WILL THE SCOTCH “RENAISSANCE” HIT HOME IN THE U.S.?
There’s a good piece in the FT that discusses the much buzzed about Scotch “renaissance,” which got us thinking. The article suggests in is title, “Whisky: Brown is the new white for distillers,” that brown spirits, most notably Scotch, will soon trump white spirits, specifically vodka. While we’re not yet seeing those trends in the US, it’s clear that spirits companies are paying attention to rising demand.
According to IRI data, Scotch whiskey dollar sales grew 2.2% in the four weeks ending August 12, while volume was down -3.6% in the US. Meanwhile, vodka sales were up 5.6% and volume grew 1.5%. So while Scotch has a ways to go to catch up with vodka, we’re definitely seeing some growth.
Scotch is “aspirational” for “newly affluent” consumers in Asia and South America, says the article. That may be true, but we’ve yet to see those strong trends in the US although demand is reportedly on the rise. Meanwhile, Scotch sales in the UK, Spain and Italy are down, although Europeans remains the biggest consumers of Scotch.
There’s no denying that there’s been a lot of movement in the whiskey industry lately. For example, India’s Vijay Mallya recently purchased Whyte & Mackay, which is a bit ironic since Mallya was a top defender of what the Scotch whiskey distillers deemed unusually high import tariffs in India.
"In the last few years, there have been concerns about whether vodka or other white spirits were actually eating into the Scotch whisky market, but that trend seems to have started fading away and the demand for Scotch whisky - particularly in the emerging economies - is coming back stronger than ever," Vijay was quoted saying in an earlier article in FT.
Major companies such as Diageo, Bacardi and Beam Global have also started pumping money into their whiskey brands.
Bacardi announced in July it will spend over $250 million in the next decade to expand its Dewar’s Scotch production in response to “growing global demand.”
Meanwhile, Diageo plans to invest over $200 million to build a new malt distillery in Scotland, while Chivas Brothers (owned by Pernod) also spent millions of dollars in expanding bottling operations in Scotland this year. In addition, both Pernod and Diageo have invested more money in global marketing campaigns for their whiskey brands, including Johnnie Walker and Ballantine’s.
On a similar token, Beam Global declared 2007 “the year of Bourbon.” The company will support its claims with the launch of four new Jim Beam TV ads, and a 5 year, $70 million investment in Jim Beam and Maker’s Mark.
“Trading up” and “fitting in by standing out” are two growth drivers in the alcohol beverage industry today. If spirits companies can convince drinkers that Scotch is once again “cool,” we think they’ll see an even higher rise in sales. In a note to young hipsters: if you want to beat the tide, trade in your cocktail for a premium, aged Scotch.
According to IRI data, Scotch whiskey dollar sales grew 2.2% in the four weeks ending August 12, while volume was down -3.6% in the US. Meanwhile, vodka sales were up 5.6% and volume grew 1.5%. So while Scotch has a ways to go to catch up with vodka, we’re definitely seeing some growth.
Scotch is “aspirational” for “newly affluent” consumers in Asia and South America, says the article. That may be true, but we’ve yet to see those strong trends in the US although demand is reportedly on the rise. Meanwhile, Scotch sales in the UK, Spain and Italy are down, although Europeans remains the biggest consumers of Scotch.
There’s no denying that there’s been a lot of movement in the whiskey industry lately. For example, India’s Vijay Mallya recently purchased Whyte & Mackay, which is a bit ironic since Mallya was a top defender of what the Scotch whiskey distillers deemed unusually high import tariffs in India.
"In the last few years, there have been concerns about whether vodka or other white spirits were actually eating into the Scotch whisky market, but that trend seems to have started fading away and the demand for Scotch whisky - particularly in the emerging economies - is coming back stronger than ever," Vijay was quoted saying in an earlier article in FT.
Major companies such as Diageo, Bacardi and Beam Global have also started pumping money into their whiskey brands.
Bacardi announced in July it will spend over $250 million in the next decade to expand its Dewar’s Scotch production in response to “growing global demand.”
Meanwhile, Diageo plans to invest over $200 million to build a new malt distillery in Scotland, while Chivas Brothers (owned by Pernod) also spent millions of dollars in expanding bottling operations in Scotland this year. In addition, both Pernod and Diageo have invested more money in global marketing campaigns for their whiskey brands, including Johnnie Walker and Ballantine’s.
On a similar token, Beam Global declared 2007 “the year of Bourbon.” The company will support its claims with the launch of four new Jim Beam TV ads, and a 5 year, $70 million investment in Jim Beam and Maker’s Mark.
“Trading up” and “fitting in by standing out” are two growth drivers in the alcohol beverage industry today. If spirits companies can convince drinkers that Scotch is once again “cool,” we think they’ll see an even higher rise in sales. In a note to young hipsters: if you want to beat the tide, trade in your cocktail for a premium, aged Scotch.
posted at 11:13 AM
<< Home