Is single malt really the Great White Hope for Scotch whisky? - Comment

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Although the global sales of Scotch whisky may have declined by around one quarter in volume terms in the past decade - slipping by 3% in 2014 alone, if you believe the optimistic statements of industry leaders, you'd be forgiven for thinking that all is for the best in this best of possible worlds.

What role will single malt play in Scotch whiskys future?

What role will single malt play in Scotch whisky's future?

For evidence, consider the remarkable multiple achieved by the owners of the BenRiach Distillery Co, when it announced its takeover by Brown-Forman last week. BenRiach may have been recording stellar profit growth (up by 24% in 2014 to GBP11.1m (US$16.1m)), but Brown-Forman's purchase consideration of $414.5m will surely not have required undue - or particularly lengthy - consideration by the company's shareholders.

Brown-Forman's apparent extravagance underscores the upbeat mood, however. In securing the three distilleries at GlenDronach, BenRiach, and Glenglassaugh the US-company is returning to the most desirable segment of the Scotch market – single malt. While CEO Paul Varga's view that BenRiach's three brands are "super premium" may be seen through a buyer's rose-tinted spectacles, few would doubt that BenRiach, The GlenDronach and Glenglassaugh hold considerable potential, once suitably re-positioned and fully integrated into to Brown-Forman's worldwide network.

But, where is single malt heading, at a time when Scotch's overall performance is patchy at best? Putting this question to some key players, I received nothing but upbeat replies and, while that might have been expected, the reasoning was remarkably consistent.

Miriam Eceolaza Zabalza, global brand director for single malts at Pernod Ricard's Chivas Brothers division, detects in single malt "a swing in consumer taste towards spirits with greater authenticity and substance. Innovation has been central to this growth", she adds, "with brands continuously bringing new offerings to a broadening market. The Glenlivet is proud to have been at the forefront of this trend and we remain very confident about the future growth of single malt, as evidenced by our continued investment in distilling capacity at The Glenlivet distillery."

Expansion is also very much in hand at Edrington's The Macallan, as construction of the brand's new distillery complex continues apace. "Single malt is the number one luxury spirit in the world, built on more than 200 years of crafted expertise," says Ken Grier, creative director for The Macallan. "The sector enjoys exceptional diversity of style and price points for both connoisseur consumers and collectors."

At William Grant & Sons UK, head of whisk(e)y Jonathan Cornthwaite echoes Grier's view. "This is the most exciting period in the history of the single malt category," he tells me. "There are huge growth opportunities in developed markets and the category still has room for explosive growth in developing markets where penetration is still low. Established distilleries and brands can sit alongside new entrants to the market to offer the consumer choice and variety, and innovation will continue to progress the overall category offering."

Likewise, Grier adds: "Many markets that were previously restricted by supply represent exceptional long-term opportunities." Being cynical, one might observe that the cloud characterising the drop in blended Scotch volumes has the silver lining of freeing up the constituent single malts to be marketed in their own right – but read on.

There are, of course, notes of caution within Scotch. Diageo's head of whisky outreach, Dr Nick Morgan appreciates that, until recently, the category had been in robust health, driven by a number of apparently-enduring trends in consumer behaviour and the growth of global connoisseurship. However, he warns, "continuing demand for what is an aged but finite product could mean that the range of products available, and the prices charged for them, could come to look very different in the future".

This introduces the vexed topic of No Age Statement (NAS) whiskies, a category which "we virtually invented more than a decade ago", claims Bruichladdich's spokesman Carl Reavey.

"Events in the wider industry have overtaken us," he continues, "resulting in what amounts to a crisis of confidence among both consumers and critics. We have moved swiftly to address this issue, with our support for greater transparency."

Others, such as William Grant with its The Balvenie Tun 1509, Glenfiddich Snow Phoenix and Ailsa Bay releases, aim to reflect the creative nature of the making of the whisky. But yes, agrees Cornthwaite, "NAS does have a role to play as consumers begin to understand more about the taste, profile and quality of malt away from age".

"It is imperative that, where these releases come to market, the consumer is able to understand why there is no age statement and not simply forced to accept an inferior alternative to previous releases that the distiller no longer has the required stocks for."

Yet others are in the happy position of being able to maintain age statements. According to Suzanne Clark, global brand manager for Dewar's & malts at parent company Bacardi: "We have limited allocations of our aged stock, so can play tactically by choosing which whiskies we place in which markets.

"All the malts we have released and plan to release have age statements, boasts Clark. "The debate about transparency in NAS is interesting but, for me, nothing is as transparent as an age statement."

But, no company is as closely associated with a definitive position as Chivas Brothers, architects of the 'Age Matters' marketing campaign back in 2010. Today, however, one may detect some softening of the line in the response from Miriam Eceolaza Zabalza.

"The age statement is not the sole indicator of the quality of a whisky and certainly not an indicator of the taste experience," she says. "There are other important factors, such as the quality and nature of the cask, the maturation process – which plays an essential part in the creation of all our whiskies – and, of course, the expertise in creating the whisky. That being said, we retain a strong age statement range across our portfolio and are committed to continuing this tradition."

Age Matters, then, just not as much as once it did.

So, onwards to the broad, sunlit uplands where Nick Morgan anticipates the possibility of some agreeable unintended consequences, foreseeing "a further renaissance of blended Scotch whisky as its undoubted quality and value are reappraised as a result of changes in the malts category".

And that, surely, would appeal to the industry's Panglossian outlook.

Sectors: Spirits

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