Brazil is turning to Scotch

Diageo is gunning for Latin America's home-grown spirits as vodka and Scotch continue to attract new consumers.

In an exclusive interview with just-drinks, Diageo's Latin America and Carribean president Randy Millian said vodka sales are up in the region, with local spirits such as cachaça unlikely to hold back growth. “Vodka isn't restricted by domestic spirits, especially if you've got the right brands,” Millian said.

According to research firm Mintel, Cachaça sales have slowed in the past two years as consumers move to vodka, Scotch and rum brands. 

Sebastian Concha, Mintel's director of research in Latin America, told just-drinks: “In Brazil, you see a huge amount of consumption of Scotch. Johnnie Walker is doing very well, but also Pernod Ricard's brands. Whisky has a lot of potential and vodka is doing quite well as a trendy drink and has seen a lot of growth in Brazil, but also in Chile and Columbia.”

Concha also said that Columbian rum is growing in Chile, where it is taking share from local grape brandy pisco.

Major spirits makers have flocked to Brazil as an emerging middle class exercises its new spending power and premiuimisation trends emerge. Diageo last year paid US$454m for cachaça brand Ypióca, however Concha warned it will be difficult to convince Brazilian consumers to trade up with a drink that is perceived as low value.

“Tequila has managed to be premiumised, and the same is now happening with vodka, so it was a natural question to ask - can we do the same with cachaça?” Concha said of Diageo's buy.

“But the general perception is that (premiumisation) is not a great option with cachaça. It's not an impossible task but there's a very strong perception with the liquid.”