Comment - A Word with Woodard - Premium without the premium
Following our discussion of premiumisation in the spirits industry with Diageo's CMO earlier this week, Richard Woodard queries a new, Scotch whisky addition to the price bracket. Is premiumisation a victory of style over substance? Or does it satisfy a genuine consumer desire? The answer, of course, is both.
Such is the hype surrounding the 2009 Bordeaux en primeur campaign that buyers of the top châteaux will probably have to stump up roughly twice the price of the thoroughly decent, but unremarkable, 2008 wines.
With a typically insouciant Gallic shrug, the Bordelais are wont to dismiss concerns that long-time lovers of top-drawer claret are being priced out of the market, as global demand grows for Lafite, Latour and Le Pin – and prices rocket as a result.
“Consider a Louis Vuitton handbag or a scarf made by Hermès,” they say. “The global market decides the value of luxury brands, not us. We only set the price that we think our customers will pay.”
And most of the time - odd vintages like 2007 and 1997 apart – they get it just about right. But it raises the question: when booze makes the leap into the luxury goods sector, how do you know when the price is right?
I was set to thinking about this by the kerfuffle which has greeted the launch today (29 April) of Glenfarclas 40-year-old single malt, the redoubtable Speysider owned by the Grant family since Victorian times.
Not that there’s anything especially unusual about bottling a 40-year-old whisky these days. Once as rare as hen’s teeth, now just about every self-respecting distillery has a middle-aged malt in its ranks; some, Glenfarclas included, have even launched limited-edition 50-year-old drams.
But what has caused jaws to drop and eyes to widen is the price of Glenfarclas’ new addition to its core range: RRP in the UK of GBP350 (US$535) – and available online at the time of writing for just south of GBP300.
To the untutored eye (and to most of the recession-battered population), GBP300 for 70cl of Scotch is still a pretty penny, but a quick survey of similarly aged malts shows a remarkable price discrepancy: on the website of The Whisky Exchange, 40-year-old malts from Glenfiddich, Glenglassaugh, Dalmore and Balblair are all priced at over GBP1,000, while Bruichladdich comes in at GBP999 a pop and Highland Park is a relative bargain at GBP750 – but still more than double the price of Glenfarclas.
Meanwhile, Glengoyne’s recently launched 40-year-old, which is, admittedly, bottled in a stunning Glencairn crystal decanter, weighs in at an eye-watering GBP3,450.
By way of contrast, Glenfarclas makes a puritanical virtue of its downbeat packaging, housing the spirit in a standard amber bottle and a distinctly unremarkable gift tube. No crystal, no fancy cases which light up and play tunes when you open them, no personalised labels signed in the blood of the master distiller.
The response of the online whisky anorak fraternity has been swift and excitable. “How often do you see whisky marketing that brags about the modesty of the package…? It’s great to see Glenfarclas going against the flow,” writes one poster on the website of Malt Advocate publisher John Hansell. “Kudos to Glenfarclas for eschewing the fancy packaging and recognising that many of us are more concerned with what’s inside the bottle,” opines another.
The natural flipside of this back-slapping for the Grant family is criticism of other distillers who have been, shall we say, rather less conservative in their pricing policies. Or who have been guilty, in the words of another online poster, of “over-hyping, over-packaging [and] over-pricing”.
But this rather misses the point. For years, single malts in particular lagged behind cannier rivals like Cognac when it came to targeting the luxury market, particularly in the Far East.
Fancily-packaged malts with impressive age statements (and hefty price-tags) are a must if Scotch is to take on the likes of Hennessy and Rémy in the lucrative gifting market in particular. Can you imagine an Asian businessman greasing a deal with the judicious gift of a bottle of Glenfarclas 40-year-old, complete with pink cardboard tube? No, neither can I.
And that’s the point – it’s horses for courses. As the Scotch Whisky Association’s recent export figures showed, the industry is spreading its net ever wider into new markets and new types of consumer. For some, authenticity and the quality of the liquid is paramount; for others, appearances are equally, if not more, important.
Neither approach is inherently right or wrong in any moral sense, but it’s a judgement call for brand owners to decide on the right path for their particular product. In simple terms, do they have the brand equity to justify Lalique crystal and a four-figure RRP?
I couldn’t put it better than Ed Bates, senior spirits sales executive at Berry Bros & Rudd, who said to me a few months ago: “There are risks in, shall we say, minor brands thinking that they can bring out a 40-year-old product, stick a couple of zeros on the price and thinking people will buy it.
“Glen You’ve-never-heard-of-it can’t do what Macallan can do. They’re going to struggle in a big way.”
In the meantime, Glenfarclas continues quite rightly to win plaudits for its refreshingly unfussy and realistic approach. The company’s 40-year-old may not quite make the margins of some of its rivals, but the gain in PR terms could outweigh any financial shortfall.
“For a 40-year-old that price is amazing,” writes one Stateside online poster, who freely admits he probably still won’t be able to afford it. “I have never had Glenfarclas, but I guarantee you my next purchase when I am back at home will be a Glenfarclas!”
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