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Why is everyone so anti-marketing?

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Why is everyone so anti-marketing?

Postby Rudolph Hucker » Wed Apr 23, 2003 9:49 am

In a number of threads currently running on this forum, comments have been posted which indicate a significant amount of prejudice against the people whose job it is to market whisky.

A common perception seems to be that on the one hand you have all those who actually produce whisky - who are the good guys - and on the other hand you have the shysters from the marketing department, whose role is to somehow undermine the good guys; who are constantly seeking to find ever more cunning stunts to seperate whisky lovers from their hard earned cash ( Are your ears burning, Macallan? ).

I suggest that marketing is not only a good thing, it is essential to the establishment, survival and development of any product.

It was allegedly Ben Franklin - but then again, so many allegations were made against Ben - who set the anti-marketing tone by saying < If a man makes a better mousetrap, the world will beat a path to his doorstep >.

Unfortunately, Ben forgot to say how the world would find out about the mousetrap, how much of the world actually needed mousetraps, what sort of price the world would pay for the mousetrap, and whether the costs of raw materials and labour were such that a profit could ever be made on the mousetraps.

What Ben should have said was something like < marketing is the co-ordination of all of the internal resources of a business in such a way as to meet profitably a previously identified external need >

This widely accepted definition shows that everyone in a business has a role in marketing from the CEO down ( or in some businesses, the CEO up! ) and every aspect of the business impinges directly on the customer's willingness to buy the product in the first place, and to keep buying it.

So right through the process from producing whisky to getting it to the paying customer, from selecting the raw ingredients;
running the production processes; deciding the taste, strength, colour etc; choosing the bottle styles; designing the label; setting the price; deciding where the product will be made available; getting the physical distribution in place; ensuring the cooperation of wholesalers and retailers - every individual involved will make decisons which will either make the whisky more acceptable or less acceptable to the customer. And the CEO's key role is to ensure that all of those decisions are the right ones.

So David Stirk's mashhand is just as much a part of the marketing concept as the Bell's saleman he mentions - without both of them, and all of their colleagues consistently striving to give the customer what the customer wants, that customer will eventually be so dissatisfied that they will
look for another brand to buy. And as rule of thumb, it is 5 times as expensive to get a new customer as it is to hold on to one you already have.

That's why going back to our definition of marketing reveals the reason why producers seek to produce dark coloured whiskies - because their research shows that the big market - which will return the best profit levels - wants whisky to be that colour.

And if you don't give the customer what the customer wants, or if you get your marketing wrong even if your product is right, you don't stay in business.

Cheers

Rudolph

PS I am not involved in any way with whisky - 'cept that I drink a lot of it!
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Postby lexkraai » Wed Apr 23, 2003 10:34 am

Rudolph, my tuppence worth on this: I start taking offense with marketing when I am being told something about a whisky which is demonstrably not true or is stretching an issue to (or beyond) breaking point. I don't mean to drag up old discussions, but Bushmills claim of '1608' and 'the oldest distillery in the world' is an example of this: an attempt to get people to buy the product with a claim that is simply false.

I fully agree with you that without any marketing there would be no product; whisky has to sell or it wouldn't be produced. But there is a difference between what I would call 'sincere' marketing (with which I have no problems whatsoever) and marketing b**ls**t (and my opinion on that is clear, I guess!). And between those two extremes are, obviously, many shades of grey.

Cheers, Lex
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Postby Rudolph Hucker » Wed Apr 23, 2003 11:00 am

Lex

You are so right!

Whisky producers who knowingly make false
claims about their products and their business are insulting the intelligence of the customers. The producers may gain some short-term advantage but sooner or later enough customers will realise what is happening and take their custom elsewhere.

And it is forums like this that help expose
dishonest marketing.

Cheers

Rudolph
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Postby Peatfreak » Wed Apr 23, 2003 11:18 am

I thouroughly agree with Lex on this point. (I must confess to having a slight marketing background). I hate being told utter lies. I also agree with David - I know many people such as stillmen and mashman that have worked there trade for 40+ years and it would be nice to see that part of the "cog" being recognised.

I think that the one thing that slightly annoys people is that a lot of the time the marketing people a percieved to not carry the same passion for the product - it is felt that they are marketing whisky with the same enthusiasm / passion as they would for say mouse traps!

I agree that marketing is essential to the future of whisky - we need younger drinkers but what marketing is being focused at them?

Overall we are not against marketing far from it - just more recognition of the whole team would be nice and a few less lies!

A wee rant (sorry)

Willie
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Postby hpulley » Wed Apr 23, 2003 1:14 pm

Marketing is a necessary part of any business. At first when I started working I thought they were useless, thinking "I make the products. All they do is write silly things about them." But without those write-ups, no one knows about the product so very few will buy them (direct sales aside). If a product falls in the forest without marketing, it does not make a sound. After a while I called marketing a necessary evil but there is nothing evil about it and I've changed my tune to one of it being just plain necessary. They are just trying to get a product noticed.

Marketing and advertising will always try to find something interesting to say. They say there is no such thing as bad press so even saying something incorrect can be positive as many people will hear about it. It is true that most marketing, advertising and sales people bounce from product to product and even industry to industry in a way that people who make products generally cannot but that is the nature of what they do. A good marketer, advertiser or sales representitive should be able to sell anything. It is the company management's job to get them the right information to use in their ads and packaging. No marketing person made up 1608 as a year, someone gave them that year. By blaming the marketing staff, we are shooting the messenger.

All that said, I hate the syrupy marketing that is obviously designed for people who have no clue about malt whisky but who are picking one up as an Xmas gift for which flowery writing about water flowing from cairns to braes and the little lady of the sea, blah, blah, blah... makes some difference. For repeat customers and those in the know, this sort of thing is a bit of an insult.

Interestingly, most expensive malt whisky is sold in a box so the colour cannot be ascertained unless you open it. Blends, however, are sold 'nude' so for those who think no good whisky can permit the light of day to pass through it, caramel here we come.

I hope the whisky marketers will realize that single malt whisky enthusiasts like the product to be more representive of what comes from the cask.

To sell to young drinkers you have to make scotch whisky 'cool', 'hip', 'the bomb'. Trouble is, it takes time to develop a real taste for it. Most young drinkers don't like even 40% ABV neat, it is just too strong. Vodka, rum and gin fruit coolers and 'premium malt bevereges' (whatever that means) are currently popular with the non-beer crowd. The single malt whisky enthusiast would be aghast at the thought of a Cutty Sark Citrous cooler but that might be what it would take to
get young drinkers drinking. Or some really cool ads in general.

Captain Morgan rum has some good ads with the cackling captain and Bacardi rum is taking it's bat winged logo to good ends. So it looks like we could also use some cool whisky mascots or at least cool symbols. Youth identify with symbols, things they can put on t-shirts, tatoos, skateboards, etc. Then make it cool to drink high ABV liquor and you're all set to make single malts cool (please don't make them put it in coke like in Spain and Japan, yuk).

Trouble is most scotch whisky symbols aren't too 'kewl' so it might take some packaging which will make us 'pure whisky enthusiasts' upset. Oh well, I don't care if they put a purple dinasaur on my scotch bottle as long as it tastes good Image

Harry
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Postby dstirk » Wed Apr 23, 2003 1:26 pm

I'm not anti-marketing per se (especially as I have a qualification in Direct Marketing - the worst type of marketing) - it's just that too often people are recognised for doing the front end too much.

Marcin Miller wrote an excellent editorial when he was inducted into the Keepers of the Quaich; too many folk are in that society who have done very little for the whisky industry.

If you really think about it, who do you know well, or who is well known in the whisky industry. With a few small exceptions such as Richard Paterson (blender), Bill Lumsden (done just about every job in the industry) and maybe a couple others, they are all marketeers.

Now before anyone says anything. Remember I fall into that category as well. I have spent the last six years doing 'marketing' for whisky (wouldn't change it for the world) and so I FULLY understand the place for marketeers and in many cases they do damn difficult jobs (you try getting up in front of a large, thirsty, crowd night after night, talk about the same brands, with the same stories and make each night sound like it was the first time).

All I am really trying to emphasise is that nobody really recognises the behind the scenes folk. Had it not been for Whisky Magazine, most malt drinkers would never have heard about Delme-Evans, or Charles Doig. And they are higher profile than most.

Anyway, I am babbling. The marketeers get enough recognition. Why don't we find out who has worked in the industry the longest. Something the marketeers can make a big deal out of!

David
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Postby Iain » Wed Apr 23, 2003 2:32 pm

hpulley wrote..."No marketing person made up 1608 as a year, someone gave them that year"

I surely agree. But many people then told them that it isn't true - and still they use it!

It seems that everyone agrees, that we get grumpy only when people in marketing, sales, pr etc etc feed misleading info or bare-faced lies to their customers. (and some brand ambassadors have been known to tell a few porkies in their times!)

It doesn't happen often, but it's surely healthy and neighbourly to alert folks to bullsh*t when you smell it!

Now... what's the latest "world record" whisky price Image
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Postby Nikwik » Wed Apr 23, 2003 3:11 pm

Marketing is necessary but often the marketing department (Probably an external agency) doesn´t seem to have a clue about the consumer and how to build a brand. For example a company I will not mention have a very good product and great people behind it so why in XXX did they have to launch a campaign with mermaids..? Now we´re really talking about insulting the consumer. The same company now sponsors the European Fly Fishing Championships, in my humble opinion a much better way to build brand awareness and loyalty...
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Postby ceedeedoos » Wed Apr 23, 2003 4:13 pm

Speaking up for young people Image

If there's a problem with the marketing, it's mainly the lack of ads and presence in bars. When I enter a bar (except for whisky bars of course) I see posters of Smirnoff, bacardi, Jack Daniels, ... You don't see single malt advertentions anywhere. When you look at the drinks that the bar offers, you don't see single malts, except the odd bottle of Glenfiddich or Glenlivet. Bars are the places where young people get in touch with new things. Not always of course, you can dig into your father's liquor cabinet or try it with a friend that has tasted single malt before.

I try to let people taste good single malts from my cabinet, and what Harry says is true. 40% abv is too much for most people, being used to the 5.5% abv of beer. And the most common reflex in that case seems to be "do you have any coke to go with it?". Well they don't get coke, they get water, and seem to appreciate it quite good. The downpart is that when you ask if they have coke to go with it in a bar, the bartender will be happy to pour you a coke over your whisky.

I don't think you can get more people with fancy purple dinosaurs on bottles ... well maybe a couple, but I don't think anyone here finds the J&B logo so much better than the Bunnahabhain logo ...
I must admit that my first bottle was Aberlour A'bunadh, just because I loved the way the bottle looked, and was impressed with the 60.2% abv ... lucky me, a'bunadh is a great whisky. So yes, fancy bottles might work too, but only with people that already are interested in single malts... You don't see many fancy bottles like the a'bunadh bottle in a supermarket, where younger people buy liquor.

Young people drink what they can get their hands on. The single malt prices are rather high compared to the blends, so basically with a 100 euro a month budget, most people grab themselves the cheapest bottle on the shelf and are satisfied with it (never having had anything else).

So my advice to marketing people, if you want to get young people to drink single malt, get those billboard posters, gadgets(include a glass with a bottle, or a keychain or whatnot, young people like to have the feeling that they get something extra for showing interest) etc coming. Once they get the taste for good single malts, they'll try the more expensive bottlings too...

just make sure people get in touch with it for a relatively average price, and get single malts promoted into bars... otherwise I think you'll be waiting a long long time until a massive young population will get the taste of whisky ...

just some ideas, I'm not really a marketing person or anything (might consider studying it next year though Image), I'm more of a politician Image

[This message has been edited by ceedeedoos (edited 23 April 2003).]
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Postby Nikwik » Wed Apr 23, 2003 6:38 pm

<BLOCKQUOTE><font size="1" face="Arial, Verdana">quote:</font><HR>Originally posted by ceedeedoos:
[b]So my advice to marketing people, if you want to get young people to drink single malt, get those billboard posters, gadgets(include a glass with a bottle, or a keychain or whatnot, young people like to have the feeling that they get something extra for showing interest) etc coming. Once they get the taste for good single malts, they'll try the more expensive bottlings too...

just make sure people get in touch with it for a relatively average price, and get single malts promoted into bars... otherwise I think you'll be waiting a long long time until a massive young population will get the taste of whisky ...
b]<HR></BLOCKQUOTE>

A company which seems to have listened to you is Glenfiddich. In Stockholm they have a campaign in some of the trendy bars with gifts, special whisky drinks and so on. Their ads are supposed to be for the younger audience but I as an O.A.P (33...) and pompous "expert" doesn´t feel offended. In the beginning of my "career" Glenfiddich was overseen as just a simple whisky for the common drinker (I started with an CC Ardbeg 1974...) but as I´m getting older and wiser I´ve realised that the Solera Reserve is not to be underestimated...

..and yes, I´ve won 6 glases in a competition as well...



[This message has been edited by Nikwik (edited 23 April 2003).]
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Postby ceedeedoos » Wed Apr 23, 2003 7:16 pm

hehe
I can enjoy the solera too (rather than the 18Y) but prefer the 21Y havana by far as the best glenfiddich I have tasted so far ...

but it's this kind of advertisement that the distilleries need ... someone who's never had single malt is not likely to show up on this site, and won't get the info that we have about this lovely drink Image
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Postby Peatfreak » Wed Apr 23, 2003 9:45 pm

I agree solera is good - if you ever go to the distillery ask if you can try it at cask strength - its awesome!!!
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Postby Rudy » Wed Apr 23, 2003 10:32 pm

Wondering why some can have something against marketing?

I'll try to explain why I feel that way.

One of the classical ways to do something with marketing are the 4 P's:
-product
-promotion
-place
-price

As a consumer of whisky interested in single malts, I'm already in a niche.
Having interest in somewhat older, cask strength or un-chillfiltred malts, I'm in a niche within a niche.

Back to the 4 P's:
-not so many products fit the profile
-promotion: the target group is not easy to reach, too small and much scattered over the market
-distribution is relatively difficult, since there are not so many points of sale
-all of the above have negative impact on cost, so higher prices. The price SHOULD be so attractive, that the product WILL be bought and at the same time a maximum profit will be realised.

I accept higher prices, for the reasons above.

What worries me, is that some people in marketing think that a higher placement of some mid-range whiskies justify high-end prices just because the single malt market is expanding and/or becoming in fashion.

This might be true and might be justified for marketing people.

As a consumer, I choose alternative ways to leave my money at other suppliers of fine malt whiskies, blaming marketing for my feeling that some products are overpriced.

But hey, that's not my opportunity loss, but the loss of the marketeers: I'll always enjoy a good dram!

Rudy.
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Postby Ize » Thu Apr 24, 2003 7:56 am

About marketing and what comes to advertising especially, I'll give good and bad example.

IMO, Highland Park is doing great work for their brand .. ah what a balance and what peacefulness can be caught already in the ads or from the webpage apperance. And Bowmore ... *yach* I dislike it because of their style of advertising, massive set of different bottlings and different images trying to be sold around almost desperately. I'm pretty sure that points that I'll give HP are + to ½ of point up for me and Bowmore are - to ½ of point down because of the image. ;-)

Kippis,
Ize
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Postby Deactivated Member » Thu Apr 24, 2003 3:25 pm

Hi,

This is how I think about it. Marketing is a nice instrument, that's true. It has to be done on a sincere way, and not at a misleading way, some products go for the misleading way, and find them selfes out of business after a while.

I go along what dstirk said, that sometimes the best marketeers, are the ones from production, simply because these people can persuade you the best.

However it seems still to be difficult to reach the younger groups, that group is growing that's true, but with the right marketing it can be reached, but it's probably the idea that whisky is for older people.

I'm not anti marketing, but I still believe in the good old "spreading the word" or "mouth to mouth" as we call it here in Holland, but I realise that you can't get a living from that...

Erik
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Postby Rudolph Hucker » Fri Apr 25, 2003 9:05 am

Harry is right - marketing is a corporate responsibility ( in my definition, starting with the CEO ) not just a departmental thing - but each individual has his or her own responsibility for any claims made for a product being legal and honest. I am not aware of the Bushmills and 1608 situation, but I am certainly aware of the Macallan
threads about colouring and provenance, and clearly neither the corporate teams nor the marketing teams have dealt with the problems effectively.

David Stirk says that only the marketing people are widely known - but then he mentions Richard Patterson and Bill Lumsden.
In my view, these people, along with Jin McEwan, Iain Henderson, Jimmy Russell, Elmer T Lee and others are (a) much more widely known than all of the marketing directors in the industry put together and (b) are very heavily involved in marketing their products - which they should be.

Rudy, Ceedeedoo and Huurman all refer to the key problems for the SMS producers. Is the existing niche market big enough to sustain all of the brands currently available and what is its growth potential?

Can SMS be successfully sold in its present form to the much larger youth market? If it can, will the existing niche market continue to buy the product, or will it lose its attraction if every Tom Dick and Harriet is drinking it? If the product has to be significantly changed to attract the younger market, will it still appeal to the existing market? Do you end up with two different SMS products for the two seperate markets?

A couple of marketing scenarios might help illustrate the problems. In the UK in the 1980s and 1990s one of the badges of success of many of the young people who made big money working in the financial markets in London was a Rolex watch - but many of the traditional Rolex buyers did not want to be identified with the aggressive, new-rich young men, and so stopped buying Rolex watches. What had been a sign of wealth and exclusivity became a common everday item worn by ostentatious newcomers.

But in a New York bar in 1992, hosting a private party for people of a wide range of ages, personal observation revealed that well over 90% of those coming to the bar asked for Absolut vodka by name - not just any vodka. So clearly it is possible for a drink to be marketed in such a way as to appeal to the widest possible audience - the trick is, can it be done for SMS?

Cheers

Rudolph
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Postby Jeroen Kloppenburg » Fri Apr 25, 2003 10:28 am

Why is it so important the Whisky industry reaches the youth?

Would a student really be interested in his dram after a school day? Or spend 4.50€ ona dram in a cafe for wich he can loads more beer?

Are other "exclusive" products also marketing their products that way to a younger target audience?

In my opinion Single Malt is by nature a product that is suited more towards people who are a bit older, and are interested in quality products. I am not generalising here by the way, but I think the "feel" of Single Malt is just something in general is not understood by younger people.

If you look at the vast majority of the packaging, the product is still being marketed as a product with firm roots in nature, and a interesting history, and a certain distuintivness (sp?), factors which the youth is not generally interested in.

I'd say market towards end 20's/begin 30's where people generally get much more interested in those area's.

Just my 0.01€ Image
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Postby Rudolph Hucker » Fri Apr 25, 2003 10:49 am

Jeroen

Sorry, I did not make myself clear - by youth
I mean that market made up of people younger than the existing niche market which is probably on average around the 40 mark. Now with some people that could mean a 20 year old, other people might only be interested when they reach say 30 years old.

Why should SMS producer be interested in reaching this market? - because any producer of almost any product, especially one whose market tends to be made up of older people has a problem. By definition that market eventually and literally dies off. The producers can market their products to people approaching the traditional age range to replace those lost customers, and it is interesting point for the marketing people to decide at which age the replacement customers need to be persuaded to move on to SMS. And maybe the current range of producers/ brands/expressions can be kept in business by replacement marketing. Possibly, their marketing can be effective in increasing the size of that existing market.

But most companies seek constantly to expand their markets - to get more customers and to keep them longer. And there are a great deal more younger people in the world - quite apart from penniless students - who could be attracted to SMS - after all, what valid reason can there be for assuming that only wrinklies can afford/appreciate/should be allowed SMS?

Cheers

Rudolph
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Postby Iain » Fri Apr 25, 2003 11:18 am

There's a wee flaw in your logic, Rudolph. Sms has never appealed to a youth market - it's a trueism that kids don't want to drink the same thing as their elders. But the numbers of sms drinkers are growing, not declining as the old fellas die off.

Sms has always tended to catch people's attention once their tastes "mature", usually from their 20s and early 30s. Far from dying out, the ranks of the sms drinkers are constantly replenished by the following generation of youths arriving at the next level of taste appreciation and looking for a suitable alternative to the sweet and bland vodka mixers, alcopops and fizzy lager of their early years Image. Far from dying out, sms has grown on the back of being perceived as a "sophisticated" product for the mature and discerning person - an image that would be damaged beyond repair if it became the drink of choice for loud and spotty youths.

Another example (hopefully not too obscure - and apologies for those who don't wish to be associated with this phenomenon!) is gardening. Gardening does not appeal at all to a youth market but gardening centres (where no fashion-conscious youth would wish to be seen dead!) have become multi-million pounds and rapidly-expanding businesses in UK. People just keep "growing" into it. And there are many other successful businesses that have appealed almost entirely and unashamedly to the "gray" market. (Think Saga Holidays!)

You don't need to attract young customers to be successful - just the next generation, at whatever age it is receptive to the attractions of the product you have to offer.
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Postby Rudolph Hucker » Fri Apr 25, 2003 11:53 am

Iain

I'm not advocating a youth market policy for SMS producers and agree with all the points you make about people's choice of drink.

Except I am not sure what evidence there is that the existing market is increasing significantly.

But the point I was trying to get over was that even if the existing market replenishes itself in the way you suggest, is that a large enough market to support the existing range of producers/brands/expressions?

May be it is - but no business can afford to stand still so the producers have got to persuade - back to the theme of marketing - that existing market to (a) by more bottles per head or (b) pay more for each bottle they do buy.

My secondary point on the marketing of SMS to a new - maybe mythical - market of young people is that the natural instinct of marketing people is to expand. And I have certainly heard at least two marketing directors talk enviously about the huge market amongst young people for SMS in Spain.

I'm not actually arguing for or against anything. Simply pointing out that marketing is concerned with profitability. If producers can make sufficient profits from existing market levels, they don't need to expand into new markets. Butif they can't,
then they will inevitably look for new markets and with the Spanish experience to inspire them, it will probably be a young people market.

Cheers

Rudolph
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Postby ceedeedoos » Fri Apr 25, 2003 12:10 pm

<BLOCKQUOTE><font size="1" face="Arial, Verdana">quote:</font><HR>Originally posted by Jeroen Kloppenburg:
Why is it so important the Whisky industry reaches the youth?
<HR></BLOCKQUOTE>

it is not important ... if you are destined to fall into the single malt world, you will ... I drank whisky when I was around 16, maybe 17 once in a while, your basic blends, and wanted more after a while, and found that in single malt. If you love beer, stick with it, it's a lot cheaper that's for sure Image

<BLOCKQUOTE><font size="1" face="Arial, Verdana">quote:</font><HR>
Would a student really be interested in his dram after a school day? Or spend 4.50€ ona dram in a cafe for wich he can loads more beer?
<HR></BLOCKQUOTE>

on the first question: I am, but probably not a lot of other students will follow me in that Image
on the second question: nope, I rather enjoy my drams at home, and indeed, for that price I can get a lot of other drinks so I probably pass (unless I want to taste something prior to buying a bottle, then I might buy one dram ...

<BLOCKQUOTE><font size="1" face="Arial, Verdana">quote:</font><HR>
Are other "exclusive" products also marketing their products that way to a younger target audience?
<HR></BLOCKQUOTE>

as a matter of fact yes, though mostly it fails I guess ... Rémy Martin (cognac) has brought out Rémy Red and Rémy Silver, the first being a mix with some forest fruit drink or something, the latter being a mix with vodka if my memory serves me well... Bacardi does a good job with their breezers, and their "plain" rum, once you get the taste you get yourself some better bacardi (or if the company finds bad luck with you, some other brand of rum) ... now they have a promotion running here that you get a small bottle of 8Y bacardi with a large bottle of regular white rum...

<BLOCKQUOTE><font size="1" face="Arial, Verdana">quote:</font><HR>
If you look at the vast majority of the packaging, the product is still being marketed as a product with firm roots in nature, and a interesting history, and a certain distuintivness (sp?), factors which the youth is not generally interested in.
<HR></BLOCKQUOTE>

I follow you on this account. The packaging, with the exception of a few, still implies on the more stylish older attitude. And I know that that is not really a part of youth culture, living in it myself Image So true, the appearance of single malt is not youthful, nor should it be.

But all that doesn't mean that the industry doesn't have the right to attempt to find an introduction into the world of youth. Not by making gimmicks out of their products or packaging, but by introducing their products in bars. I have tried a multitude of drinks in bars that I would never have bought in a bottle, until I tasted them. The same could go for single malt, IMO.

okay, I'll quit blabbing, in the end it all comes down to opinions Image
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Postby Iain » Fri Apr 25, 2003 1:16 pm

Rudolph, I believe that the sales of sms by value and by volume have been growing year on year for about 10 years now, at around 8 per cent pa (I don't have the figures to hand, so please don't take that as gospel). This is a pretty good rate of growth (outperformimg blends, for example, even though many of them are aimed at the popular "J&B&Coke" mass market) and it seems it has caught the marketeers of certain brands by surprise - see recent postings on this forums that demand for Lagavulin has exceeded stocks laid down 15-ish years ago, leading to shortages and price hikes, and that the quality of The Macallan may be declining due to the unforseen demand for the standard expressions. Meanwhile, independent bottlers have great difficulty in getting casks from the producers, who are delighted with the premium prices that sms can command and have therefore decided to take greater control of the distillery brand names by denying them to the independent bottlers - a sure sign that they are noticing success in the market, and have optimistic forecasts of future growth in demand for sms brands.

At least that's how it looks from here. I'll try to dig up some stats for you, in case I've got the figures wrong by memory. Scotch Whisky Association will be able to help, I'm sure. Scotch Whisky Industry Review of 1998 records year-on-year growth in export volume sales of bottled sms every year from 1991 until 1998, with a blip in 1995.
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Postby Iain » Fri Apr 25, 2003 3:48 pm

Rudolph, those nice folks at SWA have replied already. I've tried to paste their figures for exports (derived from UK Customs and Excise stats) here, but it only resulted in a jumble of figures - let me know if you'd like me to forward them to you privately.

Effectively, since the "bad" year in 1995, exports of bottled sms have increased in volume every year except in 2001, (from less than 3m 9-litre cases in 1995 to nearly 4.5 million in 2002) with year-on-year percentage increases that often touched double figures.

And they have increased in value in every year during the same period (from less than UK£144m in 1995 they earned more than UK£268m in 2002). The year-on-year growth in value of exports is pretty impressive - eg more than 15 per cent increase in 1996 over 1995, more than 13 per cent in 1998 over 1997, and more than 11 per cent in 2002 over 2001.

AFAIK this suggests that sales of sms are not static, but that the products are indeed reaching new consumers (or the old ones are consuming a lot more!) and that the growth is not being achieved by price-slashing, sacrificing profits for volume (a problem in many areas of the booze market).

Slainte!
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Postby Rudy » Mon Apr 28, 2003 1:42 am

This is an interesting thread indeed...

Here are some things I noticed in my environment (the Netherlands):

About the attempts to interest the younger people:
in my student days, I got into (grande champagne) cognac, and later I got into single malts as well. Of course only tax free bottles, and trying not to consume too much Image. Of the people I met, very little were interested in these spirits, beer is consumed most. Here it's primarely quantity over quality. I guess any marketing effort here is just money waisted.

About people who get interested:
After I started to work, I met more people interested in single malts. Not too many, since beer is most popular here in the Netherlands. After playing the 'Ambassador' role for some time, some of my old friends start to get interested, but not all. The people at the wine course that we organised a single malt N&T for got interested, but not all (especially not the woman) are drinking single malts regularly now. It seems that IF single malts are getting discoverd by people THEN in their late 20's early 30's in my environment. The N&T's I visit are roughly attended by people in the 30-55 range.

About drinking behaviour:
It seems like beer and wine are easily accessable, and higher abv drinks are only consumed in bars by younger people as long as it's mixed.
How many people drink vodka or rum neat and are trying to appreciate it? Almost none. This is only done with (single malt) whisky and cognac.

About market growth:
Rudolph, why are you wondering about significant market increase? Iain provided us the figures, but couldn't you notice by yourself?

1. the portfolio of (OB) expressions during the last years increased more than you could buy bottles per week.
2. Any liquor store in a place with 5000 people has a range of at least 30-40 single malt whiskies. Most shops in small towns have 50-60 whiskies. Any town with >100.000 people has at least 1 shop with 100 whiskies.
Since most people drink beer, the shopkeepers still have this large range on stock... So there must be a market all right!

About ageing consumers:
In the Netherlands there is a drink called 'jenever', which is also a distillate (of grain). This is consumed by older people and the youth does not drink it. Here the market is shrinking and some day it might be gone.
With (single malt) whisky the same might happen, but chances are very small.
Firstly, the market seems to be at it's top and people enjoying malt will stay with it. So consumption of a large group of people is more or less guaranteed for the next 30 years to come.
Secondly, it's a global market. The product is widely known and a lot of people will get introduced to it, someday, somewhere. This will lead to a continuaty of the group of consumers.

Threats:
as you already stated, Rudolph, it's cheaper to hold on to your customers than finding new ones. The threat I see are the marketeers theirselves. Want an example?

Instead of 1 Brora 30 yo OB and a Lagavulin 25yo OB,

I bought 1 Douglas Laing Platinum Selection Brora 32yo, a Signatory Straight from the cask Brora 21yo, a Signatory unchillfiltered Brora 20yo, a Chieftains Choice Brora 19yo, a Lagavulin 12yo OB and, as far as I can remember, got some change back.

(I have to be honest, I did not buy this on one day)

But look at the load of money I left at Diageo...NOT

It can get nastier.
A Talisker 20yo OB is quite OK (yes, Diageo can do good things...)
But have you ever heard of Jean Fillioux Reserve Familiale Tres Vieille Grande Champagne? It costs about the same as the Talisker. If you ever taste it, you will find out how 50 years old cognac tastes like.
If you like this more, then you'll know where the biggest threat lies.

Rudy.
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Postby hpulley » Mon Apr 28, 2003 2:20 pm

Cognac is no threat to losing yours truly. My first whisky drinks at home were consumed from gold rimmed Napoleon snifters because that is the neat high ABV beveridge I used to drink. I'll never go back to cognac, much preferring grain based drinks to wine based. Distilled or not, I can't get my head around the wine based ones. Why is it that young whisky, 8yo, 5yo or less, can still be fairly good while young brandy and cognac can be nothing more than paint thinner/remover? I am much more impressed with the world of distilled grain than the world of fortified wine. To each their own of course.

Harry

[This message has been edited by hpulley (edited 28 April 2003).]
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Postby Rudy » Mon Apr 28, 2003 8:51 pm

Hello Harry,

it's true, younger whiskies like the Vintage Islay 5yo are very enjoyable indeed. Cognac starting at compte 4 (4yo) may be called V.S.O.P. and at compte 5 (5yo) may be called Grande Reserve. In practice, the cognacs are much older when bearing these designations. But comparing the two 'rivals' at young ages is no relevant issue.

Younger whiskies represent only 2% or 3% of the whiskies I have at home. I seek complexity and find these starting at around 18yo.

The whisky industry must be happy with consumers that share your opinion, because then there really is nothing to worry about.

Rudy.
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Postby MacAndersson » Tue Apr 29, 2003 9:48 am

Regarding the "problems" or "threats" facing the single malt whisky industry.
Here is a thought.

According to The Scotch Whisky Industry Review sales of maltwhisky is increasing rapidly. In 1975 2,2 million litres were sold, in 2000 15 million litre.

Single malt whisky makes up for 11 percent of all Scotch whisky. In 1997 that figure was 6 percent. An increase of 85 percent.

Islay-whisky makes up for 15 percent of maltwhiskysales and grows 2,5 times faster then other maltwhisky.

Lagavulin is short of whisky. The last few years it has been pulled back from 43 markets.

On Islay Kilchoman Distillery is being built.

On Shetland Blackwood Distillery is being built.

In Fife Ladybank Distillery is being built.

I am having some difficulties to see the "great threat"
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Postby Gate » Tue Apr 29, 2003 11:43 am

For me, it is partly the taste of whisky that I prefer to that of brandy, and partly the sheer variety of flavour and style that whisky offers compared to any other spirit. For brandy, there seem to be three styles: Cognac and similar, Armagnac and similar, and Jerez and similar. There isn't really that much difference between them as styles, particularly when you compare them to the range of peaty Islays, coastal Highland, Island or Campbeltown, Speysiders sherried or not, unpeated Southern Highlanders like Glengoyne, Lowlanders, pot-still Irish, a bewildering range of blends, bourbon, rye and a nice unassuming corn whiskey. Don't get me wrong, I really enjoy a good brandy; but one fine old Cognac, for example, just does not differ from another fine old Cognac in the way that a 16-year-old Lagavulin differs from an 18-year-old Macallan differs from a 12-year-old Elijah Craig differs from a 12-year-old Redbreast. Brandy can look like terrific value when I feel like a brandy - but more often I feel like a whisky. I think whisky can handle the competition (and Scotch has the same sort of snob appeal in France that Cognac has in the UK).
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Postby Rudy » Tue Apr 29, 2003 10:43 pm

Hello MacAnderson,

great figures you presented. It's great to see SMS growing, but it remains a niche market with 11% market share.

The whisky industry earn their living with blends. SMS is just a spinn-off, where also profit can be made, but not enough to keep a whole company floating on it.
(Except for a few distillers that bottle all their make, like e.g. the Edradour.)

There are two issues here:
1. are the new SMS customers consuming blends before that? If so, then there's only a shift in the market segment, not a growth of the market as a whole.
2. if sales go up, then the figures, both in litres or Pounds, will go up as well. Trivial, but these numbers are not important. It's margin that leads to profit. As far as I can see, there not so much there. In the Netherlands, during X-Mas a 'basic blend' was on offer. I can't think of a worse timing. Remember that for a lot of people, a basic blend is a luxury drink, because it's whisky. So the moment you expect highest sales numbers, you decrease the price? There goes your margin!

Hello Gate,
I fully agree with you, the variety with SMS is almost endless! The differences between the malts from different regions are also easily recognizable.

I'm only familiar with one type of brandy and that is cognac from the 'Grande Champagne', which comes from one of the six districts there. You also notice differences there, but they are more delicate.

I like all types of SMS, from young to old, and from Rosebank to Laphroaig.
With my average salary, I can not afford a complex, elegant and delicate whisky, like e.g. a Springbank 25 yo OB Limited Edition any longer.
I do not envy you, but I simply can and will not afford myself the bottles of single malt that cost over $/€ 200.
As I said before, other peoples financials are not my business.
I have to look for alternatives and find that with cognac, a product/branche that, with an wrong way of marketing their customers a long time ago, got into deep deep trouble and stayed there ever since...

I fear the same for the whisky industry someday and to express my concern, I write in a forum like this.

Rudy.
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Postby mdlarsson » Wed May 14, 2003 9:45 pm

Marketing and honesty doesn?t seem to work very well together.

Daniel
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