Great Scot!

In their heyday, back in the 1980s when Gordon Gekko and his cronies were smoking $100 cigars with their competitors on Wall Street, distillers were selling close to 20 million cases of Scotch whisky in the U.S. every year. Volume last year was a little more than half that, but after years of decline, the category overall has been flat, and segments of it are experiencing solid growth.

Globally, exports of Scotch are at an all-time high both in terms of volume and sales, according to the Scotch Whisky Association. The category is a mixed bag in the U.S. right now, but in general a few trends are clearly emerging in the market.

Blends still account for the lion’s share of the business. Nationally, the five top imported brands in the U.S. – Dewar’s, Johnnie Walker Black, Johnnie Walker Red, Chivas Regal and J&B – represent about 40% of the volume. The top five U.S.-bottled brands – Clan MacGregor, Scoresby, Cluny, Inver House and Old Smuggler – account for another 18.7% of volume. The top five single malts – The Glenlivet, Glenfiddich, The Macallan, The Balvenie and McClellands – garnered about 7.4% of the national volume last year. Other brands accounted for the other third of the volume sold.

Premium brands, with a few exceptions, are growing; top import brands were up 1.1% nationally as a category last year over the prior year. Value brands are declining; top U.S.-bottled brands were down 1.6% nationally. Single malts are extremely healthy; top brands in the category grew 6.8% in 2007. In the control states, overall Scotch sales fell last year by about 1.5%. As in the national statistics, single malt Scotch sales did well, rising 6.7% in the control states.


The same phenomenon that has driven sales of high-end vodka, tequila, bourbon, rum and other spirits is piquing consumer interest in premium Scotch.

“Branding is very important to consumers, whether it’s clothing, food or alcohol,” said Davinia Small, USA business manager for Ardbeg at Moet Hennessy. “People are definitely upgrading based on who and what they want to be and the image they want to project.”

“Premium brands will continue to grow faster than standard brands,” according to Larry Neuringer, brand director for Chivas Regal and Ballantine’s at Pernod-Ricard.

Part of the shift is the cyclical nature of the industry. Brown goods declined during the ’80s and ’90s as vodka became the spirit of choice and grew explosively. Now the tides are turning somewhat as other spirits find favor again.

“In the 1990s, we saw the Martini and lounge craze,” said Ned Duggan, Dewar’s brand manager, “with Cosmopolitans and a rainbow of colors in everyone’s Martini glass. There’s been somewhat of a backlash. People are drinking more brown spirits straight. I think the authenticity of many of these brands is driving consumer growth.”

“The high end is driving growth with value brands declining,” added Bill Toph, vice president Scotch whisky at Diageo. “Premium brands are investing and continuing to grow, similar to other categories. Consumers are more knowledgeable and more interested in premium spirits, and they’re moving to brown spirits as they learn more, and developing their palates.”

The combination of consumers’ growing sophistication and desire to explore is leading them to learn more about brown spirits like Scotch and try new flavors. “People are more and more aware of flavors and the nuances in products,” said Carolyn Ellison, brand manager for Glenfiddich at Wm. Grant. “Suppliers are innovating to provide those taste experiences.

“They’re exploring and experimenting with flavors in premium categories,” agreed Lynn Raynault, brand manager for The Balvenie, also at Wm. Grant, “reaching out for different taste profiles. Other categories are growing, too, such as tequila and rum, but single malts offer robust flavor consumers are looking for.”


Premium blends are taking advantage of the shift in consumer trends by investing in their brands and giving consumers new reasons to try them.

Dewar’s, which outsells its nearest competitor by nearly two to one, saw modest growth last year of about 1.0% nationally, but Duggan said he’s looking for that to change. Dewar’s 12 year-old and Signature, both introduced in 2004, are growing nicely, which is renewing interest in Dewar’s White Label.

Johnnie Walker continues to use its iconic “Striding Man” to represent and draw attention to the brand in its “Keep Walking” campaign. The new sponsorship last year of PGA pro Jim Furyk has “done more with higher marques” to raise consumer awareness, according to Toph. As part of the golf tie-in, Johnnie Walker also plans to sponsor a sweeps in the April-May period giving consumers a chance to be Furyk’s caddy at a charitable tournament. Signature golf balls are part of the giveaway.

J&B, Diageo’s other leading blend, continues to leverage its “Start a Party” campaign with ads and materials that focus on a giant mirror ball to show how consumers can get a party started anywhere with J&B.

    Chivas Regal, off 2.3% nationally last year, is still adjusting to new ownership under Pernod-Ricard. The introductions last fall of new Chivas 18 year-old and 25 year-old have injected some life into the brand, according to Neuringer.

     Another iconic blend that’s faring well is “the ship that brought Americans a taste for Scotch,” Cutty Sark. The brand launched a new package last year helping it remain one of the best-merchandised Scotch whiskies in off-premise accounts.

Singular Focus

While the major blends do their thing to attract a mainstream following, single malts are generating the real excitement in the category. While segment leaders like The Glenlivet and Glenfiddich have been around for ages, consumers are discovering lesser-known brands and a wider range of products from familiar names.

More than 80 distilleries across Scotland produce a wide range of products, giving today’s curious and experiential consumers lots to try. Single malts really took off back in the ’90s along with the boom in cigars. Retailers both on- and off-premise increased their single malt offerings, but pushed back when only a dozen or so really moved through inventory.

The market has shifted, though, as a growing number of consumers learn more about Scotch in general and single malts in particular. Back then, single malts were all about peat and malt. Consumers now look for more nuances in products like single malt whisky.

“Scotch is really a category of discovery,” said Wm. Grant’s Ellison. Instead of just tasting smoke, she said, consumers now are sophisticated enough to look for all the other flavors a complex single malt offers, like vanilla, toffee, floral or fruity notes, herbs and yes, even salt and seaweed.

“The generation of consumers in their late 20s and early 30s are just ready for something else,” said Eric Maldonado, brand manager for The Macallan at Remy Cointreau USA. “They grew up on sweet beverages, and helped fuel the cocktail craze. I think Americans will always have a sweet tooth, but part of the experience of single malt is the sweetness inherent in the product itself, not in an overt way.”

    “I think you can break consumers into a couple of different categories,” said Brian Cox, Glenmorangie business director at Moet Hennessy USA. “There’s been real growth in the fanatical malt whisky aficionado across the board. They’re not loyal to favorites; they like trying new things, and they’re constantly looking for the next new release. You can only go so far with vodka. People are bored with it, so they’re turning to products like single barrel bourbon and single malt Scotch.”

Relationship Marketing

One of the keys to marketing handcrafted products like single malt whisky is building a relationship with consumers.

Single malt segment leader The Glenlivet, which saw sales rise 7.1% nationally last year to 273,000 cases, has a number of programs to recruit users and build relationships with them. The Glenlivet Society gives consumers online information about the brand and special events designed for Society members, who also have an opportunity to travel to the distillery for a three-day lifetime experience as part of The Glenlivet Gathering. An event program called City Links creates urban-scaled golf courses and driving ranges in markets across the country. The brand also sponsors member-guest golf tournaments at clubs around the country.

Glenfiddich and The Balvenie, both from Wm. Grant, build relationships by letting consumers participate in selecting new releases for the coming year. Glenfiddich grew 3.3% nationally in 2007 to 157,000 cases, while The Balvenie’s sales rose 9.1% nationally to 72,000 cases.

The “Ardbeg Committee,” which consumers can join online at the distiller’s website, is now 10,000 strong, spreading the word about the single malt and the awards it has won.

Another key to marketing single malt whisky, and Scotch in general, is product education. One of the best ways to generate buzz is to put product into the mouths of consumers along with the words that describe a single malt and how it’s made.

    The Macallan, the number-three single malt in the U.S., with sales of 114,000 cases nationally last year, up 10.7%, created a “Celebrate The Macallan” event in two markets last year – New York and Washington, D.C. The event, which Maldonado called “an experiential journey,” teaches consumers about The Macallan’s range and how these unique whiskies are made. More are planned for this year.

Glenfiddich created an online education program called the Glenfiddich Fellowship that allows consumers to learn all about the brand at their own pace. When they pass a test at the end of the “course,” they earn a spot in the Fellowship.

Glenmorangie, along with many other distilleries, brings its master distiller over to the States several times a year to make the rounds, calling on retailers and talking to both them and consumers about single malt whisky. The brand also samples at as many whisky festivals as it can. Under Moet’s stewardship, Glenmorangie will be running print ads for the first time ever in the U.S.

Spiritual Expression

Whisky distillers have vast stocks of aged whisky, and they’re now starting to release it in new and interesting forms to meet the growing consumer demand for new flavors and taste experiences.

The Balvenie, for example, is well know for its vintage malts. “Each variant in the range provides an opportunity for that exploration, and every year we have a new expression from The Balvenie,” Raynault said.

The Glenlivet recently launched The Glenlivet Cellar Collection, and this fall will unveil its second ultra-premium, The Glenlivet XXV, a 1980 vintage malt that’s been finished in sherry casks for two years.

The Macallan put out a 55-year-old single malt early this year bottled in a limited edition Lalique crystal decanter. In the second of six planned bottlings in Lalique, only 120 decanters were released in the U.S. with a suggested retail value of $12,000. More affordable, but still pricy, is last year’s vintage 1976 release from the Fine & Rare Collection that retails for $1,500 a bottle. Recent additions to the range are the Fine Oak malts matured in three types of casks – European oak sherry casks, American oak sherry casks and American oak bourbon casks.

Glenmorangie recently introduced its Extra Matured Range of expressions. They not only come in newly designed bottles, replacing the well-known Wood Finished Range, they’re all completely new whiskies. The range now includes Glenmorangie Lasanta, finished in Spanish Oloroso sherry casks; Glenmorangie Quinta Ruban, matured in port pipes; and Glenmorangie Nectar D’Or, matured in French sauterne wine barriques. Expect to see at least one new expression from the brand this year.

Last year Ardbeg put out a “double-barrel” bottling in time for the holidays, with two expressions in the same pack.

This past holiday season Diageo primed its Classic Malts Selection with seven new limited-edition special releases, including four Rare Editions, two Distillers Editions and the Glenkinchie 12-Year-Old. The new editions range in price from $49.99 to $399.99. 

And more single malts are coming onto the market with support of larger spirits companies all the time. Skyy Spirits, which already imports The Glenrothes, has added three single malts to its stable.

“It’s exciting news for us,” said James Bruton, group brand director at Skyy Spirits. “Now we have a single malt from all the major regions.” The Glenrothes is a Speyside malt released in vintage bottlings every year, like fine wine, so when it’s gone, it’s gone. Bowmore, from the original and first Islay distillery, got a new package last year and eight new expressions in the range. Some of them will be packaged in a triple 100 ml sample pack this year. Also new are Glen Garioch, a Highland malt, and Auchentoshan, one of only two Lowland whiskies bottled as single malts.


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