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Simply a matter of shelf belief

'Own label' whisky brands are thriving across the world. But how does the market work and how has it developed the way it has? Peter Mulryan reports
By Peter Mulryan
The world of whisky has not been unaffected by the growth of the multinationals, in fact, the whisky industry has led the way. As early as the 1920s Johnnie Walker was sold in more than 120 countries; now four bottles of the brand are consumed every second, of every minute, of every day.Between them Diageo, which owns Bell’s and Johnnie Walker; Pernod Ricard, which owns Chivas; and Allied Domecq, which owns Teacher’s and Laphroaig, now account for almost 60 per cent of global Scotch sales.But along side the multinational global brands there exists another kind of whisky; one without a logo, whose major market advantage is price.It’s a parallel universe split between cheap Glen-Something supermarket brands and premium own label products created for individual markets.It’s all come a long way since the 1960s, when large supermarkets first started spreading across the United Kingdom. The idea then was simple; create and sell a whisky that was the same or better quality than the brands, but without the associated branding costs. With no enormous marketing budgets, supermarkets would make their money selling bulk, rather than from a large mark-up.Sainsbury’s was first into the market, and it was followed shortly afterwards by Tesco; this is a sure indicator that the experiment was working and that the public had taken to own brand whisky.For the next generation, that was where its aspirations lay. The market prospered and today retailer own brand makes up a not insubstantial 45 per cent of all whisky sold by British supermarkets.The own brand industry in the United States was a lot less successful and is a lot less sophisticated than in Europe.There the market is largely price driven, with huge sales of American blended whisky, while Scotch is still seen as a premium product and therefore the label on the bottle is as important as what is inside the bottle.By the late 80s, though, the own brand market in Europe had started to diversify. Single malts were becoming more popular and the industry embraced the change. However as the market grew in size and sophistication, the distillers who made the whisky were not sure how to respond.They obviously weren’t overjoyed to see so much non-branded whisky being sold, but then again they liked being able of offload excess stocks for cash. It was a double-edged sword.Leonard Russell is managing director of Ian Macleod & Co. and although he is reluctant to use the word ‘pioneer’, his grandfather (also Leonard) kick-started the whole retailer own brand industry; as far as he is concerned the customer is now very demanding. “These days own brand is not just a case of ‘buy this whisky, it’s cheap!”’ he explains.“The market has segmented. At one end cost driven stores such as the German chain Aldi demand ‘cheapest on display’ which use quite young malts in order to meet a price point, while other stores such as Sainsbury’s have that category, then alongside it a 5 year-old to compete with the market leader and a range of other malts, some of them premium. It’s really quite developed.” With the arrival in the UK of US supermarket giant Wal-Mart, there is more pressure than ever on the bottom line -price.“We are in the own label business, but I have walked away from some deals because I am not going to sell at a loss and I am not prepared to compromise on our quality standards,” said Russell.With the own brand market being squeezed by large multinational retailers and rising production costs, it has also had to contend with brands promoting down; it’s therefore not surprising that we are starting to see casualties.There are many whisky enthusiasts out there who cut their teeth on Oddbins own brand malts, but these are now being phased out. “I’ll be slightly sad to see them go. There have been some very fine whiskies behind those brightly coloured labels,” says Grant Ramage, senior buyer for Oddbins."We can never say what is inside the bottle. The distillers would not let us. It’s so sensitive that there are only ever two or three people in the company who know. But it’s all a bit academic now, as these days most people buy brands.”The growth in the market for branded whisky is just part of the global brand phenomenon that stretches from trainers to jeans, from whisky to make up.Blink an eye, and L’Oreal has just sold 85 products around the world, go to the Nokia website and you can download the Ato W of logos; from Adidas to Windows 98.So these days when you buy a brand of whisky you’re not simply buying an amber alcoholic drink, you are buying into a lifestyle.It used to be tweed ‘n’ tartan, but now that’s old and passé (except in India and some other markets).Most brand managers are now after the same audience as the one which watches Friends, so ‘image’ is everything.Laphroaig sells individuality; at Glenmorangie you can buy tradition and tranquillity; while Glenfiddich sells lifestyle and the promise of space and freedom.The values being sold can even differ from market to market; in most of the world Jameson sells ‘what’s the rush?’ But in the huge Spanish market, where the concept of rushing is so alien, Jameson celebrates the concept of being different.And then there’s the down home philosophy meets rebel rock'n’roll of Jack Daniels.But the own brand business hasn’t stood still while the global giants have loosened the purse strings, it too has changed to meet the demands of more sophisticated drinkers. Moreover it can do something that goes totally against the grain of the global branding ethos. Where The Famous Grouse is the same the world over, own brand can create individual whiskies for individual markets.Every country is different, and has its own unique drinking culture. For example 63 per cent of the Scotch drunk in Australia is bulk, while more than 99 per cent of the Italian market is for branded Scotch.Euan Shand of Duncan Taylor & Co. deals with each end of the market, from the Peerless range of 21 years plus single malts which sell into the US through outlets such as Sam’s in Chicago, to brands such as Scottish Glory which you can get next time you are passing through Mongolian duty free.“These whiskies are all blended to our exact specifications,” said Euan. “For example, when we were developing a blend for the Malaysian market we were advised to produce a dryer, less sweet whisky than we would drink in the UK.”And that is what happened, and it works; so much so that the majors are now muscling in on the action. Edrington recently signed a $25.6 million-a-year deal to sell premium whiskies blended specially for the Korean market under the Lancelot label, and they can cost $355 a bottle.With anything you get what you pay for, and this is particularly true of own brand whisky. However there is no need to pay through the nose as there are some excellent own brand whiskies out there and with a little experimenting consumers can get genuine bargains.Sample Top BuysOddbins Single Highland
‘This is a wonderful fresh, clean whisky,’ says Grant Rammage. It retails at £17.49 and no more stocks of this eleven year old malt are being sourced. When it’s gone, it’s gone.’Sainsbury’s 5 Year-Old Finest Old Matured
Winner of a Gold Award in the International Wine & Spirits Competition, beating many branded blends.Waitrose port matured malt 21 Year-OldSelling at £20.95 , it is an incredible whisky for any money.