£100 Million Tonic for Scotch Whisky
Scotch whisky is extremely important toDiageo accounting for roughly 25% of group profits. Diageo, through its United Distillers& Vintners spirits arm controls about 40% of the Scotch whisky market, and owns fourof the top ten selling Scotch whisky brands (see Table One). UDV is, of course, by far theworld's largest spirits group, being at least double the size of its nearest rivals -Allied Domecq, Seagram and Bacardi. See "
Table One: The World's Top 10 ScotchWhisky Brands
|Brand||Owner||Total Volume |
(9 litre cases)
|1||Johnnie Walker Red||UDV||7.4m|
|4||Grant's||William Grant & Sons||4.0m|
|6||Johnnie Walker Black||UDV||3.0m|
|9||The Famous Grouse||Highland Distillers||2.2m|
|10||Cutty Sark||Berry Bros & Rudd||1.9m|
|Source: UDV. 18 Scotch whiskies feature in the world's top 100 premium brands.|
Scotch Whisky Market
In recent years, the global market forScotch whisky has been flat with consumption in traditional markets, such as the UK andNorth America, in slow decline while the emerging markets of South America, eastern Europeand Asia-Pacific have been hit by economic turmoil, although the long-term prospects inthese regions remain bright. Any growth in the 75 million cases global Scotch whiskymarket is being driven by the deluxe and single malt sectors (see Table Two), and thismarked shift towards premium brands is expected to continue.
Table Two: Global Scotch Whisky Market byVolume (9 litres cases)
|Total Scotch Whisky||73.4m||75.4m|
|Standard Scotch Whisky||45.1m||43.6m|
|Deluxe Scotch Whisky||8.7m||9.9m|
|Malt Scotch Whisky||2.9m||4.3m|
Scotch is perceived by younger consumers asan older person's tipple. Younger drinkers tend to prefer white spirits such asvodka, bacardi and tequila, and this poses a serious threat to the future of Scotch andother dark spirits.
Obviously, to continue to develop theconsumer base for Scotch whisky, it is essential for Diageo to recruit younger drinkers inboth mature and emerging markets. The global campaign for Johnnie Walker, covering bothRed and Black Labels, has been designed to redress this image problem by presenting thebrand as contemporary and appropriate to modern consumer demands.
Johnnie Walker is the world's topselling Scotch whisky, selling about 10 million cases (9-litre) annually in over 200countries. Indeed, Johnnie Walker was one of the world's first global consumerbrands, being sold in more than 120 countries by the 1920s. As the dominant player inScotch whisky, the onus is on Diageo (UDV) to take a clear leadership role in restoringlong-term growth and improving the profitability of the market.
The Global Campaign
The global marketing campaign for JohnnieWalker breaks new ground, by jettisoning the hackneyed images of tartan, cut glass androaring fires normally associated with promoting and advertising Scotch whisky in favourof a modernist approach. Designed to appeal to man's fundamental and instinctivedesire to make progress, the campaign's umbrella theme is 'Keep Walking'and is centred on the famous Johnnie Walker 'Striding Man' logo.
The executions revolve around the core ideaof walks that are universally regarded as emotional and inspirational. For example, one ofthe TV adverts dramatically features a walk by Russian fireman Nickolay Malakhov into aburning building to rescue someone trapped inside. Another shows French tightrope walkerRamon Kelvink completing a daring walk between two New York sky scrapers.
The press advertising highlights famousquotes about different types of walks including walks of bravery, determination andfreedom. For instance - "We will either find a way or make one," is a quote fromHannibal which is used. Similarly, Abraham Lincoln's comment: "I am a slowwalker, but I never go backwards," is also adopted.
The TV and press executions are part of anintegrated global campaign, which because of the universal nature of the 'KeepWalking' theme can be used across all the brand's markets, irrespective ofcultural and commercial differences. "We are determined to accelerate the growth ofthe Scotch whisky category and Johnnie Walker, as the world's number one Scotch, hasthe heritage and quality to lead the way," says Jack Keenan, chief executive of UDV."By breaking the mould of traditional Scotch whisky marketing we believe thiscampaign will put significant new energy behind Johnnie Walker."
Managing for Value
The global marketing campaign for JohhnieWalker is in line with Diageo's strategy of 'managing for value,' whichaims to maximise shareholder value by using economic profit criteria to determine businessstrategy. This has involved a major review of the spirits portfolio, disposing of non corebrands and concentrating on developing nine core brands globally, including JohnnieWalker, Gordon's gin and Baileys cream liqueur. The nine core brands will receive thelion's share of the total marketing budget, with Johnnie Walker leading the way.
Anheuser-Busch has revealed plans to launch a new variant in its Bacardi Silver range....
The US consumer goods group Fortune Brands has confirmed it is in talks about launching a joint bid with Pernod Ricard for Allied Domecq....
Diageo is to launch a new global advertising campaign for Smirnoff Ice. The first ad in the global campaign, 'Garden', launches in Great Britain on April 11th on terrestrial and satellite TV. ...
Fideuram Wargny has upgraded its rating of Pernod Ricard to 'buy' from 'hold'. Its analysts argue that the merger talks with Allied Domecq is a catalyst for share growth....
Diageo has completed another share buyback transaction....
Brown-Forman has restructured its distribution set up for Europe, entering into new agreements for its spirits brands in a number of countries, including Italy, Spain, and Germany....
Fortune Brands has started making moves to acquire in the European drinks industry, according to press reports....
E&J Gallo has announced a number of appointments within its European division....
- What's coming up in beer in 2017? - Comment
- Chile's winemakers caught out by Brexit "disease"
- What's coming up in spirits in 2017? - Comment
- Interview - Pernod Ricard's luxury director
- The just-drinks Analyst - 2017 forecasts
- Suntory sends staff to fat camp - report
- A-B InBev acquires Spain's Cervezas La Virgen
- Pernod Ricard's Absolut Lime - NPD
- Former Stoli Group CEO joins Perfect Vodka owner
- Diageo Australia names new commercial head
- Global vodka insights - market forecasts, product innovation and consumer trends
- Global Cognac insights - market forecasts, product innovation and consumer trends
- The Next Seven Big Beverage Markets
- Global gin insights - market forecasts, product innovation and consumer trends
- Darker Than Before: Global Prospects for Brown Spirits