Blog: Malt alternative
Chris Brook-Carter | 9 March 2004
U-turn, re-appraisal, or climb down. Call it what you like, but the decision by Diageo, announced this morning, that it is to axe Cardhu Pure Malt and bring back the brand in its original single malt format cannot have been an easy one, and neither does it come without some surprise.
The furore that surrounded its decision last summer to change the world’s fifth best-selling malt whisky to a mix of vatted malts – a format Diageo called a Pure Malt – caught the drinks giant by surprise. “We under-estimated the strength of feeling on this issue,” Ian Meakins, president, EU markets, said today.
The debate threatened to split the Scotch Whisky Association, reached the House of Commons - when one Scottish MP raised it at Prime Minister’s Question Time - and came close to spilling over into the courts when rival Scotch producer William Grant spoke of taking legal action.
A compromise was finally reached where Diageo promised to make changes to the packaging of the product, including changing the colour from brown to green, and to carry out additional promotional activity explaining to consumers the nature of the new product.
What is surprising about Diageo's decision today is that the trade seemed to be happy with the compromise. It is made all the more baffling by Diageo’s insistence that it came under no consumer pressure to change back to the Single Malt format, quite the contary in fact. Speaking to just-drinks, Nicholas Morgan, the company’s marketing manager premium malts, said the launch of Cardhu Pure Malt had been a success and he referred to the potential consumer backlash many had predicted as “the dog that didn’t bark."
That the company must now go back to those consumers and communicate a second change in make-up in 12 months makes the decision all the more baffling, as does the fact that Diageo is once more facing the supply issues that forced it to change to Pure Malt in the first place.
Why then the turnaround? Diageo claims it is in light of talks being held with the SWA over whisky definitions, which it believes will conclude that Scotches can only be called after distilleries if the spirit has been produced there – in other words only single malts can be named after a distillery.
Perhaps so. But Diageo could have argued that Cardhu had been marketed since before any definitions were put in place and so was exempt from the rules. Morgan said that the long-term benefits to the trade of these definitions outweighed the importance of the Cardhu Pure Malt issue.
However, some industry insiders are not convinced this is the whole story.
An answer then, may lie in Diageo’s global aspirations to market a premium malt brand. One industry insider just-drinks spoke to speculated that the company had decided it would face a restrictively hostile consumer reaction in more malt-literate markets than Spain, such as the US, if it were to take Cardhu Pure Malt global. If this is true, we may see the launch in the next 12 months of a Diageo-owned premium vatted-malt brand to replace Cardhu Pure Malt, with the sorts of volumes to launch an aggressive global push in this sector.
Whisk(e)y companies spend a lot of money and effort ageing their products for that premium taste....
PepsiCo created a stir last week with the news it is testing a product called Caleb's Kola, with some in the media claiming it was the beginning of a new “craft soda” category....
SABMiller's bid to widen the appeal of beer is very much in evidence at its latest 'House of Peroni' - with beer cocktails and a bigger bottle for the Italian lager brand on offer. ...
Here's a round-up of the big stories on just-drinks last week, featuring PepsiCo, SABMiller, the Scotch whisky category and the US wine market....
- Analysis - Remy's Cognac "dead-cat bounce"
- Comment - How Hand-Made is Tito's Handmade Vodka?
- Diageo's future brighter than present suggests
- Diageo's Q1 Results by Region
- SABMiller's troubles fuel M&A rumours
- Moët Hennessy unveils first Travel Retail outlet
- United Spirits sees Q1 net loss
- Diageo puts Beckham centre stage in Haig Club ad
- Beam Suntory, Edrington part ways in Travel Retail
- TWE unveils Penfolds range after CEO's "bold move"