Analysis: Is blended Scotch on the rocks?

3rd January, 2013 by SB Staff Writer

The height of fashion in emerging markets, blended Scotch is about as cool as a paisley tanktop in western Europe. What’s to be done? Neil Ridley looks for answers.

Johnnie Walker blended Scotch

Johnnie Walker aims to create excitement for blended Scotch in the west

What a difference a decade makes. Just 10 years ago, the world market for blended Scotch whisky looked very different indeed. The successful emerging nations grabbing the headlines today, despite glamorous product launches and aspirational sloganising, were just a pipe dream back then or, at best, a prediction on the page of a market research document.

Today, however, the international perception of Scotch whisky is riding high on news of a record £4.2bn export turnover last year, according to the Scotch Whisky Association, up 23% on 2010 (and contributing around £134 every second to the UK’s balance of trade).

But the industry faces a tough dilemma: how to maintain this unprecedented international success in countries such as Brazil, Taiwan and Russia, while propping up ailing sales figures in both the UK and the more established whisky markets overseas.

While reports of Scotch whisky’s untimely demise in established markets are greatly exaggerated (last year, sales in the US and France increased 32% and 27% respectively on 2010), the issue is just where those sales are coming from.

“Although developing markets are driving growth, 50% of the sales of Scotch whisky are in established markets,” points out Dr Nick Morgan, Diageo’s head of whisky outreach.

“The key point, though, is that in the established markets, single malts probably over-index. Rather than the usual 7-8% of sales, malt whisky sales are more likely to be nearer to 20%.”

One commonly held belief across the industry is that the biggest threat to blends comes from their perceived inferiority to single malts and the fact that new, younger consumers just aren’t that in tune with the imagery surrounding them. Indeed, a recent report commissioned by Mintel suggested that the issue lies with the “heather and weather” stigma that has haunted blended Scotch whisky domestically for the past decade or more, plus the fact that there are too many perceived issues to overcome when serving the spirit, compared to the likes of Bourbon or white spirits.

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