...where distraction is the main attraction.

Tuesday, April 17, 2012

Diageo, Whisky Killer, Part 2: The death of Green & Gold Labels


Green Label has always been the odd one out amongst the Johnnie Walker blends.  Unlike the rest of the cast, Green is a Blended Malt rather than a Blended Whisky.  This means there's no grain whisky in it, just a mix of single malts.

Last year, in an interview for the Malt Whisky Yearbook, a Diageo representative -- the same exact rep who made the questionable statements I covered yesterday -- said the following about Green Label:
"Green Label was aimed at offering something for people who were comfortable with their favorite blend, but not sure how to get into single malts......Green Label is right in the middle of our Flavour Map.  It has very wide appeal."
Less than a year later, Diageo announced they are killing Green Label.

Then they announced they are killing the next blend up the list, Gold Label.


This same Diageo rep says in this same interview:
"If you want uber-flexibility you don't put on an age statement, but if you are pitching your blended malt against single malts, then an age statement helps, because single malts almost invariably carry age statements."
So, what does Diageo replace Green Label (15yr) with?  A non-age statement "Gold Label Reserve".

Gold Label Reserve is not Gold Label (18yr), since Gold Label will be getting the hatchet.  It's a completely different blended whisky (not a blended malt), without an age statement.  Since age statements are largely marketing tools, how exactly is Diageo going to try to sell Gold Label Reserve amongst the rest of their blends......which all have age statements......and still get folks to pay $60 for it?  How are they going to keep the not-Gold-Label Gold Label Reserve from getting confusing?  Are they hoping that customers will think that it's Gold Label and will get excited about paying $25 less for it?

Gold Label itself is getting replaced by Platinum Label (which does have an 18yr age statement) which will be peatier and at least $30 more expensive.


To clarify:
Green Label's price point --> Gold Label Reserve
Gold Label's price point + $30 --> Platinum Label (18yr)


So what was...
Red - $20
Black - $40
Green - $60
Gold - $80
Blue - $200

Is now...
Red - $20
Black - $40
Gold Reserve - $60
Platinum - $110
Blue - $200
...unless they raise the prices of the others, which is not out of the realm of possibility.


What is their reasoning behind this move?

In an interview with the major wine & spirits journal, Shanken News Daily, the same Diageo gentleman provides the following wisdom:
“As we reviewed the brand offering, we found that the range wasn’t meeting consumer needs and providing the best consumer journey through the range as far as taste profiles and price points.”
And...
The revamp was meant to spread out the Johnnie Walker portfolio’s pricing in order to better motivate consumers to move up the brand ladder.
The truth falls outside these statements, since the decision likely had very little to do with "consumer needs".  I have no doubt that Diageo had legitimate financial reasons behind their decision.  But I don't think the above statements have anything to do with those reasons.

Firstly, how does removing your brand's one stepping-stone between blends and single malts meet consumers' needs?  How does adding a NAS (non-age statement) bottling meet consumers' needs?  How does removing the most critically lauded label in your brand meet consumers' needs?  How does removing Gold Label from one price point then adding a Gold Label Reserve at another price point meet consumers' needs?

It doesn't.  It meets your company's needs.

And "providing the best consumer journey through the range as far as taste profiles and price points"?  You're removing a semi-peated whisky (Green) for a non-peated whisky (Gold Reserve), then replacing a non-peated whisky (Gold) with a semi-peated whisky (Platinum).  +1 plus -1 equals 0.  Taste profile hasn't shifted.  You're just charging $50 more for your peated whisky.  And $30 more for your 18-year whisky.

I'm sorry, you said something about "consumers needs?"

And as my MBA buddy said, "I don't recall the chapter in my MBA where higher prices gets customers to buy more. Maybe I skipped that day."

This is about profitability.  To try to hide that in statements about the buyer's desires isn't even creative PR nonsense.


Blended malt sales are dipping while single malt sales are rising.  But since Diaego claims they're not in the single malt business, where's all that malt whisky going to go?

Blended malts require 100% single malt whisky.  Large blends have between 30% and 40% single malts, the rest is filled out with cheaper quicker grain whisky.  I've had some cheap Diageo blends, and they're barely hitting the 30% malt mark.

Let's do some quick math.  According to the Yearbook, Diageo released 220,000 cases of Green Label in 2009.  That's 1,980,000 liters of malt whisky.  That same quantity of malt whisky could be spread out to 550,000 cases of grain-light or 733,000 cases of grain-heavy blended whisky.

Thus Diageo wants to keep their malt whisky and spread it around.  And they're trying to create more for the emerging markets (read: China).  Diageo just built the enormous Roseisle distillery; they're considering building another; they're ramping up production to squeeze another 10 million liters/year out of their existing distilleries.

So they clearly need more malt whisky for their blends.  Unless they want to try to sell single grain whisky to the Chinese.  (Diageo, you can have that idea for free.)

And as I'd mentioned before, they're aiming for revenue growth by having customers pay $50 more for peated whisky and $30 more for 18-year old whisky.  Simultaneously, in the Green-now-Gold-Reserve price point, consumers will be paying the same amount of money for something with a completely different flavor profile that has less depth due to a 60% to 70% reduction in single malt content.

Wow.  Thank you for considering our needs.

Well, not my needs.  After this label phase-out commences in the summer of 2013, I am done with purchasing Diageo products.

Green and Gold Label are my favorites amongst the Walker blends.  I feel a BLEND of disgust and disappointment with their removal.  It's an emotional revolt I cannot objectively qualify with words.

But I'm also sick of the lazy way Diageo handles their single malts, as illustrated in yesterday's post.

I'm also frustrated by the way they handled their closed distilleries, destroying brands rather than selling them off to a smaller company that couldn't even compete with them.

The cultural and socio-economic thumping that was dealt to Kilmarnock upon the closing of the Johnnie Walker bottling plant did not win Diageo any points on my behalf.

And finally these odd, ham-handed, dishonest attempts to mask their business is insulting to me as one of their consumers.

My dollar is my voice.  I will support the smaller whiskymakers.  They may not always be 100% honest in their marketing material, but at least they work hard at developing their single malt product.  They succeed and evolve more with less at hand as they try to wrestle shelf space away from the Diageo brands.

Johnnie will have to keep walking without me.

4 comments:

  1. Todd Stuart PhillipsOctober 3, 2012 at 9:14 PM

    Hear, hear. Quite agree.

    Just now finding this post, the first I have heard that they are retiring Green Label! A crime against humanity. It is the only blend I will ever buy.

    Now I see why my friend from Diageo is ignoring my suggesting of having a private "house concert" where he does his Green Label blending presentation.

    I am also disappointed in Diageo's Distillers Edition bottlings, where they do heavy sherry finishings on various brands, like the peaty Talisker, Lagavulin, etc.

    While the results are interesting, they really end up as a train wreck of flavors - there is nothing like the deeply integrated and subtle complexity of a traditional Macallan or Springbank, or Highland Park.

    It is a terrible trend where many drinks companies are vatting young spirit with old and slapping on some fancy finishing, ending up with a product that is does not marry well at all. But I can see many Americans liking it, since we tend to spell subtle in 19 foot high shocking pink letters with sparklers around them.

    And it is not just Diageo. Ardbeg and Glenmorangie, and even Springbank are doing it too, with slightly better results.

    I guess the demand for older whisky is just too much, so they are spreading it around in their single malt expressions, cutting it with younger stuff and hiding that with perfumed finishing. Gone are the days.

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    1. Thank you, Todd!

      I completely agree with you! Though I'm fully infatuated with Ardbeg's malt. I'm enjoying their experiments...well...those that remain affordable at least. I sort of understand Springbank's fiddlings, but their raw Longrow and Springbank spirit is so much better un-doctored.

      I have a sample of a Talisker and Lagavulin Distiller's Edition, so I'm curious to see how that goes. Again, another two strong malts that are impressive on their own, even despite a ton of filtering and coloring.

      Gone are the days, unless the whisky market collapses...

      Thanks for the comment!

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  2. Does this work for you as a sample of Diageo bashing ?

    { ed. in response to belated lament of Port Ellen's passing & subsequent price gouging at

    http://www.theguardian.com/lifeandstyle/2013/oct/26/scotch-whisky-village-distillery-died }

    " Nowhere in the article, nor in a single comment post at the originating Guardian site publishing the article online, did I see mention, let alone discussion or opprobrium, about Diageo's Gordon Gekko style Blue Star airlines "wreck it because I can" exploitation of distilleries in the '80's & '90's.

    They not merely mothballed distilleries they'd gobbled via vulture capitalism using CocaCola Corp. capital, but scrapped legacy stills & bulldozed century old historical structures not least because the newly acquired legacy distilleries made product superior to their flagship brands.
    The acquired brands exposed Diageo’s inferior product lines' corner cutting shortcomings to the retail consumer.

    This is / was not stewardship of the Scotch tradition by the leviathan dominating the global marketplace. It is cultural stripmining.
    The great strategic hope for a tradition of quality spirits is the blossoming of craft distilleries, more prevalent in U.S. as far as I'm aware, than faithless transnational corporations re-animating mummified Scotch distilleries in another repetition of historical pump & dump pattern, flooding the retail market with product too much too fast with unsustainable rising price trend. "

    At least we're not alone in our vituperative maligning.

    http://www.dramming.com/2013/09/03/diageo-whisky-for-fools-collection-2013-released/

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    1. Wow. This^^^^

      Thanks, morlock. I fear the pump & dump as well. What distilleries get canned and bulldozed by Diageo and Pernod if/when the next whisky loch occurs? The ones that are the least needed for blends. Can we naively hope that those distilleries get sold rather than scrapped. Yeah, right.

      I love how the "manufacturers" remain silent about how an independent Scotland would affect their business...especially when the vast majority of ownership is not Scottish. And due to technology, they hire very few Scots. And much of their barley is imported from outside of Scotland. That leaves tax revenue as the only that the Scots can keep for themselves. Right now the UK gets the tax revenue first, so only the tax office (the HMRC) knows how much Scotland actually receives. With independence, Scotland will at least be able to manage what they bring in and keep something from Scotch for themselves.

      There are a handful of small craft Scottish distilleries popping up next year, a couple more that have been distilling for a few years, and bunch others in the planning stages, awaiting starter money. Let's hope they make good stuff. Whisky word of mouth has proven to be influential.

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