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just the Answer - Diageo's global category director of whisk(e)y, David Gates

By | 27 April 2012

Earlier this year, just-drinks sat down with David Gates, the global category director of whisk(e)y at Diageo, to talk about Johnnie Walker, Formula One, Scotch and the other whisk(e)y sub-categories.

just-drinks: How big a shadow do you feel Johnnie Walker casts over Diageo's Scotch whisky portfolio?

Diageo's global category director of whisk(e)y, David Gates

David Gates: For me, it's more a beacon of light than a shadow; it kind of sets the standard for the rest of the brands in the portfolio. The performance has been stellar, and we're immensely proud of the marketing work that we've produced for Johnnie Walker.

In an ideal world, we would get each of our whisky brands in as well-defined a position and with such clear growth drivers.

j-d: With such a volume-driven brand as Johnnie Walker, why go for such niche-targeted extensions like Diamond Jubilee and King George V?

DG: It's about the halo-effect on to the rest of the trademark. We're looking to reinforce quality, authenticity and craftsmanship every step of the way. Also, it's about doing the right thing: there is real value in our people feeling pride in what we do as a brand and as a business. Finally, there is a big value opportunity for the super-premium, very high-end whiskies in markets like Asia.

j-d: How can you gauge the success of these niche ideas for the brand as a whole?

DG: There are examples where we can see an absolute correlation – when we launched King George V in Changyi airport, for example, sales of the new launch and of Blue Label both went up together. It was a relatively significant number, as well.

j-d: Has the opening of Diageo's Roseisle distillery marked a tipping point in supply and demand for Scotch whisky?

DG: What I think it shows is confidence in the future of the category. If you look at the emerging markets, the growth is already there. Then, there's the potential to unlock even more. If we get tax reforms in India or Turkey, that will unleash some heavy duty demand: We're going to need that increased capacity.

Then, look at Brazil: the population is double the size of France and Spain combined, you can feel the economic prosperity. Some of the favellas have just disappeared now. There's a new confidence in the country. Then, you've got Mexico, Colombia, Chile, Peru. You've got economic, political and social stability in these markets – life has never been better. There's a strong correlation in emerging markets between GDP and Scotch whisky growth.

j-d: Are the markets of Africa set to offer growth?

DG: It's going to be more about sub-Saharan Africa for Scotch. Countries like Kenya, Angola, Nigeria have got a burgeoning middle class, and they're looking for symbols of status. That's where Scotch tends to play a strong role.

There's usually a tipping point for markets like these, and sometimes it's about tax reform. That will bring us what we call arm's reach price accessibility: when a person coming into money can just afford it, but only just.

With Greece, that tipping point was when they joined the European Union and the subsequent tax reform.

Sometimes, we cause the tipping point through changing the value equation of our whisk(e)y offerings. In Africa, I think it will be strong growth from a percentage basis that's because we're starting from a small base before it gets to the kind of scale where it becomes noticeable. That'll take a while.

j-d: What about China, where Pernod Ricard is booming?

DG: Of course, Pernod has been in China for a number of years and has a strong presence there. However,  we are continuing to build our presence in the market and are excited about the opportunities for our Scotch brands.  

What we're beginning to do is to educate with enough depth of meaning about whiskey and whiskey culture. We want to make sure that there is no superficiality to the category: If you're in fashion, then it's quite easy to go out of fashion. If you build strong credentials and put down strong roots, then you build a solid platform for the future.

j-d: Johnnie Walker's partnership with Formula 1 has been going for seven years. At what point do you start to feel that the deal has run its course?

DG: Our McLaren partners have regularly talked to us about sponsors like Tag Heuer and Boss who have been doing this for 20 years or so, and how they've continued to be successful. That's our thinking: When you look at the viewing numbers, its appeal and demographic and where it's expanding to, that's exactly where we want to be. Our challenge is to keep on refreshing it and keep it interesting. The sport is still the most glamorous and prestigious sport out there. The sheer number of viewers who are in our demographic is huge. So, we're not asking that kind of question of it just yet – we're really happy with it.

Conceptually, you can ask how long it's got. But, we see the value of a long-term partnership.

j-d: Is Irish whiskey anywhere nearer recognising its potential?

DG: Within Diageo, Bushmills is a cherished band – we've got good growth going on there and we’re excited about the potential for the brand to really compete in the category. I think the category has got scale – look at Jameson: There's a brand that has laid down the marker for everybody else. 

Activity in a category is a good thing; I don't think a single brand on its own can be as effective at building a category. In the US, for example, we felt at times like we were fighting a lone battle with Johnnie Walker. So, having new players in Irish whiskey, as well as ourselves upping our game, will be good for the overall category.

j-d: What about Japanese whisky?

DG: I lived in Japan for three years, so I've got a soft spot for that category – it's really interesting. We don't play there. Suntory have done a really good job in Japan with the hi-ball. But, it's a wait-and-see game for us.

j-d: Diageo has got a gap in American whiskey and Bourbon, hasn't it?

DG: Well, we have got Crown Royal, which is huge in the US, and Bulleit, which is a lovely little brand at the moment.

j-d: But, how would you feel about the Jim Beam brand, should it become available?

DG: I haven't really looked at Beam as a brand in that respect. When we look at a category, we look at all the players. In Bourbon, Jack Daniel's has the biggest geographical footprint, it's fantastically marketed and well-positioned. That's where we'd look first when we look to access growth. Beam would be interesting, but that's probably more a question for Paul than me!

Beam is a really interesting brand. It's very strong in the US and Australia, but it doesn't have the level of geographical consistency as Jack Daniel's. If you were looking at it as a global play, it would be a big, long road for the brand in some places. That takes time and money.

Some of the most interesting things happening in Bourbon are at the smaller, niche end. Bulleit is a wonderful player in that space.

j-d: What's your desert island dram?

DG: It's Black Label!

j-d: You must have drunk so much of that stuff by now.

DG: I have: That's the point! Or a Talisker 20 in a Sherry cask.

Expert analysis

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Sectors: Spirits

Companies: Diageo, Johnnie Walker, Pernod, Ricard, Jameson, Suntory, Jack Daniel’s, Crown Royal

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