Analysis: Is blended Scotch on the rocks?

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 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.

Cutty Sark recently relaunched to make its heritage more relevant for today’s consumers

For John Glaser, founder and blender at Compass Box Whisky, the issue with blends in established markets is that they have simply become out of touch with consumers. “They’ve just become boring,” he says. “The majority of corporate brands are featuring, for the most part, boring liquid compared to what’s going on generally in the world of craft spirit brands. Blends are mostly all drunk by people over 60 years old or, in the US, in pockets of ethnic minorities, so I think you could argue they’ve skipped at least two generations.”

Jason Craig, brand controller at Edrington for recently acquired blended whisky Cutty Sark, points to the fact that, while there is no shortage of provenance in blended Scotch, the real issue is its relevance today. “There is a fine line between dust, decay, cobwebs and ‘fuddy duddy’, versus modern, contemporary and forwardthinking,” he argues. “The key to success here is knowing how to keep your past ‘relevant’, not just keeping your past for the sake of it – and it’s this relevance which was our biggest concern when relaunching Cutty Sark.”

Alongside repackaging the mainstream product in the portfolio, Cutty Sark Original, and redrawing the brand’s iconic clipper logo in the process (depicting the vessel with more wind in her sails to demonstrate the brand’s progress), the Edrington team recently began a campaign targeting the established markets in Spain, Greece, Portugal and the US with a new addition to the range, Cutty Sark Storm. With a bold, contemporary pack design and a newly reformulated liquid – which Craig describes as “a smouldering whisky; like Cutty Sark on steroids” – the company hopes Storm will help inject some new life into the blended whisky category from both an aesthetic and a flavour perspective.

“The idea of killing off romance in a brand is almost rhetorical,” suggests Craig, “but to move forward with the times, sometimes you have to. Most people who work with a brand have a tendency to take a ‘steady as she goes’ approach – almost a level of guardianship, coupled with the fear of change that comes with it – which can be very paralysing.”

It’s a view shared by Compass Box’s Glaser, seen by many industry commentators as one of the key players in the reinvention of blended whisky. “Blends are victims of complacency,” he argues. “They have tried hard to maintain their core audiences, but have not figured out how to be relevant to younger audiences. Thus the need for new brands doing things differently.”

One such proposition from the London based blender is the newly launched Great King Street, a whisky designed to show off blended Scotch’s versatility and mixability. “Well-made blended Scotch whiskies have an elegance and approachability that make them a joy to drink,” points out Glaser. “They are far more versatile than other styles of whisky, equally enjoyable drunk on their own or with ice, soda water, or in cocktails.”

Glaser’s assessment sits perfectly with the explosion of the simple and refreshing highball serve of blended whisky in Japan, which has helped to reinvigorate the flagging sales of the spirit in this typically mature whisky market. Looking for an innovative new serve, inspired by success in other markets, is a tactic which a number of companies have pursued.

Great King Street: Showing off blended Scotch’s mixability

Last year, Edrington-owned The Famous Grouse trialled a number of premixed varieties in the UK on-trade aimed at a younger audience, alongside The Snow Grouse, designed to be drunk straight from the freezer, and The Naked Grouse, which aims to highlight the complexity of flavour in a blended whisky.

Perhaps the most fundamental stumbling block to the resurrection of blended whiskies in the established markets is the sheer lack of coverage they tend to receive, in comparison to the relative glorification of single malt whiskies across the specialist and popular media channels.

“If blended whisky is the victim of anything, it is by and large the victim of the concentration and focus the commentariat have placed on malts,” argues Morgan. “Everyone speaks about malts and knows about malts, but no one talks about blends. The easy fix in the mature markets is to change the way we look at the category and the way we talk about blends, making it a bigger and more inclusive conversation.”

To this end, Diageo has recently unveiled a new marketing campaign for the Johnnie Walker range: Where Flavour Is King, which is based on demystifying the language and imagery surrounding whisky by focusing purely on the inherent and unique flavours in each of the Johnnie Walker expressions.

In addition to this more targeted approach and following on from the sense of revivalism highlighted by television programmes like Mad Men, Johnnie Walker

Black Label has engaged the services of the programme’s glamorous lead actress, Christina Hendricks, as an ambassador for the blend worldwide. With the potentially enormous rewards in the emerging markets, one could argue that hope is fading fast for companies chasing the green shoots of growth in the mature markets, especially in the UK.

However, John Glaser feels that all is not lost, just yet. “If brands are taking a longterm view on mature markets, they need to be planting or at least nurturing seeds in the mature markets now,” he contends. “In 10 years or so, the emerging markets will slow down.”

It’s a point of view shared by Diageo’s Nick Morgan. “[Blends] are simply too big to ignore,” he says. “Let’s not forget that they still account for 50% of our business.

There is always going to be a huge appetite for blended whisky in the established markets, and it would be extremely foolish to turn your back on generations of drinkers and not try to recruit them into your product.”