Dave Broom considers the implications of the industry's dog-eat-dog corporate strategy upon whisky's future
Getting out of drinks in favour of showbiz and sewage (now there’s a natural synergy) has allowed Pernod Ricard to become the third biggest whisky firm, while Diageo (which took the wine side) just keeps expanding like the drinks industry equivalent of Monty Python’s Mr Creosote.Is it good news for the industry? At this point the answer has to be yes. Pernod-Ricard is successful at marketing premium brands – look at Jameson, Wild Turkey and Havana Club for proof of that. A new premium Scotch portfolio looks like a good fit. That said, many questions remain unanswered. How will the new owner juggle a fresh, expanded malt range? Will the fact that Pernod Ricard now has The Glenlivet and Glen Grant mean that Aberlour’s role will diminish? I hope not. Will they finally do what Seagram never did and realise that in Longmorn and Strathisla they have two of the greatest single malts around? It always baffled me that the marketeers in Seagram head office paid scant attention to their production guys and asked them what they drank. The answer, by the way, is Longmorn. Hopefully Pernod will pay more attention. Ultimately, what happens with the malts is a side issue. Pernod Ricard’s success as a player will be judged on how it handles the flagging fortunes of Chivas which in turn means how it gets rid of the biggest stock surplus in the industry. Seagram always had a pretty basic way of managing production in its distilleries, whether they were in Speyside, Kentucky, Canada or Cognac. Run ‘em all at full tilt and then slam on the brakes. This time those brakes were applied way too late. Sure, periods of surplus are inevitable in an industry which has to predict how much product it will sell in five, 10 or 15 years time. Every eager Brand Manager, dreaming of the day when they get a corner office and the key to the executive washroom, will predict that, under their charge, ‘their’ brand will sell more cases. Trouble is, in Chivas’ case they forgot that the world doesn’t drink blended whisky like it used to. Sell the surplus as single malt is as sound a piece of advice as Marie Antoinette suggesting the starving Parisians dined on gâteaux. The whisky world doesn’t work like that. Sure we all love malts, it’s wonderful to see such a vast array on the shelves – but let’s get real. Malts are not going to save the whisky industry in the short (or medium) term. If blends don’t get their act together pretty quick then there will be more distillery closures, more people out of work and, in the long-term, fewer malts for us to drool over. Pernod Ricard has gone in with its corporate eyes wide open and obviously has contingency plans on how to manage the surplus, but the reality is that it suddenly owns 11 working plants in Speyside and is sitting on too much stock. Chivas needs money behind it quickly. What sense is there in holding onto Benriach, Allt-a-Bhainne, Braeval, Caperdonich and the (mothballed) Glen Keith? Maybe some will be snapped up by enterprising smaller firms: Inver House springs to mind, as do the better independent bottlers, but even if they are saved and we see a ‘new’ malt brand appearing its sales will be a drop in the ocean as far as the industry is concerned. It isn’t just a Pernod Ricard problem. Every distiller needs to find a way to make blends sexy again. Trouble is, no matter how hip the ads are, how much people like the drink when given it blind, the baggage surrounding blends in the mature markets means they won’t walk into their neighbourhood bar and order a blend. It may make more sense to start again and launch new products rather that try to raise the dead. It doesn’t matter how good Bell’s is these days – and it’s bloody good by the way – people don’t want to drink it regularly, they want malt ... occasionally. Not interested? You should be if you want to guarantee the supplies of your favourite malt in the future.
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