SINGLE MALTS HERE TO STAY
From the
late 1990s onwards there was a predictability about Scotch Whisky sales. Almost
every year the Scotch Whisky Association (SWA) would announce another record-breaking
performance in terms of volume and value in export markets around the world.
Scotch was thriving and achieving growth in a comfortingly diverse range of
locations.
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And by ‘Scotch’ the implication was, essentially, Blended Scotch. This is because-- increasing interest in single malts notwithstanding-- in terms of pure statistics, Blends have remained the big game in town on a global basis, still accounting in volume terms for some 83% of all scotch sales this year, 2015. What was not brought out by the SWA was that Blends had accounted for 91% of all scotch sales in 2010 and 90% the year after next, 2012. Single Malt sales had shot up 26% in value, over 2012!
Then, in
September 2014, the SWA declared that all was not so rosy in the scotch whisky
garden. A statement from the SWA declared: “While scotch whisky exports to some
key markets, such as France and Taiwan, increased in the first six months of
2014, the overall trend was downwards with economic headwinds and uncertainty
having an impact.”
This was
followed on April 1 this year by the news that “weaker economic conditions and
political volatility in some markets saw the value of scotch whisky exports
decline 7% to £3.95bn in 2014 from £4.26bn the previous year”, although during
the calendar year there was significant volume and value growth in a number of
important markets, such as India, Thailand and Japan.
Although
single malts have seen growth in some markets, particularly those that are more
‘mature’ in terms of whisky sales, in many countries malts barely sell and
blends are really the only game in town. All such averments came to naught when single malt Scotch whisky clocked a record year of export sales in 2016, topping £1 billion ($1.25 billion) for the first time. This achievement is attributed to growth in sales among luxury and prestige markets.
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They
dominate in Singapore, for example, reflecting its role as a gateway for much
of Asia, where blends generally sell much greater quantities than malts.
Overall, Singapore is the world’s third-largest scotch whisky market in terms
of value. Meanwhile, in the Americas, Mexico and Brazil, occupying 9th and 10th
places in the ‘value’ table, are overwhelmingly blend markets.
So just
where is blended scotch performing well against the overall trends for scotch
as a category, and how are producers and their marketing teams ensuring its
success in those territories? Growth went beyond just the single malt market as overall export sales of Scotch whisky, including blends, reached nearly £4 billion, following three consecutive years of decline from a peak of £4.27 billion in 2012 to £3.85 billion in 2015.
The US
remains by far the largest export market for scotch in value terms, both
blended and malt, with Diageo’s Johnnie Walker being the leading super-premium
blended scotch. Despite a worldwide drop of 12% in sales during 2014, the
Johnnie Walker family remains the world’s best-selling blended brand, with
almost 20% of global blended scotch sales being accounted for by entry-level
Johnnie Walker Red Label and first step up Black Label.
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Johnnie Walker may be a firm favourite in the US but, according to a Diageo head of whisky outreach Dr Nick Morgan: “Buchanan’s, now at more than 350,000 cases, is one of the hottest scotch brands in North America. In the six months to the end of December 2014, net sales were up 33% as it continued to leverage its strong connection with the Hispanic community. Scotch volume in the US continues to decline, but value is growing – this is a continuation of a 10-year trend toward premiumisation in the category.”
Latin
America remains a region with great potential for Blended Scotch, with Diageo’s
Buchanan’s and Old Parr Tribute recording strong growth in Columbia. Morgan
notes: “In Mexico broad distribution, along with the media campaign Keep
Walking Mexico, drove Johnnie Walker Red Label’s 40% contribution to net sales
growth. We also introduced Black & White to participate in the segment,
resulting in net sales growth of 70%.”
With blended
scotch sales falling significantly across the board in mainland China,
“marketing spend for Johnnie Walker is being focussed on the modern on-trade to
improve profitability,” according to Morgan, “and to launch Johnnie Walker
Double Black and test new campaigns in the more profitable off-trade channel to
build new occasions for scotch”. He adds:
“Marketing spend in China was also focussed on Johnnie Walker Blue Label and the
Johnnie Walker Houses, including the addition of the Johnnie Walker House in
Chengdu.”
Africa is
increasingly being viewed as a key blended scotch whisky continent, and Morgan
says: “Johnnie Walker’s net sales were up 15% in Africa in the first half. The
brand more than doubled in Angola and showed strong growth in other African
countries, including South Africa, where Johnnie Walker Black Label and Red
Label net sales were up 13% and 17% respectively, supported by the Where
Flavour is King and Johnnie & Ginger campaigns that focus on quality and
liquid credentials.”
In terms of
recent releases, Johnnie Walker has added a huge number of expressions since 1910. These are limited annual editions,
designed to showcase different elements of Johnnie Walker’s character – to date
‘smoke’ and ‘fruit’. Essentially they are bottlings intended to compete in
terms of liquid quality and prestige with high-end single malts and alternative
spirits, rather than other blends, as price tags around the £475/£550 mark
reflect.
There is more to it, though. Johnnie Walker is pushing out Blue Label series on any excuse or occasion. Their massive collection of aged whiskies (>50 years) is showing signs of Angel's Share damage. The once 63.5% ABV casks are dropping alarmingly below 40%-they cannot be sold as Scotch Whisky any more, as the minimum ABV must be 40%. NAS expressions are rolling out non-stop, as younger malts at 42-50% ABV are being blended with the dying aged malts and being sold at 40% ABV and more-at usurious prices, I must add!
There is more to it, though. Johnnie Walker is pushing out Blue Label series on any excuse or occasion. Their massive collection of aged whiskies (>50 years) is showing signs of Angel's Share damage. The once 63.5% ABV casks are dropping alarmingly below 40%-they cannot be sold as Scotch Whisky any more, as the minimum ABV must be 40%. NAS expressions are rolling out non-stop, as younger malts at 42-50% ABV are being blended with the dying aged malts and being sold at 40% ABV and more-at usurious prices, I must add!
Third place
in the global blended scotch top 10 behind Johnnie Walker Red Label and Black
Label goes to Pernod Ricard’s Ballantine’s range of blends. Global brand
director Peter Moore says: “Our latest half-yearly figures for Ballantine’s are
pleasing. Volumes were up 6% and organic sales growth 5%. Asia remains our
biggest challenge, though there is positive momentum in Japan.”
Latin
America has seen strong performances for Ballantine’s, with double-digit growth
and, specifically, a 40% volume increase in Brazil. “We’ve done lots of
promotional work in Brazil around music with a high level of digital material,”
says Moore. “The brand
has been in Brazil for a very long time, but we’re at an early stage of
development in Mexico. However, we are doing well there.”
Moore also
nominates Africa, India and eastern Europe as markets where Ballantine’s sales
have been strong, noting that: “In Europe, we are also seeing greater stability
in markets such as Spain [where overall scotch whisky volumes rose by 1% in
2014], with positive signs during the past three or four months, after six
years of decline.”
Scotch
whisky exports to France, the biggest market by volume and second biggest by
value, were up 2% to £445m and 3% to 183m bottles in 2014. Moore says: “We’ve
seen modest growth in France, which is our biggest single market with our
strongest Ballantine’s portfolio presence in Europe. We have Finest, blended
malt, 12-year-old and even 17-year-old in France.”
Despite
tough trading conditions in Russia at present, Moore says: “Overall, there is
positive momentum around Ballantine’s Finest in Russia. As in Brazil, we’ve
been involved in music-related activities in Russia, and we are also employing
music activation in South Africa and Angola. In South Africa we collaborate
with the famous DJ Black Coffee, using him in advertising and digital media.
We’ve seen real momentum for Finest as a
result.” An important
factor in the comparatively positive trajectory for Ballantine’s has been a
repackaging exercise for Finest, accompanied, as Moore says by “putting
positive energy into point of sale displays, which seems to be paying off”.
Another leading
blended brand which has benefited from repackaging is Dewar’s – the
best-selling blended scotch in the US. Last year saw the range receive a major
overhaul, with brand activity focusing on the slogan True Scotch Since 1846. According to
a Dewar’s spokesperson: “Under the banner of True Scotch, the new Dewar’s
visual identity is designed to intrigue and engage consumers in the most direct
way possible – bringing the values, aspirations and authenticity of this unique
whisky to life, while showing how relevant these qualities remain.”
Bacardi
global marketing manager for whisky Stephen Marshall adds: “The relaunch has
been global, so it takes time to bleed through the system, but we’re seeing
really positive signs in the US and Spain, two of our most important markets.”
It is
impossible to consider the role of blended scotch on the global stage without
considering Chivas Regal, and a Chivas spokesperson declares: “There has been
good brand performance in the key growth markets of Brazil, India, Turkey,
Mexico, South Africa and Australia, and also in mature markets, including
France. Chivas
Regal is ramping up its activity globally, employing Win The Right Way – our
biggest integrated campaign yet, supported by The Venture, the founding of a
$1million fund for social entrepreneurs. ”Last year
also saw the release of the first new Chivas Regal blend since 2007 in the
shape of Chivas Regal Extra, which employs a higher than usual percentage of
sherry cask-matured whiskies in its composition, and which takes its place in
the brand’s super-premium sector.
So much for the activities of some of the key blended scotch brands in export territories, but one blended scotch market that is rarely mentioned in positive terms by producers at present is the UK. Since 2009, the overall UK market for malt and blended scotch whisky has fallen by some 9.5%, according to HM Revenue & Customs figures, and established blends have borne the brunt of that decline.
However, it is not all doom and gloom, as Compass Box supremo John Glaser observes. “Our business is up around 25% in the UK and much of that growth comes from our Great King Street blends. This follows several years of significant UK growth for us.” The ‘niche’ Great King Street blends depart from more conventional offerings by giving the consumer far more information than most blenders would ever dream of disclosing, including the identity of component whiskies and the maturation regimes involved in their development. In terms of the decline of traditional blends in the UK, Glaser says: “I see it as a brand issue rather than a blend issue. The big name blends don’t have any relevance to younger people. If you present the right blend to the right people in the right way, it will sell.”
The latest figures posted by HMRC show the strongest exports of Scotch
whisky since 2013, helped both by the Pound falling after the Brexit
conundrum and also by strong growth in consumer demand worldwide, led
by No.1 market the United States. In these
still challenging times, the global art of presenting ‘the right blend to the
right people in the right way’ has arguably never been so important.
MOVE FORWARD TO AUGUST 2019
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If you require any more information or have any questions about my privacy policy, please feel free to contact me by email at noel.moitra@gmail.com.
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Scotch whisky sales increased by 10.8% to £2.19bn in the first half of 2019, according to data released by the Scotch Whisky Association (SWA). The volume of exports also increased by 7.1% to 598m 70cl bottles.
Single malts continue to grow in popularity, with exports up 18.8% to £652m in the first six months of the year. Single malts now make up 30% of the value of all Scotch shipped overseas. Exports of blended Scotch grew too, rising 7.5% to an export valuation of £1.35bn.
Demand for Scotch whisky is growing both in developing markets, like India, and in established ones like the US, Japan and Germany. This reflects the enduring popularity of Scotch whisky in so many cultures around the world. It also reflects the industry’s continued focus on improving trading conditions – for example, removing tariffs and discriminatory taxes – across global markets.
A proportion of this year’s export growth also reflects actions taken by a number of distillers to mitigate the risk of a no-deal Brexit in March/April by exporting some stocks early, evidenced by a spike in EU exports in Q1. For example, there was significant growth in exports to South Korea and Morocco, both markets where tariffs could have been re-imposed if the UK had exited the EU without a deal on 29 March.
The EU saw significantly more growth in value and volume in Q1, (+27.9% and +14.5% respectively compared with Q1 2018), than in Q2 when they dropped by -13.2% and -20.5% compared to Q2 2018. This reflects shipments ahead of the 29 th March Article 50 deadline. Shipments to South Korea increased by 25%, and exports to Morocco increased by 74% in the first half of the year, again reflecting forward shipping ahead of potential tariffs following Brexit.
The USA remains the top export market for Scotch, with export value increasing sharply (+19.5%). The USA has benefited from increasing premiumisation in recent years, and distillers have launched a number of new products which have increased market share of Scotch in a competitive brown spirits market. Notably, consumers aged 25-34 now account for the largest age demographic, having come to appreciate the ageing process of whiskies.
pay more as they learn about the range and variety of single malts on offer. IWSR forecasts show global consumption of Scotch whisky reaching 103.1m nine-litre cases in 2023, up from 95.3m in 2018. While blends will still account for the lion’s share of Scotch, malts will grow at a faster rate (4.1% vs 1.2%), showing that consumers worldwide are increasingly willing to pay more as they learn about the range and variety of single malts on offer, and as they become more educated about how Scotch is made. While overall volumes are set to decline in Europe over the next five years, growth in the Americas and Asia Pacific will more than make up for this.
As noted by the SWA, the increase in shipments of Scotch should not be seen as a direct indication of an equivalent increase in consumption – much of the growth in Q1 will have been stockpiling in an effort to reduce the risks posed by a disorderly Brexit. Overall volume growth in Scotch between 2018 and 2023 is forecast at 1.6% CAGR, compared to 3.9% for US whiskey, 6.3% for Irish, and 6.7% for Japanese, as the slower growth of blends will outweigh the 4.1% growth in malts.
Scotch’s image as a status spirit is helping drive growth across many markets, especially the potentially huge Asian markets of China and India as these economies grow. But the traditional image of Scotch also arguably puts off younger consumers in existing markets where other categories are seen as more dynamic. Various methods are being attempted by producers of blends to reach out to new consumers, partly via broadening the occasion of consumption into cocktails (especially via highballs) and partly by reworking the traditional image of blended Scotch by tie-ins with popular culture. The key recent example here would be Diageo’s Johnnie Walker brand and its “Game of Thrones” tie-ins. Johnnie Walker is by some margin the largest Scotch brand globally, with just under 20% share by volume, and its activity will be closely watched by the industry as a whole. Could Johnnie Walker’s innovation help drive a turnaround in the fortunes of blended Scotch? It would be unwise to rule it out.
I have listed the Johnnie Walker releases in Wikipedia under Johnnie Walker.
Single malts continue to grow in popularity, with exports up 18.8% to £652m in the first six months of the year. Single malts now make up 30% of the value of all Scotch shipped overseas. Exports of blended Scotch grew too, rising 7.5% to an export valuation of £1.35bn.
Demand for Scotch whisky is growing both in developing markets, like India, and in established ones like the US, Japan and Germany. This reflects the enduring popularity of Scotch whisky in so many cultures around the world. It also reflects the industry’s continued focus on improving trading conditions – for example, removing tariffs and discriminatory taxes – across global markets.
A proportion of this year’s export growth also reflects actions taken by a number of distillers to mitigate the risk of a no-deal Brexit in March/April by exporting some stocks early, evidenced by a spike in EU exports in Q1. For example, there was significant growth in exports to South Korea and Morocco, both markets where tariffs could have been re-imposed if the UK had exited the EU without a deal on 29 March.
The EU saw significantly more growth in value and volume in Q1, (+27.9% and +14.5% respectively compared with Q1 2018), than in Q2 when they dropped by -13.2% and -20.5% compared to Q2 2018. This reflects shipments ahead of the 29 th March Article 50 deadline. Shipments to South Korea increased by 25%, and exports to Morocco increased by 74% in the first half of the year, again reflecting forward shipping ahead of potential tariffs following Brexit.
The USA remains the top export market for Scotch, with export value increasing sharply (+19.5%). The USA has benefited from increasing premiumisation in recent years, and distillers have launched a number of new products which have increased market share of Scotch in a competitive brown spirits market. Notably, consumers aged 25-34 now account for the largest age demographic, having come to appreciate the ageing process of whiskies.
pay more as they learn about the range and variety of single malts on offer. IWSR forecasts show global consumption of Scotch whisky reaching 103.1m nine-litre cases in 2023, up from 95.3m in 2018. While blends will still account for the lion’s share of Scotch, malts will grow at a faster rate (4.1% vs 1.2%), showing that consumers worldwide are increasingly willing to pay more as they learn about the range and variety of single malts on offer, and as they become more educated about how Scotch is made. While overall volumes are set to decline in Europe over the next five years, growth in the Americas and Asia Pacific will more than make up for this.
As noted by the SWA, the increase in shipments of Scotch should not be seen as a direct indication of an equivalent increase in consumption – much of the growth in Q1 will have been stockpiling in an effort to reduce the risks posed by a disorderly Brexit. Overall volume growth in Scotch between 2018 and 2023 is forecast at 1.6% CAGR, compared to 3.9% for US whiskey, 6.3% for Irish, and 6.7% for Japanese, as the slower growth of blends will outweigh the 4.1% growth in malts.
Scotch’s image as a status spirit is helping drive growth across many markets, especially the potentially huge Asian markets of China and India as these economies grow. But the traditional image of Scotch also arguably puts off younger consumers in existing markets where other categories are seen as more dynamic. Various methods are being attempted by producers of blends to reach out to new consumers, partly via broadening the occasion of consumption into cocktails (especially via highballs) and partly by reworking the traditional image of blended Scotch by tie-ins with popular culture. The key recent example here would be Diageo’s Johnnie Walker brand and its “Game of Thrones” tie-ins. Johnnie Walker is by some margin the largest Scotch brand globally, with just under 20% share by volume, and its activity will be closely watched by the industry as a whole. Could Johnnie Walker’s innovation help drive a turnaround in the fortunes of blended Scotch? It would be unwise to rule it out.
I have listed the Johnnie Walker releases in Wikipedia under Johnnie Walker.
If you require any more information or have any questions about my privacy policy, please feel free to contact me by email at noel.moitra@gmail.com.
At http://noelonwhisky.blogspot.in/, the privacy of visitors is of extreme importance. This privacy policy document outlines the types of personal information received and collected by http://noelonwhisky.blogspot.in/ and how it is used.
Log Files
Unlike many other Web sites, http://noelonwhisky.blogspot.in/ does not make use of log files, except to gather number of clicks to analyze trends and administer the site. Any such information is not linked to anything that is personally identifiable.
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http://noelonwhisky.blogspot.in/ does not use cookies to store information about visitors preferences, record user-specific information on which pages the user access or visit, customise Web page content based on visitors browser type or other information that the visitor sends via their browser.
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.:: Google, as a third party vendor, uses cookies to serve ads on http://noelonwhisky.blogspot.in/.
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You should consult the respective privacy policies of these third-party ad servers for more detailed information on their practices as well as for instructions about how to opt-out of certain practices. http://noelonwhisky.blogspot.in/'s privacy policy does not apply to, and cannot control the activities of, such other advertisers or web sites.
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