and production is scaled up to meet
this demand. Blends will not be advertised as much and will not experience the same growth

• Our visitor centre expects to peak at c9000 visitors per year (based on figures from Scottish Tourism
Bureau) as the distillery will become one of the main attractions on the Shetland Islands so a significant
faction of tourists are expected to visit.

• Shealtain will partner with local tourist operators as part of ts support for the local community. We
therefore expect royalties from the sales and adverts. This is a small fraction of total tourist spend on
Shetland and is forecast at c£35k/year.
Points 3.14
 46

P&L
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Blend Sales (units) 0 5000 6000 7000 8000 9000 10000 10000 10000 10000 10000
Single Malt sales (units) 0 0 0 0 16,000 18,000 20000 25000 30000 35000 40000
Visitor centre units 0 2000 4000 5000 6000 7000 9000 9000 9000 9000 9000

Blend Revenue £0 £150,000 £180,000 £210,000 £240,000 £270,000 £300,000 £300,000 £300,000 £300,000 £300,000
Single Malt Revenue £0 £0 £0 £0 £800,000 £900,000 £1,000,000 £1,250,000 £1,500,000 £1,750,000 £2,000,000
Visitor centre revenue £0 £14,000 £28,000 £35,000 £42,000 £49,000 £63,000 £63,000 £63,000 £63,000 £63,000
Tourism Royalties 0 0 £ 34,379.00 £ 34,379.00 £ 34,379.00 £ 34,379.00 £ 34,379.00 £ 34,379.00 £ 34,379.00 £ 34,379.00 £ 34,379.00
Merchandise 0 £ 47,000.00 £ 51,700.00 £ 56,870.00 £ 62,553.00 £ 68,792.00 £ 75,650.00 £ 83,213.00 £ 91,524.00 £ 100,646.00 £ 110,688.00
Total Revenue £0 £211,000 £294,079 £336,249 £1,178,932 £1,322,171 £1,473,029 £1,730,592 £1,988,903 £2,248,025 £2,508,067

Blend COGS £0 £100,000 £120,000 £140,000 £160,000 £180,000 £200,000 £200,000 £200,000 £200,000 £200,000
Single Malt COGS £0 £0 £0 £0 £480,000 £540,000 £600,000 £750,000 £900,000 £1,050,000 £1,200,000
Visitor centre costs £50,000 £50,000 £50,000 £50,000 £50,000 £50,000 £50,000 £50,000 £50,000 £50,000
Merchandise COGS £ 23,000.00 £ 25,300.00 £ 27,830.00 £ 30,611.00 £ 33,664.00 £ 37,020.00 £ 40,721.00 £ 44,788.00 £ 49,252.00 £ 54,166.00

Blend Contribution £0 £50,000 £60,000 £70,000 £80,000 £90,000 £100,000 £100,000 £100,000 £100,000 £100,000
Single Malt Contribution £0 £0 £0 £0 £320,000 £360,000 £400,000 £500,000 £600,000 £700,000 £800,000

Visitor centre contribution £0 -£36,000 -£22,000 -£15,000 -£8,000 -£1,000 £13,000 £13,000 £13,000 £13,000 £13,000
Merch Contribution 0 £ 24,000.00 £ 26,400.00 £ 29,040.00 £ 31,942.00 £ 35,128.00 £ 38,630.00 £ 42,492.00 £ 46,736.00 £ 51,394.00 £ 56,522.00

Gross margin £0 £38,000 £98,779 £118,419 £458,321 £518,507 £586,009 £689,871 £794,115 £898,773 £1,003,901

Start Up costs £4,000,000

Advertising £70,000 £70,000 £150,000 £150,000 £150,000 £200,000 £200,000 £200,000 £200,000 £200,000
Operating Costs £250,000 £250,000 £250,000 £250,000 £250,000 £250,000 £250,000 £250,000 £250,000 £250,000

Operating profit -£4,000,000 -£282,000 -£221,221 -£281,581 £58,321 £118,507 £136,009 £239,871 £344,115 £448,773 £553,901

Points 3.15