Blog: Scotch whisky - where did it all go wrong?
Olly Wehring | 21 August 2007
The question of image and innovation in the spirits industry is hardly ever off the agenda, but for some categories it is more pertinent than others.
Vodka, for example, has been hugely successful in this area. The likes of Absolut, Stolichnaya and Grey Goose are extraordinary examples of style- rather than substance-driven products. Here, after all, are drinks that, by their nature, are without character though still at the cutting edge of image (marketing). Scotch whisky’s track record, by comparison, is woeful.
Millions of pounds are being ploughed into boosting production at the moment, but almost all that extra capacity is being earmarked for the developing markets of Brazil, Russia, India and China. Meanwhile, the likes of the UK, France and, more worryingly, Spain and the US continue to suffer a confidence-shaking image crisis.
The issue of how to track new consumers in mature markets, such as the UK, France and Japan, has vexed the industry for more than a decade. Extraordinarily, there remains no convincing solution, leading some industry watchers to ask whether the leading Scotch producers have all but abandoned their traditional markets. Furthermore, an over-reliance on discounting has only exacerbated the problems for the blended category.
It was with great enthusiasm, then, that just-drinks has agreed to be a key stakeholder in a new initiative set up to discover a solution to this problem.
Leading figures in the Scotch whisky industry are to form a pan-industry working party to investigate image and innovation in Scotch. The debate will be led by the World Whisky Conference (WWC), with the aim of the working party, which will meet in Scotland next month, being to present a white paper to the industry at next year’s WWC.
I am pleased to say that much of this debate seems to have stemmed from the report we published and released at this year’s WWC. It argued that the future health of blended Scotch was more uncertain than the levels of investment in production capacity would lead us to believe.
The working party already includes private and public drinks groups, analysts and journalists, which demonstrates, I think, the urgency with which this subject is being viewed. The potential for Scotch in the BRIC economies certainly merits investment, but the fragility of that growth demands that we look at why Scotch has stagnated in its traditional strongholds.
One, perhaps minor, consequence of the conflict in Ukraine appears to be a fall in sales of Russian vodka in the country....
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A very early start today, with Carla Errazuriz from Concha y Toro's fine wine division picking me up from our Santiago hotel at 0700....
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