Diageo is still defending its plan to market Cardhu blended whisky as a 'pure malt', with all the trappings of a single malt. The Scotch whisky industry is up in arms over the issue, which threatens to destroy the added value upon which the whole single malt market rests.

Diageo continues to come under criticism for its decision to blend the Cardhu single malt while keeping the packaging and branding the same. The Scotch industry is up in arms at the possible ramifications of selling a blended whisky under the same imagery and claims to prestige as a true single malt.

Diageo defends its decision to target the Spanish market. Its belief is that the only way to bring new consumers into Scotch is to start shaking up existing categories and finding new ways to appeal to consumers.

There can be no doubt that the whisky industry is facing trouble. With a continually ageing consumer base, the prospects for the future look a little bleak. Tempting new, younger consumers into enjoying whisky is a key goal for every major distillery.

Despite industry outrage, and the fact that the MP for Moray has raised the issue with the UK Prime Minister, Diageo seems set to continue marketing Cardhu blend in Spain. Initially, the only visible change in the labeling was the replacement of 'single malt' with 'pure malt'. Now, however, Diageo is running full page adverts that will explain the matter further to Spanish consumers.

The major issue at stake here is the value of the 'single malt' brand. Among knowledgeable whisky consumers, there is considerable difference between single malt and blended whisky. However, among less informed customers, this important distinction is not so clear. As a result, Diageo can gain a significant advantage by retaining the distillery name and branding on an inferior product.

Unfortunately, in the long term this strategy risks diluting the value of the single malt brand to a point where consumers, particularly in new markets, do not see any value in single malt over blended whisky. As the single malt market is based on its ability to charge a significant premium for quality and prestige, this threatens the very core of the industry.