Blending in: the malt with dual personality
Blended malt is often regarded as the 'mongrel' of the Scotch category, but it is clearly a growth area. Some consider the combination of the kudos of malt with the brand-friendly flexibility of blends to be a winning formula. Richard Woodard is not so sure.
Blended malts are nothing new - previously known as vatted or pure malts, they've been around for years. But a new era dawned in 2003, when Diageo famously re-designated its fast-growing Cardhu single malt as a 'pure' malt, blended from a variety of Speyside distilleries.
The ensuing controversy - culminating in Diageo's U-turn and reinstatement of Cardhu as a single malt - led to a change in the regulations but, more importantly, focused the industry's attention on the potential of this sub-category, which boasts much of the cachet and provenance of single malt whisky, but has virtually none of the potential stock management problems.
Cardhu was the victim of its own success. Exponential growth in Spain meant inevitable inventory problems, but such is the nature of single malt whisky production. Lagavulin remains on widespread allocation for exactly the same reason. But such pressures do not apply to blended malts.
In addition, blended malts offer scope for product innovation. Established brands and single malts tend to have a traditional, conservative consumer base which is shy of innovation and wary of new branding techniques. But blended malts offer an opportunity to develop new, younger brands with a different USP - such as William Grant's Monkey Shoulder, or Ian Macleod's Six Isles, a blend of single malts from Scotland's six whisky-producing islands: Islay, Jura, Arran, Mull, Skye and Orkney.
These are niche products, but the big brands have not been inactive in this regard either. Diageo's relaunch of Johnnie Walker Pure Malt as Green Label has enabled the brand to participate in the sector, particularly in Asia, while Pernod Ricard's Chivas Brothers arm has blended malt variants for Clan Campbell, Ballantine's and 100 Pipers.
Much of the activity has so far been limited to the UK, US, France, Spain and - perhaps most interestingly - Taiwan. And it is in Taiwan that one brand, Edrington's The Famous Grouse, has most enthusiastically embraced the blended malt concept.
In all, Grouse blended malt has six different age statements, along with vintage and special bottlings - and the result is that the blended malt market in Taiwan has gone into overdrive. Senior industry figures estimate that blended malts there now account for up to 400,000 cases a year, or roughly two-thirds of the market, with The Famous Grouse dominating the sector along with Suntory's Prime Blue brand.
This has not gone unnoticed by Edrington's rivals. "Macallan really drove the malt market, but the market is now two-thirds blended malts," observes Neil Macdonald, malts brand director at Chivas Brothers. "Blended malt out there is almost a sector in its own right."
Interestingly, blended malts in Taiwan are typically treated as cheaper alternatives to super-premium blends such as Chivas Regal or Johnnie Walker Black Label, with single malts operating at a premium to the latter.
This poses questions about the role that blended malts play in the overall Scotch whisky sector. Some view them as a potential bridge between blends and malts, offering the reassurance of a known brand with the heritage and provenance of malt.
"The development of blended malts was intended to give consumers an easy way to enter the world of malts," says Gerry O'Donnell, brand director for The Famous Grouse at Edrington. Meanwhile, Iain Weir, head of marketing at Ian Macleod, believes blended malts are driven partly by pressure on single malt stocks and also act "as a stepping-stone in price and taste between blends and single malts".
It seems a natural progression, but others are less convinced. Chivas Brothers has not been a big player on the blended malt scene, preferring to use the category tactically to support certain brands. A spokesman refers to Clan Campbell blended malt, for example, as "a trade-up opportunity in France", while Ballantine's and 100 Pipers blended malts perform similar roles in Taiwan and Thailand respectively.
Both, says the company, are "very much extensions of a market-leading standard blend franchise in that country. It's very much just something a bit more special from that brand".
The inference here is that, beyond tactical brand support, Scotch doesn't really need a blended malt category in its own right. "On the one hand we've got premium blends that have extremely strong franchises - and then we have very strong single malts," says the Chivas spokesman. "We don't require a third category necessarily. Those are the brands that we're going to back."
Nor does the company believe that there is strong evidence so far that people are being led from blends into malts via blended malts. "There are enough people gravitating across to single malts anyway. We don't need to create more demand."
Indeed, could blended malts be counter-productive by cannibalising sales instead? Weir doubts that they will steal single malt sales, but admits that blends could suffer, while O'Donnell believes it is too early in the life cycle of blended malts to tell.
It is surely no coincidence that the markets which show the greatest projected growth in blended malt sales - the US, UK, Spain and Taiwan - are also predicted to witness a fall in blended Scotch sales as well.
You can't push the link too far, however: these are maturing markets where - in the case of Spain and the UK especially - blends have become commoditised and have fallen out of favour with younger consumers. But the emergence of blended malts is hardly likely to help this situation.
More than three years after the Cardhu controversy, blended malts have developed into an amorphous sub-category which is made up partly of innovative products like Monkey Shoulder and Six Isles, and partly by sometimes opportunistic extensions to existing blended products. It's hard to see blended malts developing much further than as a tactical weapon to be used by certain companies in selected markets - and in the process, they could pose an indirect threat to sales of blended Scotch, the lifeblood of the category.
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