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Issue 52 - Who's a pretty ploy then?

Whisky Extras

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Whisky Magazine Issue 52
November 2005

 

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Who's a pretty ploy then?

The Pattison brothers could have taught media guru Max Clifford a thing or two about promotion.They even used parrots to promote their whisky. Ian Buxton reports

Every age has its ‘bubbles’ and every age seems determined to repeat the mistakes of the last. Think of the South Sea Bubble; of Victorian railway bonds; of the mania for tulips that possessed Holland in the 17th century; of the dotcom boom.

Then, think whisky. Yes, whisky had its own period of financial madness – and though in many ways it shaped the industry we know today, like booms everywhere, it ended in bust.

For a while it seemed it would never end.

By 1890, the ‘whisky barons’ of Victorian Scotland had never had it so good.

The demand for whisky, on the back of the increasingly popular blends, Scotland’s fashionability and the ever-expanding British Empire, seemed limitless.

New distilleries were built (some 39 in the decade to 1900). New brands were launched.

New markets conquered.

In an age of flamboyant entrepreneurship modern marketing was invented and firms strove to outdo each other with ever more extravagant campaigns.

Two brothers stood above all. Robert and Walter Pattison inherited partnerships in a small whisky blending business in Leith, initially built up by their father.

In 1896 they floated it as a company, Pattisons Ltd, taking all of the ordinary shares, a quarter of the preference shares and £150,000 in cash as payment for their business.

Just as in the dotcom boom, the share offer was six times oversubscribed.

Just as in the dotcom boom the directors could initially do no wrong. They began hiring salesmen (‘travellers’ as they were known) and soon employed 150 – a larger salesforce than the much bigger Distillers Company Ltd (DCL, the forerunners of today’s Diageo).

Lavish corporate hospitality also featured. Pattisons celebrated its second anniversary with a spectacular party at Henley Regatta.

According to the Wine Trade Review of July 1898: “One of the smartest and most attractive house-boats at Henley during Regatta Week was the Glenfarclas, which has just been built for Messrs Pattisons of Leith… members of the trade gathered on board to drink to the success of the hosts with much cordiality each day.” We may well imagine the scene.

Advertising was massively increased – tripling from £20,000 in 1897 to over £60,000 in the following year (that’s a relative value of over £4.3m today for the United Kingdom alone and in the days before television advertising!) Their campaigns were bold, stylish and highly effective. Employing a series of puns on the prestige of the British Empire and Britain’s considerable military strength, Pattison’s whisky was ‘In General use’ over a picture of a General and his aide de camp enjoying a dram; it was ‘forging ahead’ like the prow of a British ironclad battleship and, prophetically, it was ‘victorious all along the line’ in ‘a big boom’.

They didn’t just spend on press advertising however. Pattison’s distributed branded glassware, spectacular mirrors and ornately decorated glass dispensers to favoured publicans; they produced a series of maps of the UK for distribution to cyclists and their brands were presented in attractive pottery jugs, now keenly sought after by collectors.

‘The Doctor’, ‘Morning Gallop’ and ‘Morning Dew’ brands were blends, but Pattison’s also owned distilleries at Aultmore and Glenfarclas (in partnership with the founding family) and substantial office and blending premises in Leith and London.

Indeed, as William Ross, then general manager of the DCL, later wrote: “Their extravagance in conducting business, including the somewhat palatial premises they erected, was the talk of the trade.” And they did enjoy being talked about.

Robert Pattison in particular, the elder brother, maintained a conspicuously opulent lifestyle including a substantial property in Peebles.

In his unintentionally hilarious account of the collapse of boo.com (called Boo Hoo), tyro entrepreneur Ernst Malmsten, one of the boo.com directors, relates how he and his 20- something colleagues regularly dashed to America by Concorde.

However, he appears sublimely unable to relate this to the collapse of his company or the reluctance of investors to find more money to fund these indulgences.

Well, Robert Pattison didn’t have Concorde – but he tried his best.

In the grandest of gestures he was known to arrive at railway stations after his scheduled train had departed. Unable to contain his pressing business, and trailing his fur coat ostentatiously on the platform, Robert simply chartered ‘a special’ – a private train all of his own to carry him home to the Borders in splendour.

But, curiously, the press were always on the platform to record this event for the edification of their readers and, for a while, it fanned public interest in Pattisons and its whisky. Today he would grace the pages of Helloand OKmagazine and be represented by Max Clifford but, in Victorian Scotland, this was simply fantastic extravagance on an unprecedented scale.

There were dark, Calvinistic mutterings: surely, this would end in tears.

Another of their promotional schemes was a stroke of pure genius. In fact, it would probably feature in any all-time list of the 10 Greatest Whisky Campaigns Ever and, like any outstanding idea, it was wonderfully simple.

Pattisons purchased 500 African Grey parrots and then instructed its travellers to enquire of their publican and licensed grocer clients “Would you like a free parrot?” Well, who could resist? It’s a great deal better than a few branded glasses, extended credit or a promotional decanter. So the parrots quickly found new homes where, their proud owners soon discovered, they’d been trained to squawk “Pattison’s whisky is best!” and “Buy Pattison’s whisky!” at unsuspecting customers.

What finer recommendation can there be?

After all, the celebrity spokesmen we see in so many of today’s whisky ads simply parrot their lines (and pocket the cheque), so why not go straight to the parrot and save the fee?

Someone should copy this campaign at once.

But dark clouds were gathering. In May 1898 another firm, J & G Stewart, went into liquidation. Rumours began circulating about Pattisons but, through the summer, the party went on. Plans were announced to enlarge Glenfarclas and Aultmore distilleries and new equipment was purchased.

However, the concerns grew and in December 1898 the DCL, by now owed over £30,000 (i.e. more than £2m), froze Pattisons’ account. In the same month, Pattisons presented some £20,000 worth of bills to its bank (effectively, it wrote cheques to that amount) but, with less than half that in its account it was declined and the bank withdrew support.

Attempts were made to mount a rescue early in 1899 and the collapse itself was, initially, greeted with incredulity. Slowly, the truth emerged: Pattisons had massively overvalued its stock and inflated its profits, often by the simple device of selling the same whisky (on paper) several times over.

Moreover, they appeared to possess a magical touch with the blending vat, claiming to produce well matured blends with a high proportion of malt. The sinister truth was that this was a further manipulation. As the Wine Trade Review reported: “The Pattisons purchased an enormous quantity of new grain whisky at 111/2d per gallon (around 5p in decimal currency). They put it through a vat, giving it a dash of malt and it suddenly came out as good Glenlivet, worth 8/6d per gallon (about 42p). The total cost of the whisky in this ‘Glenlivet vat’ was 2s 31/2d per gallon (about 11p). Three-quarters of that was cheap grain whisky.” At the resulting trial for fraud the jury took just an hour and a half to find the Pattisons guilty, Robert being jailed for 18 months and Walter nine.

More than the Pattisons and their creditors suffered. Ten other firms were brought down in the collapse. The reputation of blending, and of the whisky trade generally, was hard hit, not recovering until the Royal Commission of 1908/09.

But others benefited, most notably the DCL. Its financial prudence throughout the boom years stood it in good stead as trade tightened; they were able to purchase a number of Pattisons’ assets at knock-down prices and they steadily came to assume a position of leadership in the whisky business.

Perhaps the last word should rest with the liquidator of Pattisons who, in his final report, described these events as constituting ‘the most discreditable chapter in the history of the whisky trade.’ The big boom was over. History doesn’t record what happened to the parrots.
 

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