...where distraction is the main attraction.

Tuesday, October 1, 2013

A Diageo boycott: The Whisky

Yesterday, the non-whisky brands.
Tomorrow, the "why?".

Here's the pressure point.  The whisky.  The distilleries fully owned by Diageo produce 38% of all of Scotland's malt whisky.  Their top selling blend, Johnnie Walker, is not only the largest Scotch blend (with more market share than the next three brands combined), but Johnnie Walker alone sold more than twice the LPA (liters of pure alcohol) of the entirety of the single malt market in 2011, 69.7M versus 34.7M.

So if a person was considering never again purchasing Diageo products, his Scotch choices would be significantly reduced.

Let's start with the blends:

Blended Scotch Whisky
Bailie Nicol Jarvie (via LVMH)
Dimple Pinch
Johnnie Walker
Vat 69
White Horse
Windsor Premier

Many of these aren't available in the US.  For the ones available here: White Horse isn't terrible, while Buchanan's, J&B, and Dimple Pinch are decent for cocktails/highballs.  But their absence would not be felt here at home.

That leaves Johnnie Walker.  I have done PLENTY of posts about JW.  Black Label was one of my starter whiskies and was, until last year, the go-to home blend.  But it was last year's news about the termination of Green and Gold Labels that had started my boycott talk.

For more about this particular act of Diageo's whisky killing, here's a link to my original post.  Here's a teeny bit of the issue I took:

In an interview with the major wine & spirits journal, Shanken News Daily, Diageo's Head of Whisky Outreach (really) says:
“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.”
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 whole "consumer needs" reference is cute.  The actual "needs" are Diageo's malt needs.  They are investing hundreds of millions of GBP to expand their malt production in order to fulfill the blends needed by emerging markets.  At the same time, Green Label was their only all malt blend (or blended malt).  Without cheap grain whisky mixed in, Green Label had a much lower profit margin than regular blends.

Per the Malt Whisky 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.  There's a quick way to triple one's blend production, spread out the malt.

Meanwhile, to "motivate customers" and tend to consumers "needs" and "journey", Diageo replaced a 15-year-old 100% malt blend with a no-age-statement (read: much younger) 30-40% malt blend, at the same price point (from Green to Gold Reserve, $60).  Then they traded out the old regular Gold Label for Platinum Label, swapping an 18-year-old blend for an 18-year-old blend at a $20-$30 higher price point.

To sum that rant from a year-and-a-half ago, even though PR content is usually mostly untrue, Diageo's PR was particularly insulting to this "consumer" and "customer".  Plus, I really like Green Label.  And my disappointment was only heightened by the dipsy corporate message.

All this malt talk leads me to the Diageo distillery count!
Included: The recently absorbed United Spirits facilities. The LVMH distilleries, of which Diageo owns 34%.
Not included: The closed distilleries.

The open distilleries
Blair Athol
Caol Ila
Glen Elgin
Glen Ord
Glen Spey
Royal Lochnagar

The United Spirits distilleries

The LVMH distilleries

There are a lot of great distilleries on this list, including a number of my favorites.  Diageo owns so much super malt that it would be so hard to part with many of these.  I guess I'm lucky(?) they bottle almost none of these historic high-quality products as single malts.

Remember that Whisky Outreach gentleman from Diageo I'd mentioned in the blend section above?  Well, he also laid out this whopper at the 2011 World Whiskies Conference:
"Diageo is a blended whisky company. Diageo does not make single malts for me to enjoy. We do not make single malts for the aficionado to enjoy. We make single malts for our blending team."
As I mentioned in an earlier post, the first and last sentences are true.  The ones in the middle are, well......

Diageo is in the single malt business, but they don't commit much to it, thus their success is limited.  "Aficionados" do enjoy Talisker, Lagavulin, Caol Ila, Clynelish, Cragganmore, and the rest of their Classic Malts series.  Sadly, those "Classic Malts" make up only 1/3 of their distilleries.  And those "Classics" get but one regular bottling each.

They also turn out Special Releases, Rare Malts, Managers Selections, Distillers Editions, and other limited bottlings.  So, again, they are in the business of making single malts for "aficionados".  They just don't commit much malt or other resources to it.

While much of the rest of the single malt world is focusing more and more on higher ABV, non-chillfiltered, and uncolored whiskies, Diageo continues to turn out watered down and heavily filtered malt full of industrial caramel colorant.  Thus they're not even bottling a good version of their product.  At the same time -- due to their emerging market needs/desires -- Diageo has cut off cask access to independent bottlers, making it impossible for "aficionados" to access better (or at least, alternative) quality versions of this malt whisky.

Here comes the kicker:  Maybe they should get more serious about the single malt market.  In 2012, the US was the largest export market for Scotch whisky.  Its revenue was almost that of the second and third largest markets combined.  And this big export market has seen massive growth in its single malt sales.  In 2000, single malts made up 7% of the US's total Scotch volume.  Now it is at 15%, a nifty little growth of around 114%.

Meanwhile, Diageo North America showed only 1.3% in volume sales growth last year, while the rest of the market grew by 3.5%.  That means they were slacking everyone else by over 63% in annual volume growth rate.

So maybe a little commitment to the quickly growing single malt category in this largest of export markets wouldn't hurt.

I can dream, can't I?

In the end, I would miss Talisker, Clynelish, and Lagavulin the most.  It's just......I wish Diageo would make it harder for me to go.


  1. Buchanan's 12yo is in my experience one of the better blends - I'd take it any time over JW Black or any number of other blends. Dalwhinnie 15yo and Caol Ila 12yo are two of my favorite regular bottles and I'd miss them, were I to reject the Antichrist (which I, sinner, am not ready to do).

    I'm sure that you will get plenty of discussion after your Creed statement tomorrow
    ("Non credo in Diageum,
    Malum omnipotentem,
    Factorem spiritus sancti,
    Et de fructu liquor...")

    But one issue that doesn't follow for me, from a logical philosophy perspective, is why reject it all, just because some/a lot of it is not good? For example, I stopped buying JW because it's not good anymore for the price, so it doesn't make sense for me to buy it - but not out of principle. When Caol Ila 12yo will stop being delicious or relatively affordable I'll stop buying it too, but for now I see no reason to deprive myself of the good stuff just because Diageo as a corporation is a bit of a dick. To the extent they are working on not having me as a customer, they will ultimately succeed, but for now I'm fine with our relationship. Now of course this will all change if it comes out that they filter their whisky with blubber from baby seals that Nick Morgan clubs to death as a pastime at corporate parties!

    1. Mr. V., good points all. In fact, part of me agrees with you. I hope to address it in some way with Wednesday's and Thursday's posts.

  2. Interesting thoughts well scribed.
    And has anyone stopped buying Balvenie (besides me) to protest Grants lawyers lawsuit with The NewZealand Whisky Co.
    A blind man could tell those DoubleWoods apart. Was this just a shot across the bow in case Diageo described one of their products as a Double Wood?

    1. Thanks, Rick! Yeah, I'm having trouble understanding the need for Grant to go after a tiny producer in this case. If NZ Whisky Co named their whisky Balvenie, then I can see it. But the Grants, who are usually okay in my mind, come off looking a little paranoid. Perhaps they're trying to enter their Balvenie products into that market. Does Grant's trademark hold up in NZ?

    2. The Grants really have no choice. If they let this go, others will think it's okay to infringe on their trademarks. Sadly, they need to do this even if they end up looking like bullies.

    3. I disagree. There is always a choice. Usually it's a case of those with the deepest pockets will win, but the courts may see it differently. Sadly, if Grants looses they come across looking worse than if they hadn't wasted all that money and changed the perception people have of them.
      Maybe I should just quickly get an international patent on quadruplewood & quintuplewood. It seems like Triplewood is already taken.

    4. I disagree. There is always a choice. Usually it's a case of those with the deepest pockets will win, but the courts may see it differently. Sadly, if Grants looses they come across looking worse than if they hadn't wasted all that money and changed the perception people have of them.
      Maybe I should just quickly get an international patent on quadruplewood & quintuplewood. It seems like Triplewood is already taken.

    5. This is a difficult issue. On a human level, the Grants look crummy because they're pummeling a little guy over a handful of printed letters. On a business level, they had to at least consider doing this if their products crossed in the marketplace. I side with the little guy even though I do like William Grant & Co. Sadly, Rick, unless this gets messy in court, I'm not sure how much this will hurt the Grants' sales. I still think it sucks though. And it goes to show that Diageo isn't the only corporate lump in the industry.

    6. And I just released how hypocritical it was for me to say "I'm not sure how much this will hurt the Grants' sales" during the week I'm ranting about a Diageo boycott. So that's brilliant.

    7. I'ts normal to want to side with the "little guy" but often that same little guy tries to piggy back on the success of the big guy. Not knowing the full details of the doublewood issue its possible the "little guy" picked the name BECAUSE it was already familiar to the consumer and would thus help sell his own product.

      In other words, the "little guy" isn't always innocent. Often they blatantly copy ideas to enrich their own bank accounts.

    8. Thanks for your comment! As per all these Diageo posts, one can glean that I tend to side with the "little guy". But one these things is happening with the New Zealand Whisky Co.:

      1.) They are trying to take advantage of the familiarity of the Doublewood name and possibly trying to further cash in on the new publicity.
      2.) Someone at NZ Co. did not do their due diligence and check through the copyright issues surrounding the Doublewood name.
      3.) They checked the copyright issues, tried to get permission from William Grant & Sons, didn't get it, and went ahead with the name anyway with a plan to win this in court.

      I don't know which one is actually going on, but I doubt they're going to win a legal battle with Grant.

  3. No idea about trademarks. I'm in Canada. International decisions like this are seen worldwide and thanks to the power of social media people can make decisions that affect outcomes. If I were the Gordons I would be asking their lawyers if this was just a means to justify their own (the lawyers) existence.

  4. This comment has been removed by the author.

    1. Brand protection is something that no serious business can afford to mess with. It's just as important as password-protecting their computers. There is a nice way to do this, and actually score points for your whisky mega-business. I'm not familiar with the Doublewood situation, maybe they were too heavy-handed. There was also a case won by Maker's Mark in he news not too long ago.

    2. I think Maker's Mark was also trying to sue to get the exclusive rights to use a drippy wax seal. That struck me as silly, but clearly I'm not the best businessman.

    3. Correct. A lot of companies use a wax seal (Aberlour for example). Maker's Mark (owned by Beam) wants to own the "dripping" wax seal. Now, I'm not a lawyer but it seems kind of silly to argue the legality of whether your wax seal is dripping or not

    4. It appears as if Beam successfully sued Diageo in 2010 over the fact that a version of Jose Cuervo had a drippy red wax seal. They won. Then Diageo filed an appeal in 2012 and LOST. I'm almost siding with Big D on this one. :-P

  5. I was on board with this until I saw Ardbeg on the list. Now I'm not so sure that it's really worth it.

    1. It's been three years since these boycott posts, and I haven't missed Diageo's stuff. I will continue to buy Ardbeg Ten as long as its price doesn't change. To me it's the most reliable whisky LVMH makes right now.