...where distraction is the main attraction.

Wednesday, October 2, 2013

A Diageo boycott: The Motivation

Monday, I wrote about Diageo's brands.
Tuesday, I wrote about Diageo's whisky.
Today, it's about the B word, and why...

Boycott is an act of abstaining from buying or using.  The definition sounds simple, but it's a word that holds significant connotations.  We shape much of our lives around the things we buy and consume.  I like to buy and consume whisky.  Diageo owns a hell of a lot of whisky.  To say "no more Diageo products for me" means there will be a lot less whisky out there for me to purchase.  But when I buy something, that money goes to support a person or a series of actions and policies which constitute a business.  Thus my money = me.  Do I want to support the actions and policies that are Diageo?

The only reason for me to say "yes" is whisky.

Here are some personal motivations for me to say "no":

1.  Let's start with the Special Releases' pricing that I mentioned on Monday.  Diageo has doubled, tripled, and quadrupled prices on these annual releases over the past few years.  And this isn't just on closed distilleries, but also open ones, so they cannot use the "closed distillery" reasoning for the boosts.  Consider that while they are priced higher than similar single casks on the market, these Special Releases are not single casks.  Instead, ten to twenty casks are utilized for each release thus there are many more bottles for sale.  So this action isn't just there to silence the secondary market, but also to manipulate the primary market via pushing prices up and creating increased scarcity for their future "Special Releases".  For more information and a better take on this, please see Oliver Klimek's "Whisky for Fools" post.

2.  Next, the termination of Johnnie Walker Green Label.  There are now two posts about this (here and here) so I won't belabor this point much more.  Green Label was one of my favorite Diageo products and possibly their highest quality blend.  So there's a personal gripe built into this, in addition the BS PR involved.

But one additional note that I did not include yesterday... For the folks who claim that blended malt sales fell dramatically in 2011 -- triggering the Green Label axe -- it's hard to know how blended malt sales could do well when there was a 55% drop in exported blended malt in 2011.  If you give us less, we'll buy less.  Otherwise, it looks like companies like Diageo wanted to keep their malt for higher profit-margin lower-malt whiskies.  Don't slap us and say we deserved it when we didn't.

3.  Talisker.

Talisker?  Talisker.  Talisker might produce my favorite malt.  Or, at least I think it might but I really have no options to explore it further since Diageo hasn't let any casks slip to other bottlers in almost 25 years.  But that's a company-wide issue I'll leave for #5.

This year, Diageo raised the price on Talisker 18 year old by 40% without explanation or without limiting the supply, leaving many of us fans to go WTF?  It is now priced up there with similarly aged products by a "luxury" brand (Macallan), a "friggin' quackers pricing" brand (Dalmore), and a hand-run small business (Springbank).  I can only assume they were trying to pull a Dalmore (whom they now own) by declaring, "This is luxury because the price is high."  Anyway, one of my favorite whiskies is now out of my price range.  Cheers.

Then there is Talisker Storm.  I've already snarked about this one.  I'll put sarcasm aside for a moment.  I don't mind distilleries releasing young non-age-statement (NAS) whisky onto the market.  A lot of folks are doing it now and pricing it at the bottom of the range.  Instead, Storm is priced about $20 higher than its classic age-listed older brother, the 10-year-old.  So, Diageo, what you're saying is that in order for me to try a younger NAS Talisker full of oak manipulation, I'm supposed to pay more?

In the end, I'm only left with Talisker 10, the first of the 10-year-old single malts to reach the $60 price range.

4.  Poor presentation of a high quality product.

First, they strip whisky out of their whisky in order to make it look pretty in cold climes.  By chill-filtering the hell out of the malt, they strain out oils that contribute texture as well as taste and smell compounds.  Then they add a significant amount of E150a.  And by "significant" I mean my last Oban 14 was brown.  I don't mean dark amber or rich gold, I mean brown.  That is not the color of watered-down filtered whisky that spent fourteen years in refill bourbon oak.

As consenting adults, we know that the alcohol we drink isn't great for our livers.  But with proper hydration we can help remove the alcohol from our bloodstream.  I don't know how long lab-created caramel colorant takes to exit my body, but I'd rather not introduce it when I'm already socking my liver with delicious whisky.  One poison at a time please.  I'll choose malt w/o E150a.

5.  No indie casks.

And by that I mean at some point around 1998 Diageo decided to end any further distribution of their casks to independent bottlers.  There wasn't a whole lot going out to the indies at that point anyway, but the faucet was shut off.

The independent bottlers are very small businesses that in no way compete with a $80B market-cap slug like Diageo.  Instead, with their limited resources they bottle unfiltered uncolored (and often cask strength) whiskies that provide anoraks with the opportunity to experience a malt from an alternate angle.  They expand the whisky experience.

Diageo puts several hundred thousand casks into bonded warehouses each year.  Couldn't they let a handful out every once in a while?  Apparently not.

6.  Did I mention that Diageo rigged an independent beer competition?  Who does that, really?

7.  Back in the 1820s, a grocer......what was his name?.......um......oh, John Walker, began blending whiskies to sell to his customers in Kilmarnock, Ayreshire, Scotland.  Business eventually picked up a bit, you may have heard.  Almost two hundred years later, ignoring protests by tens of thousands of locals (you know, actual Scottish people) and efforts by the Scottish government, Diageo closed the Johnnie Walker bottling plant in the home of Walker's Kilmarnock Whisky, delivering a pounding to the local economy.

8.  Let's add into this mix the fifteen distilleries proto-Diageo closed and demolished during the last whisky drought.  Does Scotland trust a company -- a non-Scottish company with stakes and ownership around the world, paying tens of millions of pounds to its executives and board and more to large stockholders -- to have this much control over its most famous export?  What will Diageo choose to do the next time the market lags?  Meanwhile, their human distillery jobs were decided to be redundant and their tax receipts go to the UK at large.  With Diageo buying their barley from around the world, how Scottish is their Scotch?

9.  To throw a little seasoning in there, Distillers Company Limited (DCL, proto-Diageo) distributed Thalidomide, the pharmaceutical drug that caused horrific birth defects in over 10,000 newborn babies around the world.  It took over forty years for Diageo to set aside substantial compensation for the surviving mutilated victims.

10.  Is that a little too long ago?  How about the '80s?  As far as corporate ethics goes, there's the share-trading fraud that tripled Guinness's share price, allowing them to takeover DCL, which is pretty neat.  Some of the wealthy fraudsters claimed anti-semitism was behind their eventual punishment -- as a Jew, very little disgusts me more than knowingly guilty parties claiming anti-semitism when they are caught (that includes you, Ryan Braun).  Former Guinness CEO Ernest Saunders was able to stay out of prison by claiming he had Alzheimer's Disease.  A few years later he magically became the only person in history to have been cured of Alzheimer's Disease.  A few years after that, with its massive holdings in tow, Guinness merged with Grand Metropolitan, forming Diageo.  So there's no Diageo without billions of dollars of fraud.

I'll stop at ten today.  Tomorrow, I'll wrap this all up and try to define my next steps...


  1. I appreciate that you link to my "Whisky for Fools" article, but I don't really agree with your conclusion. For me the fools are the people who buy pay the exorbitant prices not only for new bottles but also on the secondary market, thus encouraging Diageo to raise the bar even higher because they have reason to believe that enough fools will jump over it again. What is cause and what is effect here?

    I also disagree with some of your other points. The pricing for example in the US differs wildly from Europe. You mention Tasliker 18 and compare it to Macallan 18. In Germany I can get the Talisker for 70 Euros, the Macallan now has skyrocketed to over 200 Euros for the sherry version. Is it reallly only Diageo who is to blame for the pricing? What about importers or local US liquor control boards?

    Talisker Storm vs, 10 yo: Look at Laphroaig Quarter Cask vs, 10 yo

    Indie casks? What about Grant's or LVMH?

    I don't want to defend Diageo here, don't get me wrong. But apart from the shameless closing of Kilmarnock and maybe the Brewdog incident see little that is unique to Diageo and would justify a boycott. And fighting now against things that happened 30 years or more ago? I don't know....

    1. Hey Oliver,

      I did say you had a better take on the Special Releases. :) I agree that the auction market takes a large part of the blame, especially with PE and Brora. But $1000 for a non-single-cask Convalmore? And almost $300 for a non-single-cask Oban? And the Lagavulin? Those appear to me to be at the very least pre-emptive strikes by Diageo because I haven't seen prices like those at auctions (yet).

      While I won't defend Macallan 18's ridiculous pricing, its rise wasn't stratospheric here rather bumping up 10-20% per year (ugh). The Talisker 18 pricing almost doubled in some of our shops out here this year. The importers are an issue with the Springbanks in the US, but I've never seen something jump like the Talisker 18 without it being a limited release. Clearly, I need to go to Germany. You guys also have so many great indie bottlers out there.

      Very good point about the Laphroaig QC. Even though I love the stuff, the QC definitely set a precedent for The Storm. And the Dark Storm. And the Port Ruighe. You got me on that one.

      I actually agree with you about most of the pricing and indie cask issues and I'll be addressing that in tomorrow's post.

  2. Not to mention that pricing for the Caol Ila 25 and Talisker 25--even at the newly lowered strengths-is eminently reasonable compared to not only the spectacularly expensive Laphroaig 25 but also 43% 25 yo's such as those released by Bowmore and Bunnahabhain. See also older Balvenies and Glenlivets. And as Florin mentioned yesterday, among the younger lot Clynelish 14 continues to be a steal, and the price of Oban 14 hasn't moved in a decade.

    I don't think there is a consistent story to be told/read in Diageo's pricing.

    And while the prices of some of the annual Special Release whiskies have gone up spectacularly they're quite comparable/reasonable compared to whisky of similar ages released by distilleries not owned by Diageo (see Glenmo Pride, Highland Park 40).

    Really, when it comes to pricing only Glenfarclas and Bladnoch have an approach different from others.

    This is not to say that I am a fan of Diageo--far from it--but I don't think there is anything particularly egregious or original about their price increases.

    1. Oh come on, The Glenmorangie Pride comes with the Baccarat Crystal Decanter by Laurence Brabant. :-\ Highland Park 40 is kinda difficult because while it sells for $3K in California, it sells for $1200-$1500 in the UK. I guess we have to wait and see what 40 year old PE, Brora, and Lagavulin will sell for.

      I do agree that Glenfarclas and Bladnoch have a different approach. Balblair used to price well. Maybe Tomatin and Tomintoul too.

      Though they did stake out the $60 spot for a 10yo (Talisker), I don't have that much of a beef with the prices of the regular "Classic Malts". They haven't moved them much yet and that's a good thing.

  3. Also are you sure about the "at some point around 1998 Diageo decided to end any further distribution of their casks to independent bottlers" thing? A cursory scan of stores and Whiskybase shows a fair number of indie Caol Ilas, Blair Athols, Cragganmores et al from 1999, 2000 and 2001. Berry Bros and Rudd alone have released 7 Caol Ilas from 2000. Isn't it more likely that a lot of post-1998 casks just haven't hit the market yet?

    1. I do have a few tables (pulling from Whiskybase) going with individual distilleries and the indie releases during the surrounding years and I should post them to show my backup. I started the charts when I overheard (hearsay!) this at two different indie tastings. While it's definitely possible there are some more casks aging, most of the distilleries have an abrupt cutoff point of '98-99. What I did not catch is the SLEW of Caol Ila. When I update my charts, I'll post 'em to help clarify. Thanks.

    2. I think you will probably have to adjust for production volume (there's a lot of Caol Ila, period). And keep in mind that once upon a time there was more whisky available than was being bottled by the officials and hence there was more going to indies. Now that demand for whisky (blends) has been going up dramatically for a while it doesn't seem odd that fewer casks should be available.

      And I don't take things said at indie tastings very seriously. I was told the most ridiculous hogwash at one such tasting by someone who should have known better.

    3. No, you're right about the gossip at indie tastings. I've heard some whoppers that were so not true that I was speechless, and those were from actual industry employees. They often end with:

      "Don't tell anyone about this yet."
      "Don't worry. I won't."

  4. Just want to add that like George Dickel, Diageo is doing very little with Bushmills. Bushmills can make some good product like Black Bush and the really good 1608. I would just like to see more single casks and cask strength whiskey from Bushmills but it seems Diageo is concentrating on the core range.

    1. If they released a single cask Bushmills, that would be revolutionary! And potentially a good sign.

  5. May I add this nice piece to your list?

    Freshly and unmatured from DIAGEO: http://blog.thewhiskyexchange.com/2015/03/nas-whisky-diageo-speaks-out/

    1. I cannot comprehend Diageo's distain for its own customers. What did we do to deserve it other than buying their products?