High-end spirits iterations like Johnnie Walkers Diamond Jubilee provide a halo effect for the brands full portfolio

High-end spirits iterations like Johnnie Walker's Diamond Jubilee provide a halo effect for the brand's full portfolio

Earlier this month, at the annual CAGE conference in London, LVMH CFO Jean-Jacques Guiony presented an eye-opening look at how the luxury goods category operates. What can the spirits category learn from Guiony's observations? Ian Buxton takes a look.

What struck me on first reading Jean-Jacques Guiony's remarks to analysts at their London conference last week was the subtle - yet critical - distinction he made between 'luxury' and 'high-end'. It's not simply semantics: according to Guiony, 'high-end' is characterised by small volumes. For example, while they are in common ownership, BMW is 'luxury' whilst Rolls Royce is 'high-end'. To achieve the volumes that define a luxury brand, BMW has its entry level 1- and 2- series, yet also produces the much more expensive 6- and 7- series models, both of which trade on their highly-desirable images.

I would add to that definition by noting the contribution of hand-crafting to high-end brands. The direct involvement of a skilled craftsman - a master blender, for example - sets the finest high-end expressions apart from even the most luxurious of products.

Something very similar has long been understood by spirits marketers, the best example being Diageo's Johnnie Walker range. Starting with the accessible entry-level Red (which retails at around GBP20 (US$29) per bottle in the UK off-trade) the range stretches all the way through Black, Green and Blue Labels to the more luxurious Blue Label King George V Edition (typically GBP435) and on to ever more rarefied expressions such as the Private Collections series; Honour; The John Walker (GBP2,000) and on to 2012's ultimate release, the Diamond Jubilee edition - a snip at GBP100,000 plus local taxes.

Whereas most of the Johnnie Walker stable occupies the luxury space, Diamond Jubilee is clearly high-end, where its price point is validated by the highly-crafted components, suggesting that the right spirits brands can occupy both segments. Something similar has been achieved by Pernod Ricard's Chivas Brothers unit with its Royal Salute Tribute to Honour (US$200,00 per 1-litre bottle) and by Whyte & Mackay through The Dalmore Paterson Collection (GBP987,500 at Harrods).

Such ostentatiously-expensive collections serve to provide a halo effect for the remainder of the brand's expressions; a point that Diageo made to me at the UK launch of King George V, eight years ago. The iteration provided "permission" for consumers to purchase the regular Blue Label, a spokesperson explained, noting that the rate of sale of that expression jumped by around 30% when merchandised next to its more lavishly-packaged - and expensive - new brother.

The really interesting thing about luxury spirits, however, is that they have been built from the entry-level up, rather than the other way around. When in 1860, Alexander Walker first launched his Walker's Old Highland brand, whisky was not considered a luxury good – far from it. It took until 1909 for the Red and Black Label branding to evolve, and Blue Label is a creature of the 1980s. Since then, further upmarket expressions have followed, to such an extent that the concept of a 'value' Johnnie Walker positioned below Red on the pricing ladder would be unthinkable.

Ultimately, as the spirits industry knows well, this is about story-telling and relationship marketing. Great brands provide their consumers with experiences; a point alluded to by Guiony when he referenced the 2014 creation of the Louis Vuitton Museum in Paris. Ideally, these experiences offer consumers something that they cannot buy, such as stepping onto a floor malting or hand-bottling their own souvenir dram.

Spirits marketers can breathe easy here: This point offers little to learn, as the iconography and semiotics of museum design have been well understood and exploited by the drinks industry for the last quarter of a century, at least. Consider the Dewar's World of Whisky and Casa Bacardi brand homes, where the archive material from both brands is consciously displayed under museum-quality and -style conditions, precisely for the message that it conveys to the visitor about the worth and importance of the objects on display.

Then, there is the fit-out of the six Johnnie Walker houses in Asia.  As James Thompson, global MD for Diageo Reserve, has said: "With Johnnie Walker House, we offer unique experiences – part education, part private club, part museum, part retail – for our consumers. In an industry where experience is key, we are proud to expand our Johnnie Walker House network to continue engaging consumers in bespoke yet unexpected ways."

It's of little surprise, then, that the most popular item in distillery gift shops is the exclusive "available only here" bottle. "People who make the effort to go there [the Louis Vuitton Museum] are probably lovers of the brand for ever," concluded Guiony.

Precisely. These consumers subsequently become (unpaid) ambassadors for the brand. A good relationship marketing programme (the 'Friends of Laphroaig' society fits this bill) maintains and builds on that experience for years afterwards.

My conclusion? Spirits marketing in the luxury space, when done well, is being done very well indeed. The industry will continue to do well if it looks to its own best practice first.

Perhaps, CAGE might want to invite some spirits marketers to their next conference.