The Innovation Game

The Innovation Game

With so much discussion going on at the moment about innovation,we decided to ask members of the whiskymag.com forum for their views

People 01 Jun 2007 | Interviews | By Rob Allanson

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PANEL
PA Paul Allison,Edinburgh,UK
NB Nick Brown,Isle of Lewis,UK
PH Peter Hall,Kenora,Canada
SH Sion Hannuna,Bristol,UK
SL Simon Lewis,Penticton,Canada
CW Christopher Watkin,Grantham,UK1. Where do you think whisky will go next?SH: There has already been so much innovation in single malts of late and I think we will get more of the same: More weird and wonderful finishes, more cask strength, limited runs and bottlings presented in eye catching packaging.With regards American whiskey, we will see Buffalo Trace’s Antique Collection, emulated by other producers. Heaven Hill’s 21 Years Old Rittenhouse rye will soon be followed, by other special releases. The potential for this growth may be limited by previous underproduction and a relative shortage of aged whiskey.PA: I think the industry, like many other industries that follow consumer trends, will continue to go down the polarised route between those that are innovators and those that are traditionalists. Furthermore the likely survivors will be those that either tap in to the top end of the market, with premium products where margins are higher, or indeed focus on the lower end of the chain where volume and value is key.An example of where this is apparent is at LVMH where they have Ardbeg going very much down the premium route and at the opposite end of the spectrum you have Glen Moray where value is key. You could argue that Glenmorangie is very much in the middle however brand presence, loyalty and product extension has been critical to its success.NB: I fear that flavoured whiskies are here to stay. I fear also that, as happened in the UK real ale market, we might develop a steady procession of micro-distillers for whom quality is a minimal consideration, releasing special bottling after special bottling in an attempt to cash in on the collectible or novelty market until they go bust.PH:From my perspective, I see whisky leaning towards more finishes not only with the single malts but also with the blends. I also can see that fewer of the old “standard” malts will be offered to the traditional world market and redirected towards the new Chinese markets that are opening up.The “Whisky Lake” only has a certain volume and as new markets and new sales innovations are attempted, there will be less and less to share around the world market. I can see that prices will rise for the foreseeable future and in time will develop into a delivery to the highest bidder to the detriment of the average drinker, like myself.For the suited sales types, it’s going to be an exciting time of developing new ways of marketing whisky to garner a big corner of the newly accessed markets. Innovation will be their watchword and regretfully the stalwarts who’ve supported whisky up until now will lose out for their loyalty as their preferred drams will become less available.SL: Whisky will expand into new markets like China and the big distilleries will try to hold onto their market share and grow it. It looks good at the moment and should be good for years to come, yet there will come a time in the future where the market will not sustain the success of distilleries and take a downturn.

2. Is innovation needed to keep drinkers interested?SH: I do not believe innovation is necessary, but variety certainly is. A new release does not need a special finish or a crazy level of peating to interest seasoned whisky drinkers.Two years ago I was obsessed with trying as many American whiskeys as possible.Now I feel like I’ve tried practically everything I wanted to and have been drawn back to Scotch. If there were other bottlings available I would buy them.PA: It is a widely accepted principle that businesses that develop new products and services, or significantly improve business practices, are almost twice as likely to increase turnover as those that don’t. It means doing things differently, exploring new avenues, collaborating and taking risks.You only need to look at the successful example from the ‘new breed’ of innovative distillers, Bruichladdich, to see that innovation breeds success. Consumers will always want variety and choice and as long as the product has a high degree of authenticity, innovation provokes interest and positive PR to help drive sales.NB: Single malt whisky is a market with little brand loyalty – people want to try new things and companies have traditionally had to share customers between them. The “innovative” distilleries seem to recognise this and release new whisky after new whisky. The result, with the addition of some attractive packaging and enough blarney, is that drinkers are able to try a never ending succession of new whiskies while donating all their whisky funds to the same distillery.Clearly we fall for it in sufficient numbers or they wouldn’t keep doing it.CW: The trend of cask finishes has almost gone too far! Innovation is a side show to the main event. Making decent whisky with great ingrediants.PH: There is a perception in some circles that innovation is needed to keep the sales and marketing game fluid. This concept has reached the Whisky production model and we are seeing some new concepts that people are snapping up merely to try something new. Ardbeg has brought out a variety of new whiskies that appear to be selling well. They are not available to the world market, so the erosion of traditional single malts market to the concept of innovation has begun.In some cases I see innovation as a good tool to open new markets and to entice the more traditional drinkers to step outside their comfort zone and try something new. It may initially introduce new drinkers to the single malts experience but targeting the young drinkers may be a miscalculated failure as they will not have the loyalty that is required to maintain interest in the brand. Innovation in moderation is a good thing for the Whisky trade and wholesale revamping and elimination of proven lines will come back to bite the producers.SL: Most drinkers of whisky will probably have their favorite drams and no innovation (or not much innovation) is needed among these folks.It’s the ‘new to whisky people’ that innovation will have an affect on the most and I think advertising, not the making of new whiskies will be the key to growth.3. Is innovation good or bad,what would you like to see happen or not happen?SH: Innovation is good insofar as it generates variety. However, I hope we do not see more young malts being marketed at inflated prices. Repackaging and rebranding costs money, we have seen this passed onto the consumer, in the case of some new releases. Let’s hope that is not the beginning of a wider trend.PA: Innovation stimulates the success of any business. In essence it is good for both the industry and the consumer to offer variety.As long as the base product is not de-valued in any way and that innovation is not used at the expense of authenticity I will support it.Ultimately innovation will at least help to encourage younger drinkers to whisky.Aside from innovation I would like to see where the constituent products are sourced from, for example and in particular with malts where the barley is sourced from.Surely if a label states ‘Product of Scotland’ all elements should be sourced in Scotland.To my mind value, honesty and integrity will be key to building consumer loyalty to the product as well as the brand.NB: Innovation is good provided it doesn’t kill off the tradition. Personally, I would like to see flavoured whiskies labelled as such - why pretend that cask finishing is about maturation in different woods - it is about sucking wine out of wood in ever shorter periods of time.It would be more honest to allow flavoured whiskies to go down the Canadian path and just add the wine in directly without faffing around with casks - and acknowledge this on the label.CW: Innovation is always good. I would love to see an Islay new make barrel shipped to the USA to be matured (keeping a second sister barrel back in Scotland to compare with) and a barrel of say Makers Mark or some other Bourbon shipped over to Scotland to be matured (again keeping a sister barrel back in the US for comparison).Let them mature over say five years, then bottle all four. What an experiment!PH:We cannot act in a vacuum and change is a fact of life. Innovation of itself is not a bad thing, how it is wielded determines whether it will be of benefit or not.Innovation in whisky or any other business to improve the product being offered is to be expected.When sales drop off, the company that staunchly continues to manufacture that product is doomed to failure. It is a simple fact of retail that the longer a product sits on the shelf, the more it costs you as the seller.The difficulty in whisky production is that the product has a legislated shelf life of three years in the cask before it can even be considered as whisky. There is a long lead time from the initial distillation process to deciding what is the proper time to market the product.Due to this delay, innovation of itself is a bit of a misnomer when applied to whisky.The new concept, if it entails a different finish as an example, can only be applied once the aging process is completed. The variety of Glenmorangie finishes require aging for ten years in traditional oak cask before the product is chosen by taste and then transferred to a finishing pipe or cask.When these finishes first reached the shelves, they were seen as innovative.Innovation that was 12 years in gestation.I would like to see some newer offerings from the whisky producers and would dearly love to see them offered in the market I purchase in.I would like to see some new finishes, some Single Cask offerings and more of the Cask strength casks made available to the world market.I would also like to see some of the mothballed distilleries brought back on line, as the markets certainly will be there when the new make has finished aging.SL: I think innovation is good as long as it is just a ‘branch’ on the tree and not the whole tree trunk.Tradition needs to be kept along with innovation in the industry. I hope that tradition is kept and celebrated. This will sustain the highend products.I’d like to see more countries get involved in the making of single malt whisky.I bet there could be some very good malts for consumers to try.
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