Published in Whisky Magazine Issue 12 on 16/11/2000.

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From the Editor

Today a new malt whisky distillery opened in Wales - the first for over a hundred years. Last week, Tomintoul Distillery was bought by a company of blenders and bottlers whom nobody has ever heard of, although they have been around for decades. A couple of months ago the giant Canadian corporation, Seagram, one of the world’s largest drinks companies, was bought by a French media company which immediately announced its intention to sell off the drinks division - including its whisky arm, Chivas Glenlivet.

One might be forgiven for asking ‘what’s going on?’ Are these the first signs of ‘unbundling’? Are the large multinational owners beginning to pull out and sell their malt distilleries to private concerns? Is this a good thing for us, the consumer? Is it possible to run a distillery profitably without vast corporate resources?

Just over 95% of the malt whisky produced goes into blends yet enthusiasm for blended whisky has been declining in most markets for some years. On the other hand, the demand for single malts increases throughout the world year by year. We consumers want as many single malts as possible to be available to us. The closure of a distillery is a tragedy - not least for the local community. Yet how can distillers keep their plant operating when the bulk of their production goes for blending and demand for blends is shrinking?

Growing the malt sector is not without problems. First, brand marketing tactics are not always appropriate since only a handful of single malts are truly ‘brands’. Most are perceived more like fine wines. Is Château Lafite a ‘brand’, in the same way that Coca-Cola is?

Second, brand promotion for a diversity of products is difficult. It is much easier to put your marketing budget behind one or two brands than to spread it thin across a range of products. Also, gimlet eyed accountants see each malt in the portfolio as competing for market share with the next - the promotion of one takes away from the others.

Third, non-specialist retailers (let alone multiple stores) do not have the space to carry a wide range of malts - nor the inclination, since sales volumes are low and the products they are offering are under promoted.

Fourth, the consumer’s desire for a ‘special relationship’ with a particular malt is costly to service. Wise companies do this anyway: the 100,000 or so ‘Friends of the Classic Malts’ and the 60,000 ‘Friends of Laphroaig’ receive regular newsletters and special offers.

The number of ‘Friends’ is an indication of the interest and enthusiasm out there (as is the popularity of Whisky Magazine). If the whisky industry really wants to serve its customers, it must listen to what they want and provide it - no matter how difficult this might be. This might be easier for nimble footed and enthusiastic private companies than for lumbering corporate giants. They have to keep a close eye on the City and on a stockmarket more interested with the quick kill of a dot com stock than in the long view required to make and sell good whisky.

By Charles MacLean

Section : From the Editor

Page number : 5