The Appeal of Scotch


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The sound of optimism can be heard clearly amid the clinking of glasses in the Scotch segment, as long-standing annual losses appear to be easing, single malts continue to grow (albeit more slowly than before) and Americans return to the kind of mindset the product embodies.

“The Scotch category seems to be leveling out,” said Diane Bloom, senior brand manager for all of Schieffelin & Somerset’s Johnnie Walker brands. “If you take a look at the volumes for the last couple of years, the decline is not nearly as steep as it has been. It’s flattening.”

Continuing the trend of recent years, sales of the 10 leading brands of blended Scotch declined by 2.0% nationally to 5.535 million 9-liter cases. On the other hand, the single malt Scotch segment is increasing its sales growth percentage in the low single digits. In 2001, the four top-selling single malt Scotches in the U.S. all increased sales. Overall, sales of Scotch in 2001 declined 1.7% to just over 9 million 9-liter cases, according to the Adams Handbook Advance 2002.

Still, suppliers are looking toward a positive movement from consumers.

“There seems to be a return to some of the more traditional values,” Schieffelin & Somerset’s Bloom suggested. “People want to connect with one another, so traditional brands and values kind of foster that consumer connection while building relationships. People want to talk more and share information. Scotch in general and Johnnie Walker in particular lend themselves to that because they’re so rich in tradition, heritage and lore.”

Among the Scotches that have bucked the weakness during the past few years is the superpremium Chivas Regal, which recently changed hands and is now being imported and marketed by Pernod Ricard USA. According to the company, Chivas will be treated as the flagship brand in that company’s tremendously expanded portfolio. The superpremium, which has been growing sales since 1997, saw a fall-off in 2001(down 9.6% in 2001), some of which can be attributed to a bit of confusion in the marketplace owing to the brand’s change in ownership. Still, it has maintained its positioning as one of the prestige blended Scotches on the market (along with Johnnie Walker Black, which saw sales rise a hefty 6.1% last year to 578,000 9-liter cases), even as the cachet for blends has waned somewhat during the past decade. Single malts, of course, saw significant growth during the 1990s, as upscale whisky drinkers became enchanted by the stories behind the many malts brought to the U.S. market. However, what was annual double-digit growth has slowed.

“We are looking at nominal growth for the category, in the 1% to 2% range based on all indications,” said David Dorsey, vice president, brand general manager for Scotch and Irish whiskeys for Brown-Forman Beverages Worldwide. “Right now, single malt shipments out of Scotland are depressed. If the economy starts to come back and we start getting more business travel, then things will start to crank up again.”

“From my viewpoint, it’s still an exciting category,” insisted Robert Rentsch, U.S. brand manager for Remy Amerique’s The Macallan. “Even though the economy has slowed down over the past year, our sales have actually been increasing.” The reason?

“I have a feeling that people are actually going back to Scotch whisky,” Rentsch suggested. “Whereas before it was crazy cocktails, and people were drinking Cosmopolitans — obviously, that’s still the case somewhat — I do think that some of the younger people, younger professionals, especially the males, are beginning to drink Scotch again, and they’re drinking the premium single malts.”

One would think, he reasoned, that with an economic downturn people “might downgrade a little bit, but we’ve actually seen lots of support with The Macallan, and even quite some support for our older age expressions, as well, including 30 year old. We sell some whiskies that go up to about $4,000 a bottle. I think the market for luxury goods in Scotch is not quite as strong as it was before, but it’s doing quite well.”

Blending Business

Still, the bulk of the Scotch business belongs to the major blends that carry the load for the category. Dewar’s, from Bacardi USA, the top-selling Scotch in U.S., sells more than 1.4 million 9-liter cases (up 0.7% in 2001). Dewar’s 12 Year Old, the brand’s high-end line extension, has been getting attention and doing well in the marketplace. Indeed, the company is running a portfolio promotion with Dewar’s White Label and Dewar’s 12 called “Share Time, Share Dewar’s.” It includes a tie-in with Tourneau watches, which will manufacture a custom watch that customers can purchase. 6803PRD17

The top-selling Scotch in the U.S., Dewar’s is featuring a basketball case card this spring in several off-premise venues.

Dewar’s is also running regional promotions in which consumers can win all-expense-paid, high-end trips for six for a weekend at a five-star resort, complete with limo and other accouterments. Said Marshall Dawson, group marketing director for Dewar’s, “We decided to do it on a regional basis so that our folks out in the field could pick up a little leverage in their respective regions.”

Another focus, where legal of course, will be in-store sampling, especially on Dewar’s 12 year old, which hit the market a year and a half ago. “We’ll be doing a lot to support the 12 year old.”

Johnnie Walker continues to actively reach out to consumers through, among other things, its Keep Walking Fund, which Bloom said is “all about progress and success.” Last year, Schieffelin & Somerset awarded $500,000 to a dozen winners who submitted proposals for major things they wanted to accomplish.

“The Johnnie Walker business is very healthy,” said senior brand manager Bloom. “Red is off a tiny bit, Black is very strong, and Blue and Gold are growing in the double digits.” J&B, another Scotch in the Schieffelin & Somerset portfolio, is not “quite as strong as Walker is at the moment,” she added.

Marketing efforts will focus on introducing young adult consumers — males for the most part — to Johnnie Walker, according to Bloom. But the bulk of that effort will take place on-premise, where younger adult consumers are found in far greater numbers. For off-premise accounts, there will be programs around Father’s Day and other key holiday periods, as well as some tie-ins with golf. JohnnieWalkerBACK

The Johnnie Walker portfolio has been doing well, according to its importer, Schieffelin & Somerset.

At Pernod Ricard USA, Chris Willis, vice president of marketing for Chivas Regal, explained that “it’s a pretty early stage for us yet on the brand. What we’re doing right now is evaluating everything that’s happened in the past and planning what we’re going to be doing for the future.” Activities for the first half of the year, which were already in place, will go as planned. There are, he added, “some very good things happening on the brand. It’s been performing well over the last couple of years in terms of the restage of the brand, which Seagram had put into place. There are probably some things where there is going to be some fine tuning.”

At Skyy Spirits, Cutty Sark was respositioned a few years ago to be “much more mainstream, a little bit more down-market than it used to be,” observed Marty Fettig, Cutty Sark brand director.

For the middle of 2002, Skyy will have a couple of irons in the marketing fire. It will once again sponsor a major music tour in the spring, its sixth. The first such tour was presented in the fall of 1999. Two more were done in the spring and fall of 2000, and again in 2001. Though the deal has yet to be finalized, it will once again highlight young, up-and-coming rock bands. Skyy’s Rock the Boat tour is scheduled to kick off on or about April 1 and continue through the end of June with as many as 40 to 50 concert dates. 6803SCOT8

The superpremium Scotch, Chivas Regal, will be a centerpiece of Pernod Ricard USA’s efforts in the marketplace.

Initiative number two is the “Party Like A Rock Star Sweepstakes.” The winner of the sweepstakes will receive a free trip to Los Angeles where he will participate in “the nightlife and debauchery of Sunset Strip,” including all the accouterments, such as limousines, penthouse suites and rock star wardrobes. The culmination of the trip will be a party at the Playboy Mansion.

Also set for launch this spring is Cutty’s reintroduction of its 750 PET bottle. “That bottle is set up to be used for outdoor activities, when people go to the pool and the beach and boats and camping,” Fettig explained.

William Grant & Sons has been successful recently positioning Clan MacGregor as “a very active value-for-money offering,” according to James Bruton, marketing manager for Scotch whiskeys for William Grant & Sons, which markets Clan MacGregor, The Glenfiddich and The Balvenie single malts. “We’re continuing to grow the brand, which we’re very pleased with. We’re also pleased with the brand recognition and recall. It is a value-for-money offering, but it’s at the premium end of the value-for-money segment.” 6803SCOT3

The Glenfiddich Single Malt, from William Grant & Sons, features a wide range of age statements.

Management continues to tweak the packaging each year, as well. Indeed, Bruton noted, packaging plays an “extremely important” role in the product. Last year, the brand underwent a significant packaging upgrade. This year, executives are looking at doing tray packs: half-cut, merchandiseable boxes like the ones frequently used by a lot of the supermarket chains. “The majority of our volume is in the 1.75 liter,” Bruton explained, “which obviously is that value-for-money sector. But we always try and put value back into the packaging to make sure we keep on growing the brand and keep on ensuring the consumer base that we do have.”

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