Scotch whisky’s unsung heroesBy Richard Woodard
They may not be the most famous, but brands such as Buchanan’s, Passport and Label 5 play a crucial role in Scotch’s global development.
Anybody care to take a guess at the name of the fastest-growing blended Scotch in North America? It’s not Johnnie Walker, Chivas Regal, J&B or Ballantine’s… step forward Buchanan’s, the Diageo brand that hit 1.6m cases last year and has been a huge success story with Latin American and emigrant Hispanic consumers in the past decade.
You’re probably even less likely to guess the brand claiming to have been the second fastest-growing Scotch in the past five years: Label 5, owned by La Martiniquaise, is now spreading its wings beyond its French heartland to target markets from Venezuela to Russia.
The success story that is the global Scotch industry tends to focus on star names, with Johnnie Walker and Chivas at the forefront, and Ballantine’s, Grant’s, J&B and Dewar’s among the supporting cast.
But “portfolio brands”, as Diageo describes the likes of Old Parr, Windsor and White Horse, are far more than bit-part players; they play a vital role in opening up developing markets that are just beginning to fall in love with Scotch.
Sights set high
Let’s deal with Label 5 first, since it is in many ways the odd brand out in this company. While the others have to play second fiddle to the higher priorities of their owners, Label 5 is the flagship brand of La Martiniquaise, topping 2.5m cases in 2011 and growing sales by 50% in five years.
That success is due in no small part to a mainstream positioning in the huge blended Scotch market of France, where it has a 14% market share, but also to a fast-expanding presence elsewhere, including sales of roughly 150,000 cases in Mexico.
The company also has high hopes for range extension Label 5 Extra Premium 12-year-old, packaged in “traditional but contemporary” style and supported by point-of-sale material, off-premise promotions and tasting sessions, among other marketing initiatives.
And where from here? La Martiniquaise has its sights set on becoming the world’s fifth best-selling Scotch brand in the next decade. If other lesser-known Scotches don’t quite share Label 5’s star billing, that doesn’t diminish their significance to their parent companies.
Take a look at the Chivas Brothers range of whiskies, for instance. A patchwork of brands from the various acquisitions made by parent company Pernod Ricard, it includes names that are only dimly familiar to an Anglophone audience: Something Special, Passport, 100 Pipers, Clan Campbell and Long John. Latin America, currently a hotbed of growth for blended Scotch, is the stage on which a number of these players operate.
Venezuela, Colombia, Ecuador and Peru are key markets for Something Special, where Chivas plays upon the brand’s distinctive diamond-shaped bottle in an art-inspired marketing initiative called “Enbotellarte”.
Similarly, Passport numbers Mexico and Brazil among its main priorities. Clan Campbell remains a leading operator in the biggest standard blended Scotch market of them all, France, alongside Long John – a blend with the elegant Tormore malt at its core and due for repackaging at the end of this year.
Turning to Diageo, the current blue-eyed boy among its portfolio brands, Buchanan’s, uses a relatively conservative image and heritage laden marketing to its distinct advantage.
“There’s something about Buchanan’s that makes it particularly attractive to Latin American consumers,” says Nicholas Morgan, Diageo’s head of whisky outreach. “A lot of the growth in markets like Mexico is among relatively new, young consumers.”
Marketing programme “Buchanan’s For Ever” focuses on pop and rock concerts involving major names including Sting, Bon Jovi and Elton John, but with an added dimension: engaging consumers in, say, Mexico to take part in voluntary programmes that benefit the community, then rewarding them with a big, set-piece gig.
Big social media players
The initiative is now being extended through the “Tiempo Para Compartir” (time to share) campaign, which Morgan says has social media at its heart. “It’s about getting consumers involved rather than advertising at them,” he adds.
Another key brand in the region is Old Parr – historically associated with Japan but now selling the vast majority of its near-1m cases a year in Latin America, and in Colombia and Venezuela in particular. Windsor, meanwhile, was a brand inherited from Seagram following the 2001 acquisition, and a brand squarely associated with South Korea – but its role is beginning to change under Diageo.
“We’ve expanded the range and put a lot of time and effort into it,” says Morgan, pointing to a big roster that includes a non-aged whisky, 12-, 17- and 21-year-olds and a super-deluxe. A regional number two to Johnnie Walker and sitting below it in price, Windsor is now expanding into China and possibly beyond, with a role in Diageo’s regional travel retail business providing a “shop window” for other domestic markets.
So is Diageo expecting the luxury-obsessed Chinese to broaden their taste in Scotch to take in Red Label and other brands such as Windsor?
“I think that’s quite possibly what could happen in China,” Morgan says. “At the moment, a lot of brands like Johnnie Walker and Chivas Regal have done tremendously well in that market during the past 10-12 years. We believe there’s a job to be done there in terms of establishing a real Scotch whisky culture – there’s still a long, long way to go.”
Diageo talks less about its relatively small Dimple/Pinch brand franchise – given its strong presence in southern Europe and Greece in particular, that’s probably not surprising – but the company has been pleasantly surprised by the recent performance of White Horse.
A brand with a small footprint in Latin America, Europe and duty free, White Horse has been spurred into “really stellar” growth, in Russia especially, over the past few years, overturning popular misconceptions about the market being all about oligarchs spending roubles by the bucketload on luxury Scotch. With a masculine image and value pricing, supported by a recent launch of a 12-year-old expression, the brand has been a big hit with Russia’s emerging middle classes.
You couldn’t get much further away from the luxury market than VAT 69, a value brand that sits below even the standard blends in price terms. Recently repackaged in its traditional, liqueur-style bottle, Diageo is aiming VAT 69 in particular at India, where the exorbitant duty rates make even this humbly priced blend an expensive buy for many consumers.
We’ve said that none of these brands are bit-part players, but they do still have to know their place: in the case of Diageo’s portfolio products, that means supporting Johnnie Walker especially, and with Chivas Brothers, they complement Ballantine’s Finest.
“It is important for us to have a strong offering for this segment of the market, and when consumers are ready to progress, we offer a comprehensive portfolio of brands right up to super- and ultra-premium with Chivas Regal and Ballantine’s in key markets,” says Geoff Parmiter, brand director for standard blends at Chivas Brothers.
“Our standard portfolio is a great tool and contains great brands that can be rolled out where appropriate as markets develop, even when each brand has a natural homeland. Our brands will still remain tactical rather than global players, but will extend their presence to more regional markets.”
Morgan sounds a similar note, citing the expansion of Buchanan’s northwards as Hispanic consumers in the US gain greater importance and spending power.
“Where brands do have very strong regional and market footprints that can be expanded by people from that region moving elsewhere and taking that brand with them,” he explains.
“We will invest behind that where we can. But the role for all these brands is to support our lead brand, which is Johnnie Walker. If you have one brand, you leave a lot of space for your competitors; if you’ve got two, you leave less. I think at the moment we would say that the strategy that has been in place for several years is beginning to work very successfully for us.”