Trade News

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UK: BenRiach Distillery Co secures GBP27m in funds

5 March 2012 | By: Chris Mercer

BenRiach Distillery Co has said that it will consider acquisitions after securing a GBP27m (US$47.2m) funding facility via Royal Bank of Scotland.

BenRiach said today (5 March) that it plans to expand its business, possibly via acquisitions, after securing the "flexible funding". The distiller's expansive mood is being fuelled by strong global demand for Scotch whisky, with its exports for 2011 expected to set a record in value terms.

"With demand at an all-time high, we are delighted to have finalised this funding," said BenRiach's MD, Billy Walker. The firm added: "The package is fully flexible, with funding offset against stock, and will be used for investing in stock and facilities, general capital expenditure and, if the opportunity arises, selective acquisitions."

For some time, BenRiach has been on the lookout for a blended Scotch whisky brand. In 2010, Walker told just-drinks: "Are we looking to buy tomorrow? No, but for sure it's part of our medium-term strategy."

Currently, BenRiach employs people and has two facilities, the GlenDronach distillery and a bottling plant. According to its latest accounts filed with Companies House, BenRiach reported net sales of GBP16.13m for the 12 months to the end of December 2010. Sales rose by 7% on 2009, due to the acquisition of the Newbridge bottling facility on the outskirts of Edinburgh.

However costs related to the acquisition, as well as higher interest and tax payments, damped profits. For the year, net profits fell by 26% to GBP1.9m. Operating profits fell less steeply, by 1.4% to GBP3.62m.

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UK/SCOTLAND: Parliament committee expected to back minimum alcohol price

6 March 2012 | By: Chris Mercer

A cross-party committee in Scotland's Parliament is set to throw its weight behind plans for a minimum price on alcoholic drinks in the country.

The Scottish Parliament's Health & Sport Committee is this week expected to report its findings on the Alcohol (minimum pricing) Bill put forward by the ruling Scottish National Party (SNP), a person familiar with the matter told just-drinks today (6 March). Drinks industry officials anticipate that the nine-member Committee will broadly back plans for a floor price on drinks.

Despite strong opposition from significant swathes of the drinks sector, the SNP is expected to push minimum pricing through Parliament later this year, after gaining a majority of the seats in 2011. As a minority administration prior to this, it failed to gain enough cross-party support for the measure.

Its fresh attempt to introduce minimum pricing comes as the policy is being taken more seriously by the UK Government in London. From a separate source, just-drinks understands that this emanates from concern that a move to ban sales of drinks 'below cost' is not tough enough.

The SNP has yet to publish the fine details of its proposal for Scotland, such as a specific price per unit. The policy would almost certainly face a legal challenge at some stage, possibly from within the drinks industry.

The drinks industry maintains that minimum pricing would be illegal under European Union law and will hit a majority moderate drinkers for the sake of targeting a minority of harmful drinkers.

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GLOBAL: Morrison Bowmore readies global Bowmore Darkest push

26 March 2012 | By: Olly Wehring

Morrison Bowmore is looking to up the global distribution of its Bowmore 15 Years Old Darkest Scotch whisky brand through a marketing campaign set to launch next month.

The push, entitled 'Magic Happens on the ‘Darkest’ Nights', will include advertising, digital, PR and on- and off-trade marketing activity, the company said late last week. Starting in the UK in April with a consumer event in London, Morrison Bowmore will also push the variant at the Manhattan Cocktail Classic in New York in May. Other consumer events will include stargazing, in-depth whisky tastings and food pairings.

The activities will be highlighted on a microsite, which will use video, interactivity and animation. The microsite will also incorporate information about sampling events and competitions.

Financial details behind the campaign were not disclosed.

Bowmore 15 Years Old Darkest spends 12 years in American Bourbon casks, followed by three years in Oloroso Sherry casks.

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UK: FY Scotch whisky exports hit record high

27 March 2012 | By: James Wilmore

Scotch Whisky exports hit a record GBP4.2bn (US$6.7m) in shipment value last year, up 23% on 2010, latest figures have revealed.

The numbers, released today (March 27) by the Scotch Whisky Association (SWA), showed that demand in both the emerging and the more mature markets has pushed export values up by an average of 10% per year in the last five years. Scotch now contributes GBP134 per second to the UK balance of trade and is the seventh year running that exports have risen, the SWA said.

Exports to the US, the biggest market by value, broke the GBP600m barrier for the first time last year to reach GBP654.9m – up 31% on 2010.

France, the second biggest market, saw exports grow by 27% to GBP535.4m.

Gavin Hewitt, the SWA's chief executive, said: "Affluent young professionals in fast-growing economies are increasingly developing a taste for Scotch whisky. This is contributing to growth in countries across Asia and Latin America.”

In South America, Brazil was the fastest growing market by value with exports up 48% to GBP99.2m, Hewitt said.

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UK: Ian Macleod Distillers turns Tamdhu Distillery's lights back on

3 April 2012 | By: Andy Morton

Ian Macleod Distillers is set to reopen Speyside's Tamdhu Distillery.

The family-owned company confirmed yesterday (2 April) that it will restart production at the distillery in 2013. Previous owners The Edrington Group mothballed the facility, which holds three wash stills and three spirit stills, in 2010.

Ian Macleod bought Tamdhu Distillery, which will be capable of producing around 4m litres of alcohol per year, from Edrington in June.

Glasgow design agency Good has been recruited to update the identity for the Tamdhu brand.

The company also said that it plans to push Tamdhu in export markets, although specific details were not released.

Ian Macleod also bought its Glengoyne distillery from Edrington, in 2003.

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GLOBAL: Diageo revamps Johnnie Walker stable – two in, two out

4 April 2012 | By: Olly Wehring

Diageo has lined up two additions to the Johnnie Walker global portfolio, and is pulling two variants from the Scotch whisky brand's stable.

The company confirmed to just-drinks today (4 April) that it will roll out Johnnie Walker Gold Label Reserve and Platinum Label 18-Year-Old in all markets starting from early June. Gold Label Reserve, which has been available in South East Asia for about three years, will hit all of Johnnie Walker's markets around the world during the summer.

Platinum Label, meanwhile, will extend its reach from the travel retail channel, where it was launched six months ago. The Gold Label Reserve will retail in the UK at around GBP40 (US$63.50) per bottle, with Platinum costing around GBP70.

Nick Morgan, Diageo's head of whisky outreach, told just-drinks today: “The team have decided that now is an opportune moment to make some changes in order to make the Johnnie Walker portfolio be in the best shape; to make the portfolio have a global reach and resonance to make the most compelling choice for consumers, and to make sure we are seizing the most of what we believe to be commercial opportunities in different markets around the world.”

Meanwhile, Diageo said that it will be withdrawing Johnnie Walker Gold Label 18-Year-Old from all markets except the US, where it will remain for another 12 months. Also leaving the portfolio is Green Label, except in the US where it will be available again for another 12 months, and in Taiwan where it will not be withdrawn at all. “Green Label is a very important part of the blended whisky category in Taiwan for us,” Morgan added.

Both Gold Label 18-Year-Old and Green Label, the latter of which Morgan described as having been regarded as “something of an anomaly within the range”, have been available since the late 1990s.

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Comment - Spirits - All That Glisters is not Gold for Scotch Whisky

10 April 2012 | By: Ian Buxton

The recent release of export numbers for Scotch whisky appeared to be cause to celebrate for the category. But, as Ian Buxton warns, the devil is in the detail.

According to figures unveiled late last month by the Scotch Whisky Association (SWA), Scotch exports continued to grow last year, hitting a record GBP4.2bn (US$6.66bn) in shipment value, up 23% on 2010.

Rising demand in both emerging and more mature markets has resulted in export values increasing by an average of 10% a year over the last five years. Scotch now contributes GBP134 per second to the UK balance of trade, says the SWA.

Exports to the US, the biggest market by value, broke the GBP600m barrier for the first time in 2011 to reach GBP654.9m – up 31% on 2010. France, the second biggest market, saw exports grow by 27% to GBP535.4m.

This time last year, we heard a similar story: SWA statistics for 2010 show an increase in export value of around 10% on 2009. The good news was accounted for by a variety of factors, the trade body said at the time: tariff reductions, increasing interest from younger professionals in newer markets in Asia and Latin America, and rising demand in both emerging and more mature markets.

On the face of it, both sets of figures are fantastic. To achieve growth of close to a quarter on top of a 10% jump is quite remarkable. Trebles all round are surely in order.

But, wait a moment. These are value figures we’re happily patting ourselves on the back about. They take no account of inflation, which you may have noticed recently has been quietly growing. And then, let’s not forget that most whisky isn’t sold in British Pounds Sterling anyway.

Is that an echo of Harold Wilson’s infamous “the pound in your pocket has not been devalued” that I can hear?

As economic correspondents such as Jeremy Warner of The Daily Telegraph have pointed out: “It's not generally realised, but over the past four years, the pound has experienced its sharpest depreciation since Britain left the gold standard in 1931 – much bigger than more memorable devaluation episodes such as the deceit of Harold Wilson's pound in your pocket or the UK's ignominious exit from the ERM.”

If you doubt that, just think of how much your pound bought you (or rather, didn’t buy you) on your last overseas trip. Perhaps we should remember that a (un)healthy chunk of the gains are accounted for by this 'hidden’ devaluation. In other words, a paper gain that means little or nothing.

Overall volume might be a better guide. Sadly there isn’t as much comfort there. The SWA’s 2009/2010 figures reveal a 2% drop (we don’t yet have the equivalent data for 2011) and a cumulative decline of almost 7% (over 6.8m 12-bottle cases) since 2007.

Let’s not enquire how Irish, American and Japanese whiskies have performed over a similar period. And, being polite, I won’t mention global vodka sales.

The Prince of Morocco was taken in by a gold casket but instead of a lady’s portrait and the promise of marriage he found Death and the sombre motto “Gilded tombs do worms enfold.” All that glisters is not gold.

I’m sure there’s plenty to celebrate in the world of Scotch. Distilleries are being expanded and re-opened – only last week we read of the Ian Macleod Distillers' plans to reopen the Tamdhu plant next year – and younger consumers are rediscovering the category.

So, please don’t, despair – but let’s concentrate on real shipments of real cases of real whisky and not get carried away by the illusory gains of financial engineering.

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Comment - UB Group and Whyte & Mackay: All or Nothing?

12 April 2012 | By: Olly Wehring

The rumour-mill in India is in overdrive again, and United Spirits' ownership of Whyte & Mackay is under the spotlight again. Reports out of the country this week have claimed that United Spirits, part of the Vijay Mallya-headed UB Group, is set to offload a stake in the Scotch whisky company. While this in itself is not actually new news, the current quandary facing the UB Group suggests that something could happen sooner rather than later.

The UB Group is in trouble: its Kingfisher Airlines division is racking up debt by the day, and the headlines forecast doom and gloom for the conglomerate. One option being considered by UB is the sale of 49% of Whyte & Mackay, which it bought for US$1.2bn five years ago. This possible transaction has got the wires buzzing.

Hold on a moment: Mallya has long entertained the idea of divesting part of Whyte & Mackay – presumably to help pay down debt the company incurred when buying the Scottish firm in the first place. Indeed, a spokesperson for Whyte & Mackay told just-drinks today (12 April) that United Spirits mooted the idea over three years ago.

However, that this position has been reiterated at a time when Kingfisher is not as healthy as it used to be, then a stake sale of Whyte & Mackay - where it's "business as usual", the spokesperson noted - appears to take on a certain sense of urgency.

This brings us on to an even more important question: Who's going to buy 49% of Whyte & Mackay? What possible appeal would there be to anyone out there to spend up to $600m (by 2007's standards) to have little say and even less control over the company? Maybe such a person would be keen to gain a foothold in India? But, there are far better ways of achieving that than acquiring a stake in W&M, surely?

There is no doubting that the arrival of United Spirits, UB Group and Vijay Mallya in Glasgow has been a good thing for Whyte & Mackay: Prior to the purchase, the company was running at a loss, and now it's in profit. While those profits have dipped recently, as the unit moves away from bulk deals and focusses more on brand-building, there was bound to be a short-term hit.

But, if Mallya needs to realise a return from Whyte & Mackay, and soon, then I can see his only option being to put the whole thing up for sale.

And then he'd get some 'phone calls.

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GLOBAL: Malted barley harvest set fair for Carlsberg, Heineken - analyst

16 April 2012 | By: Andy Morton

A forecast fall in malted barley prices would benefit brewers such as Carlsberg and Heineken, due to their large exposure to Western Europe, according to a drinks analyst.

In a conference call with investors late last week, Trevor Stirling, European beverage analyst with Sanford C Bernstein, said that European brewers could currently expect to pay EUR400 (US$520) per tonne of malted barley this year, thanks to good weather and reduced pricing pressure from other crops. The estimated price fall represents a decrease of around 12% year-on-year, Stirling noted.

“The outlook is positive,” Stirling. “We're still very early into the crop cycle, but the indications are that the price of malt and barley will end up being lower, potentially significantly lower, this year than it was last year.”

For Carlsberg, Stirling said, “the benefit is doubled, because they have both Western European and Central & Eastern European exposure where they benefit from the falling raw material prices and ultimately potentially for much lower transportation prices, if they can avoid expensive imports”.

Western Europe has a projected surplus of 1.9m tonnes, while Argentina and Australia were also looking at strong supply. “And, if we have normal weather conditions in Russia,” Stirling added, “we could potentially have a major global surplus of malting barley with even further pressure on prices.”

Prices for this year's US harvest have already been set, due to differences in the way farmers sell their crop, but, according to Stirling, the country's area of barley cultivation is up this year by 30%, which would push down prices in the long-term.

Bad weather could still increase prices, he warned, as it did in 2010 when a heatwave in Russia forced the government to ban barley exports to meet domestic demand. Also, a high price for feed barley, which is of lower quality and easier to grow in bulk compared to the malted barley used by brewers, could make farmers less inclined to take a risk on the premium crop. This would squeeze supply of malted barley and push prices higher.

However, Stirling said the outlook for feed barley was improving because of expected good harvests in Russia and Ukraine. He predicted the premium on malted barley would remain high enough to ensure a robust supply.

“If feed barley prices fall and the relative premium for malting barley expands, the situation looks very good for the brewers.”

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UK: Edrington Group switches distillery managers at Macallan, Highland Park

18 April 2012 | By: Olly Wehring

The Edrington Group has confirmed a change of distillery managers at two of its whisky facilities in Scotland.

The company, which also owns The Famous Grouse whisky brand, said earlier today (18 April) that Russell Anderson, who heads up production at its Highland Park distillery on Orkney, will move to The Macallan site on Speyside. Replacing Anderson, who has spent 15 years at Highland Park, will be Graham Manson.

When contacted by just-drinks, a spokesperson for Edrington said that Anderson is replacing Alexander Tweedie, the current manager at The Macallan. Tweedie is taking on the role of technical support manager for Edrington as Bill Crilly is retiring from the role later this year.

Manson joins Edrington from North British Distillery, where he has been engineering manager since 1997. He also spent time with Diageo, working on its Bell’s Scotch brand.

Between 1998 and 2000, Anderson was production manager at The Macallan.

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US: Bowmore plays name game with whisky launch

19 April 2012 | By: Andy Morton

Morrison Bowmore wants customers to rename one of its whiskies for the US market because its name cannot be used in the country for legal reasons.

The ten-year-old single malt Scotch whisky from Islay is sold around the world under the name Tempest. However, another company already owns the US trademark for that name, a spokeswoman told just-drinks.

People who log on to Bowmore's Facebook page from today (19 April) can chose between two names; Dorus Mor, a Gaelic word for the rough seas around Islay, or Whirlpool. The name will only be used in the US market.

The contest ends on 18 May, and those who vote for the winning name will be entered into a draw to win a Bowmore tweed jacket.

Tempest is a small-batch release with an abv of 55.1%. It will launch in the US under its new name towards the end of this year with 1,200 bottles available. The SRP is US$119.99 for a 75cl bottle and it will be available nation-wide.

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GERMANY: William Grant & Sons hands Tullamore Dew distribution to Campari

26 April 2012 | By: Olly Wehring

William Grant & Sons has switched distributors in Germany for its Tullamore Dew Irish whiskey brand.

The company, which acquired Tullamore Dew from C&C Group in 2010, confirmed today (26 April) that the German arm of Gruppo Campari will take over distribution in the country. Campari Deutschland will replace Beam Deutschland.

The move follows Beam Inc's purchase of the Cooley Irish whiskey brand in January, a transaction that prompted a review of William Grant's distribution for Tullamore Dew in Germany.

“We want to thank Beam Deutschland for their dedication and professionalism in helping us build the fantastic Tullamore Dew brand," said Francois Sommer, William Grant's area director for Europe. "While we enjoyed consistent growth over the years, the acquisition of Cooley by Beam Global led us to re-think our route to market approach.”

The change will take effect from 1 July.

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UK: William Grant & Sons readies chairman transition

30 April 2012 | By: Olly Wehring

William Grant & Sons has confirmed details of a change of chairman.

The UK-based spirits company, which owns the Glenfiddich and Grant's Scotch whisky brands, said this morning (30 April) that Glenn Gordon will become its new non-executive chairman. Gordon, who is the great-great grandson of company founder William Grant, replaces Peter Gordon, who assumed the role four years ago.

“I am very proud of the significant strides that our business has achieved over the last four years as a result of everyone’s efforts,” said Peter Gordon, who will continue to be a board member, the company said. “A seamless transition between me and Glenn will ensure we maintain our current pace.”

The current board also comprises Javier Ferran as vice chairman, Charles Gordon, Fergus Chamberlain, Robert Pollet, Iain Napier, CEO Stella David and CFO Dermid Strain.

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just the Answer - Diageo's global category director of whisk(e)y, David Gates

27 April 2012 | By: Olly Wehring

Earlier this year, just-drinks sat down with David Gates, the global category director of whisk(e)y at Diageo, to talk about Johnnie Walker, Formula One, Scotch and the other whisk(e)y sub-categories.

just-drinks: How big a shadow do you feel Johnnie Walker casts over Diageo's Scotch whisky portfolio?

Diageo's global category director of whisk(e)y, David Gates

David Gates: For me, it's more a beacon of light than a shadow; it kind of sets the standard for the rest of the brands in the portfolio. The performance has been stellar, and we're immensely proud of the marketing work that we've produced for Johnnie Walker.

In an ideal world, we would get each of our whisky brands in as well-defined a position and with such clear growth drivers.

j-d: With such a volume-driven brand as Johnnie Walker, why go for such niche-targeted extensions like Diamond Jubilee and King George V?

DG: It's about the halo-effect on to the rest of the trademark. We're looking to reinforce quality, authenticity and craftsmanship every step of the way. Also, it's about doing the right thing: there is real value in our people feeling pride in what we do as a brand and as a business. Finally, there is a big value opportunity for the super-premium, very high-end whiskies in markets like Asia.

j-d: How can you gauge the success of these niche ideas for the brand as a whole?

DG: There are examples where we can see an absolute correlation – when we launched King George V in Changyi airport, for example, sales of the new launch and of Blue Label both went up together. It was a relatively significant number, as well.

j-d: Has the opening of Diageo's Roseisle distillery marked a tipping point in supply and demand for Scotch whisky?

DG: What I think it shows is confidence in the future of the category. If you look at the emerging markets, the growth is already there. Then, there's the potential to unlock even more. If we get tax reforms in India or Turkey, that will unleash some heavy duty demand: We're going to need that increased capacity.

Then, look at Brazil: the population is double the size of France and Spain combined, you can feel the economic prosperity. Some of the favellas have just disappeared now. There's a new confidence in the country. Then, you've got Mexico, Colombia, Chile, Peru. You've got economic, political and social stability in these markets – life has never been better. There's a strong correlation in emerging markets between GDP and Scotch whisky growth.

j-d: Are the markets of Africa set to offer growth?

DG: It's going to be more about sub-Saharan Africa for Scotch. Countries like Kenya, Angola, Nigeria have got a burgeoning middle class, and they're looking for symbols of status. That's where Scotch tends to play a strong role.

There's usually a tipping point for markets like these, and sometimes it's about tax reform. That will bring us what we call arm's reach price accessibility: when a person coming into money can just afford it, but only just.

With Greece, that tipping point was when they joined the European Union and the subsequent tax reform.

Sometimes, we cause the tipping point through changing the value equation of our whisk(e)y offerings. In Africa, I think it will be strong growth from a percentage basis that's because we're starting from a small base before it gets to the kind of scale where it becomes noticeable. That'll take a while.

j-d: What about China, where Pernod Ricard is booming?

DG: Of course, Pernod has been in China for a number of years and has a strong presence there. However, we are continuing to build our presence in the market and are excited about the opportunities for our Scotch brands.

What we're beginning to do is to educate with enough depth of meaning about whiskey and whiskey culture. We want to make sure that there is no superficiality to the category: If you're in fashion, then it's quite easy to go out of fashion. If you build strong credentials and put down strong roots, then you build a solid platform for the future.

j-d: Johnnie Walker's partnership with Formula 1 has been going for seven years. At what point do you start to feel that the deal has run its course?

DG: Our McLaren partners have regularly talked to us about sponsors like Tag Heuer and Boss who have been doing this for 20 years or so, and how they've continued to be successful. That's our thinking: When you look at the viewing numbers, its appeal and demographic and where it's expanding to, that's exactly where we want to be. Our challenge is to keep on refreshing it and keep it interesting. The sport is still the most glamorous and prestigious sport out there. The sheer number of viewers who are in our demographic is huge. So, we're not asking that kind of question of it just yet – we're really happy with it.

Conceptually, you can ask how long it's got. But, we see the value of a long-term partnership.

j-d: Is Irish whiskey anywhere nearer recognising its potential?

DG: Within Diageo, Bushmills is a cherished band – we've got good growth going on there and we’re excited about the potential for the brand to really compete in the category. I think the category has got scale – look at Jameson: There's a brand that has laid down the marker for everybody else.

Activity in a category is a good thing; I don't think a single brand on its own can be as effective at building a category. In the US, for example, we felt at times like we were fighting a lone battle with Johnnie Walker. So, having new players in Irish whiskey, as well as ourselves upping our game, will be good for the overall category.

j-d: What about Japanese whisky?

DG: I lived in Japan for three years, so I've got a soft spot for that category – it's really interesting. We don't play there. Suntory have done a really good job in Japan with the hi-ball. But, it's a wait-and-see game for us.

j-d: Diageo has got a gap in American whiskey and Bourbon, hasn't it?

DG: Well, we have got Crown Royal, which is huge in the US, and Bulleit, which is a lovely little brand at the moment.

j-d: But, how would you feel about the Jim Beam brand, should it become available?

DG: I haven't really looked at Beam as a brand in that respect. When we look at a category, we look at all the players. In Bourbon, Jack Daniel's has the biggest geographical footprint, it's fantastically marketed and well-positioned. That's where we'd look first when we look to access growth. Beam would be interesting, but that's probably more a question for Paul than me!

Beam is a really interesting brand. It's very strong in the US and Australia, but it doesn't have the level of geographical consistency as Jack Daniel's. If you were looking at it as a global play, it would be a big, long road for the brand in some places. That takes time and money.

Some of the most interesting things happening in Bourbon are at the smaller, niche end. Bulleit is a wonderful player in that space.

j-d: What's your desert island dram?

DG: It's Black Label!

j-d: You must have drunk so much of that stuff by now.

DG: I have: That's the point! Or a Talisker 20 in a Sherry cask.

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INDIA: Fresh reports break of Diageo, United Spirits talks

25 April 2012 | By: Olly Wehring

Diageo has declined to comment on the latest report out of India claiming that the drinks giant is back in talks to buy a stake in United Spirits.

The reports, which surfaced yet again earlier today (25 April), cite an unnamed person familiar with the situation as suggesting the two are in negotiations “to structure a deal that would arm (United Spirits' owner Vijay) Mallya with enough cash to revoke pledges on shares of United Spirits”. Investment bank JM Financial has been recruited to work out the details of an agreement, the Economic Times claimed in its report.

However, in the same report, a spokesperson for JM Financial was quoted saying: “We are not involved with Diageo in any structured deal to help Vijay Mallya pay off debts in Kingfisher Airlines and therefore your query is factually incorrect and speculative.”

The UB Group, which owns both United Spirits and Kingfisher Airlines is struggling with major debt issues, with Kingfisher approaching bankruptcy.

A spokesperson for Diageo told just-drinks today: “As a matter of policy, we do not comment on market rumour and speculation.”

Meanwhile, a spokesperson for United Spirits confirmed to just-drinks that the company is "not in any discussion with JM Financial".

However, he added: “Diageo and ourselves are in constant touch with each other exploring joint business opportunities in this rapidly evolving market.”

When asked specifically about a possible stake sale, the spokesperson said: "There is no question of selling our stakes in our core businesses to invest further or to repay debt in any business including Kingfisher Airlines.

"We have other opportunities to access the necessary funding."

In 2009, Diageo walked away from talks with The UB Group over a possible tie-up with United Spirits.

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Diageo's "dirty trick" brews up a Twitter storm

10 May 2012 | Source: James Wilmore

There really is nowhere to hide on Twitter. Particularly when you're a global corporation and you've been caught with your pants down, metaphorically speaking, by a notoriously PR-savvy independent brewer.

Step forward Diageo, the latest giant to feel the wrath of Tweeters.

Late yesterday, the company's name was trending – and not for the kind of reasons it would hope.

It came after maverick Scottish brewer BrewDog accused the drinks firm of intervening to stop them winning 'Bar Operator of the Year' at an awards ceremony in Scotland.

Apparently BrewDog got the judges' vote, but a (probably now former) representative of Diageo, sponsors of the awards, intervened to stop the brewer bagging the title.

Diageo has since owned up, offering this mea culpa:

“There was a serious misjudgement by Diageo staff at the awards dinner on Sunday evening in relation to the Bar Operator of the Year Award, which does not reflect in anyway Diageo’s corporate values and behaviour.

“We would like to apologise unreservedly to BrewDog and to the British Institute of Innkeeping for this error of judgement and we will be contacting both organisations imminently to express our regret for this unfortunate incident.”

Bad timing as well, as Diageo CEO Paul Walsh this week addressed the Ethical Corporation's Responsible Business Summit.

From our sources, we understand it is likely the Diageo representative involved went 'rogue' on the night and the incident points more to a personal grudge, rather than company-wide ill-feeling towards Brewdog. The Scottish brewer produces some fine craft beers, but nothing that would obviously worry Diageo.

Strangely though, the whole hoo-ha, while no doubt gutting for the staff at Brewdog's shortlisted bar, has been a PR win for the indie brewer.

As someone going under the name Flat Caps Coffee tweeted earlier : “Diageo do @brewdog a MASSIVE PR favour! Prob better than winning the award would have”.

While earlier, BrewDog lamented the fact on its official Twitter feed that Diageo was trending instead of their company name.

It's a funny old game.

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Comment - Spirits - Flavoured whisk(e)y: A Spirited Move

10 May 2012 | By: Ian Buxton

Our whisk(e)y specialist, Ian Buxton, has had his head turned this month by a glut of flavoured whiskies. Or, 'spirit drinks', if you're a European.

"The spirit is willing, but the flesh is weak." That may just sum up the attitude of the Scotch whisky industry when confronted with the growing flood of flavoured whiskies or, to be correct, ‘spirit drinks’.

That, if you didn’t know, is what the EU and the whisky regulations would have us call them though, when you see brands such as Jim Beam Honey and Bushmills Irish Honey, you’d have to look twice to tell them apart from the parent brand. The bottle and label clearly reference the original and are designed to appeal to fans, albeit such products are destined mainly for the US.

European law is absolutely clear. Once you add flavourings to Scotch whisky, or indeed any whisky as defined in the EU Spirits Regulation, that product is no longer Scotch whisky or whisky; it is a new product based on Scotch whisky or whisky and must be described and labelled accordingly. And that, according to the romantics in Brussels is a ‘Spirit Drink’.

Sounds classy, doesn’t it?

But, that doesn’t appear to worry Diageo (Bushmills Irish Honey), Beam (Jim Beam Black Cherry and Jim Beam Honey) or Brown-Forman (Jack Daniels’ Tennessee Honey). Smaller producers such as Phillips Distilling (Revel Stoke Spiced Whisky from Canada) and even Spencerfield Spirits (Sheep Dip Amoroso Oloroso) are also getting in on the act. Clearly, they see a market opportunity, not a line extension too far that is going to damage their brand equity.

So, why are the Scots so coy? After all - although occasionally it does seem to be getting a little silly - this trend to flavour has also worked in rum and vodka.

The more extreme manifestations of the trend excepted, where’s the harm if consumers are looking for experimentation and innovation? And, if they don’t care for it, it can be quietly withdrawn and forgotten.

That was the fate, after all, of Edrington Group’s experiment with Jon, Mark & Robbo’s Easy Drinking Whisky Company and their Smooth Sweeter One, a blend of Cooley’s Irish malt and Bunnahabhain, whisky’s answer to the Titanic. But, although easy drinking turned to slowly sinking, you’ve got to give them credit for trying.

References to flavouring whiskies in Scotland, especially with spices and dried fruits, abound in the literature and could easily be resurrected if marketing demanded the requisite measure of authenticity. ‘Traditional practice’ has proved to be a flexible and accommodating criterion but the heritage lobby would surely be satisfied with a provenance that can be dated back to G. Smith’s recipe of 1725 for Fine Usquebaugh.

There’s no shortage of honey in Scotland and there seems little reason why what works for Bourbon and Irish whiskies couldn’t benefit Scotch. Could it be that the current boom in demand for whisky, with the price for new fillings soaring upwards, has made life a little too easy for Scotland?

We’ve seen Ginger Grouse served on tap and Compass Box have their Orangerie ‘whisky infusion’, but nothing yet capable of addressing the challenge and opportunity of the giant US market for whisky. Clearly Beam, Bushmills and Jack Daniels see an opportunity.

So, how long can Scotch producers ignore this apparent gap in the market? How long before we see a Chivas Regal Spiced or a J&B Honey?

Perhaps it’s time for the Scotch whisky industry to turn to its Bible. After all, as Sampson reminds us in the Book of Judges 14:14 “out of the strong came forth sweetness”,

Scotch is undoubtedly strong. Can it now show us its sweeter side?

[Uisge-Beatha]

just the Facts - Scotch Whisky

28 May 2012 | By: Olly Wehring

This week, Pernod Ricard is hosting members of the media and the analyst community in Scotland for two days as it presents a capital markets day on Wednesday (30 May). Ahead of the trip, just-drinks looks at the Scotch whisky market globally.

• Scotch whisky is the largest international spirits category in volume terms, accounting for 21% of total market share. Vodka is second, with 20%, followed by non-Scotch whisk(e)y at 12%. Rum has 11% share.
  
• In value terms, Scotch again tops the tree in international spirits, with 25% share. Value follows volume's top four, with vodka (18%) non-Scotch whisk(e)y (12%) and rum (9%) leading the spirits pack.
  
• The largest market for Scotch in terms of value is France, with 10.8% share. The UK is second with 8.1%, and the US third with 7.5%. Looking at the BRIC markets, Brazil accounts for 4.9%, China has 3.2%, while Russia accounts for 2.9% and India 2.5%.
  
• Turning to brands, Diageo's Johnnie Walker leads the pack in Scotch, with 22.1% global market share. Pernod claims the second and third spots, with Chivas Regal (8.2%) and Ballantine's 6.5%. William Grant & Sons' Grants brand is fourth with 4.2% share.
  

All figures courtesy of The IWSR ending 2010.

[Uisge-Beatha]

IRELAND: Diageo to sponsor Irish Open with Bushmills

25 May 2012 | By: Andy Morton

Diageo will sponsor this year's Irish Open at Royal Portrush Golf Club through its Bushmills Irish Whiskey brand.

The drink, which shares a base with Royal Portrush, in Antrim, will have exclusive whiskey pouring rights at the tournament, taking place between 28 June and 1 July. The tournament winner will get the 'Freedom of the Old Bushmills Distillery’, which will see them granted the keys to its private reserve, the distillery said.

“This will be an event that will attract hundreds of thousands of people to the region,” said Bushmills' master distiller Colum Egan.

“Everyone who is coming to the North Coast to watch world class golf has just four miles to travel to also experience award-winning Irish whiskey at the Old Bushmills Distillery."

The distillery will also host a whiskey and music festival on 20 and 21 June.

[Uisge-Beatha]

UK: Diageo hits “pivotal moment”, prepares US$1.5bn Scotch investment

6 June 2012 | By: Olly Wehring

Diageo has announced plans to invest heavily in its Scotch whisky operations and has lined up the construction of another distillery in Scotland.

The company, which has seen the performance of its Scotch portfolio outperform the global market in recent years, said earlier today (6 June) that it will spend GBP1bn (US$1.55bn) on Scotch production over the next five years. A “major” new distillery is included in the plans, although the company could only pinpoint the Speyside or Highlands areas for the facility.

Existing distilleries will be expanded, while a further new site will be considered, “if global demand for Scotch is sustained at expected levels”.

As well as the production spend, Diageo said it will construct “substantial new warehousing capacity” in which to age the additional liquid. Around 100 jobs will be created as a result of the investment.

“This is a pivotal moment in the development of the Scotch whisky category for Diageo,” said CEO Paul Walsh. “Over recent years our brands have achieved remarkable, sustained global growth. “We expect that success to continue, particularly in the high growth markets around the world.

“This builds on the foundations we have already laid down over recent years through sustained investment in both production assets and in maturing Scotch inventories.”

When contacted by just-drinks, a company spokesperson said: “The locations (for the new distillery) have yet to be finalised and Diageo is carrying out detailed investigative work at a number of potential locations in Speyside and the Highlands area. The first planning applications are expected to be lodged this summer.”

Diageo has invested heavily in Scotch recently. A year ago, the firm confirmed a GBP20m spend on upping capacity and, in 2010, it opened the Roseisle distillery at a cost of GBP40m.

The announcement comes a week after Pernod Ricard presented its plans to grow Scotch globally going forward.

[Uisge-Beatha]

Comment – Spirits – Diageo, Pernod Ricard and the Scotch Whisky Grand Prix

7 June 2012 | By: Olly Wehring

Diageo confirmed yesterday (6 June) that it will invest heavily in its Scotch whisky production capabilities going forward. As soon as the announcement was made, debate kicked off about whether the move was a positive for Diageo or Scotland, or both. Whatever the argument, the news confirms that Diageo is dead set on coming good on its promise to have half of its annual net sales coming from the emerging markets.

The spirits giant plans to spend GBP1bn (US$1.55bn) on its Scotch operations over the next five years. The cash will be used to build a distillery similar in output - 10m litres of pure alcohol a year - to Diageo's Roseisle facility, which will see its liquid come online later this year. As well as this, half of Diageo's existing 28 Scottish distilleries will have their capacity increased and, if that weren't enough, another distillery is being considered further down the line.

The debate mentioned earlier kicked off when some observers considered Diageo's closure of its Kilmarnock presence back in 2009, with the loss of around 500 jobs. About 100 staff will be taken on as part of the investment (not including construction and other ancillary service employment). Good for Scotland? Maybe not as good as it will be for Diageo's future balance sheet.

On a broader global stage, Diageo's move makes perfect sense. As Pernod Ricard said last week at its Capital Markets Day in Scotland, the potential for Scotch – both blended and malt – knows no bounds, as the emerging markets soak up whatever is available. Indeed, Pernod also said last week that it will be investing in its Scotch operations. Both Diageo and Pernod are looking to the likes of Brazil, China, Russia and India – as well as smaller markets in Africa, Asia and LatAm – to provide the performance that both have forecast for the medium and long term.

From the outside, this looks like a pretty risk-free move. After all, if the two can't sell what they make, they can hang on to the liquid for a little while longer, then charge more for older Scotch once the cycle picks up again.

But, I see a bump in the road. And, it's name is India. As the situation currently stands, the excise rate on imported spirits in the country is at 150% - and that's just to get the stuff off the boat. With each Indian state holding its own set of tax reins, there are further duties to pay depending on where the two companies want to venture.

Talks between the European Union and India over this, and other financial matters, are ongoing. This particular tunnel is long, with no end in immediate view. One seasoned observer has told me that the likelihood of an agreement between the two – and the subsequent dropping of the 150% duty rate – before the next Indian elections in 2014 is only 50-50.

Diageo may maintain that it is not factoring India - and its widely-touted craving for Scotch – into its future plans for Scotland. I find this quite hard to believe.

Pernod's dominance of imported spirits in China, through the Martell Cognac brand, is based very much on the fact that it got into the market first. Diageo will not want that to happen again and will have its foot ready on the clutch the best it can ahead of the (Indian) flag coming down.

The spirits juggernaut has started its engine and will be hoping it is not heading for a false start.

[Uisge-Beatha]

GLOBAL: Pernod Ricard unveils major investment to boost Chivas Brothers production

30 May 2012 | By: James Wilmore

Pernod Ricard has committed to a GBP40m (US$62.2m) annual investment in Chivas Brothers to keep up with demand for its Scotch Whisky brands in emerging markets.

As part of the plans, Chivas Brothers, Pernod Ricard's UK-based Scotch whisky and premium gin unit, will open a new bottling hall at its plant in Paisley this summer. The Glen Keith distillery will also be re-opened next April.

Meanwhile, the Glenallachie, Glentauchers, Tormore and Longmorn distilleries will also have their distillation capacity increased.

In a statement, the company said it was looking to "capitalise on the trend" of consumers "thirst for premium spirits in many emerging international markets".

The new Paisley bottling hall will “increase the emphasis on hand-bottling for prestige and ultra-prestige editions such as Chivas Regal 25, the Royal Salute range and high-end limited editions of The Glenlivet and Ballantine’s,” the firm said.

Christian Porta, Chivas Brothers' chairman & CEO said: “We are committed to a capital expenditure of £40 million annually to further increase our distillation capacity and production facilities.

“This investment, allied to strong market growth, a continued commitment to innovation and the best suited portfolio to target the most profitable opportunities, will provide the basis for future value growth for our company.”

[sir mihas]

Swedish state monopoly alcohol retailer Systembolaget announced on Friday that Sweden's first whisky auction will be held on October 7th.

Among the 400 bottles on offer include a Macallan from 1946 with a starting price of 24,000 kronor ($3,620).

The organisers of the auction, which will be held by the Stockholm auctioneer's office, are not overly concerned that financial turbulence and the dire economic climate will dissuade potential buyers.

"It remains to be seen. But demand for whisky is substantial and, with the emergence of clubs and whisky tasting, has become something of a people's movement," said Sören Nylund at Systembolaget.

Further items on offer at the auction, which will beheld in Frihamnen on October 7th, include a Very Very Old Fitzgerald Original Sour Mash from 1953, a Highland Park 1964 and a Glenury Royal 29 Years Old

[o_koulos]

Κάθε άλλο παρά ελπιδοφόρα είναι τα μηνύματα που έρχονται για τη φετινή σοδειά κριθαριού βυνοποίησης σε Ηνωμένο Βασίλειο και Σκωτία, σύμφωνα με τα όσα επικαλείται η συμβουλευτική εταιρεία RMI Analytics.

http://www.agronews....-fetino-ouiski/

[Uisge-Beatha]

just The Answer - Bruichladdich CEO Simon Coughlin and commercial director Douglas Taylor

20 November 2012 | By: Andy Morton

Two months ago, French spirits and Champagne firm Remy Cointreau paid GBP58m (US$90.3m) for Islay Scotch maker Bruichladdich. The sale of the independent distillery, only reopened for 12 years, sent ripples through the whisky industry and saw the departure of co-founder and MD Mark Reynier.

just-drinks sat down with new boss Simon Coughlin, also a co-founder, and commercial director Douglas Taylor to talk about Reynier's exit, Bruichladdich's influence on the industry and how selling to Remy was one of the least exciting days of their lives.

just-drinks: Your management team is still in place since the Remy sale, except for Mark Reynier. Why did he leave?

Simon Coughlin: This was Mark's baby. He brought us all in to help deliver that project. I think the fruition of bringing it to a point where it was ready for sale meant that his job was done. There are still things that he would have like to have done, but I think he had the realisation that it was time to move on. He had a great relationship with Remy, there are no issues there. He just thought: “I'll go find something else to do.”

j-d: So the intention from the start was to sell?

Bruichladdich's co-founder and CEO, Simon Coughlin

SC: The honest answer is, yes. We thought that in this industry the liquid has been separated from the production and the ingredients - it's been taken over by marketing. Mark (who was previously MD of his own wine retailer) said: “But hang on, what we did in the wine business was all about understanding ingredients, the connection of what's in the glass with the ground and the people who make it." The whisky industry has lost all of that - it's just a drink. We thought there was a chance to do it differently.

That was the vision Mark had, and that's precisely what we achieved. What we were doing differently came to the attention of a bigger company that got it, and went: “You know what? We get that completely and we can take that somewhere else to a much bigger place with our distribution." And that is the beauty of our relationship with Remy Cointreau - they totally get what we do. They love it, they want us to do more.

j-d: Were other companies knocking on the door?

We've always had people knocking on the door. We've had to have a view of what we're doing with the business. It wasn't a lifestyle business.

j-d: Were you fortunate the whisky market changed around you?

SC: I don't think it was fortunate. I think it's happened. Some of it we were influential in.

j-d: Do you think Bruichladdich helped change the industry?

SC: I believe so, yes, absolutely. I utterly believe that.

Douglas Taylor: If you look at the things we've done - non-aged statements, unconventional packaging, aquamarine bottles, 46% abv. And bringing products that have authenticity, traceability and provenance. If what you want is a whisky with the monarch of the glen and gold foil, then the world is full of that kind of whisky.

SC: But if you want knowledge of a whisky, then ours has that. But it's not anorak detail. People want to know more about what they are eating and drinking. That's what we did in wine.

Bruichladdich's commercial director, Douglas Taylor

j-d: It's been a short space of time since Remy bought you. Is it all still a bit chaotic?

In terms of the distillery and bottling, there's absolutely no change except we are going to increase production significantly. On the commercial side, there's a lot going on. A lot of conversations - are we going to keep the same distributors, are we going to merge quickly in some area? Most are still up in the air, which is very exciting.

j-d: Did you stipulate to Remy that what you have worked towards will be protected?

SC: No. (Remy CEO) Jean-Marie Laborde did. They think it is an extraordinary thing that we've achieved.

DT: They've invested in Bruichladdich for what it is. If you start bottling on the mainland, trying to bring in efficiency then you end up with a pretty run-of-the-mill distillery that they wouldn't have had to pay so much for and could have gone to market and sourced. The thing they find most appealing is the part they want to protect. And that gives us great confidence.

SC: They want us to keep our edge, to be challenging. Someone said to me the other day: "I'll see you at the next SWA (Scotch Whisky Association) meeting, because Remy will want you to join." But I have no idea. It's the least important thing at the moment. We probably won't join, because it'll mean conforming.

j-d: How did the sale come about?

SC: We had talked to them in the past. We've talked to a whole range of people in the past, about 20 in the last five or six years. To all intents and purposes, we got a call.

j-d: It must have been an exciting moment for you.

SC: When we came out of the board meeting where we decided to put it to shareholders, I have never been less excited in my life because we all thought that that was it. We had started a process that would end in us selling the company. If you'd been there you would have thought that somebody had died. It was more than just a business to us.

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