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Malt Whisky – Young, Free and Single?
d=”standfirst”>Malt whisky is in the dangerous position of relying on an ageing consumer base. Is it time to wrest the category from the anoraks who hijacked it, asks Dave Broom
It was during a conversation with Allied-Domecq’s Michael Cockeram when the statistic first emerged. He began to quote from a TGI consumer survey which indicated that while sales volumes may be rising in malt whisky the number of drinkers is falling and their age is increasing. The average malt consumer in mature markets, Cockeram said, was now a 54 year-old male. If true, this was an alarming development. It also allowed me to ask large and small producers what this says about the state of the malt category in mature markets. As Cockeram says, “We’re entering a crucial time. What the category lacks is contemporary relevance, younger people. To fix it will require long-term planning – and long-term support.”
Neil Macdonald at Chivas appears remarkably sanguine. “The people who entered malt when the category took off 10-12 years ago were then in their mid-30s. Circumstances have changed and I’m not surprised to see the category has aged. In the US the average age of a Glenlivet drinker is 42 and there’s an enormous difference in age profile according to the type of malt they drink. Older consumers tend to drink at home, but there are consumers in their mid-30s who have malt in a whole set of different usage occasions.”
Others were more concerned. “I can believe that statistic if it applies to the UK,” says Robbie Millar at Compass Box. “The question is, does it need to be changed and do people want to change it? From our point of view the answer is yes, absolutely. The industry should be worried, but I don’t think it will necessarily do anything.”
Firms accept that in mature markets younger drinkers need to be brought into the category. “Our recruitment target is from around 30, plus,” says Diageo’s Nick Morgan. “This has to be done without trivialising the category. At the end of the day, most actual and potential consumers carry around a set of rules about malt whisky in their minds – and the words authentic, traditional and, although I fail to understand what it means, heritage are always top of the list. The challenge is to take these values and make them relevant to people, without dumbing them down, which is a trend I see in some companies’ marketing work.”
While different players have their own views on the mechanics, all accept that some shift is needed.
An underlying inference from that TGI statistic is that malt is not simply “old” but is becoming the preserve of the malt anorak, the obsessive collector interested in the minutiae of the drink. “So we’re now talking anoraks versus hoodies?” asks Morgan quizzically. “The average age of a malt whisky drinker in Sweden is late 20s or early 30s – and no matter what they wear they come into the premium category with the same degree of interest and enthusiasm as their anoraked counterparts. Anyone who has attended a whisky fair in Europe or North America recently can’t have failed to note the preponderance of younger consumers coming through the doors. The malt category accounts for over 5 million cases. Are there really that many anoraks left in the world?”
Maybe, as Morrison Bowmore’s Kenny Mackay says, there is no such thing as the typical malt consumer. “The Bowmore drinker could be a man drinking in a club in Cambuslang or in a style bar in London. Once you understand that then you need to adjust your marketing mix. There’s no point in talking to a new consumer about phenol levels, but we can tell them that Bowmore is the oldest distillery on a wee island off the west coast of Scotland. When you go to the malt-nuts in Chicago, Japan or Germany then you have to talk phenols. You need to take different approaches but retain the general style and essence of the marketing, whether that is simple or complex. That’s the challenge.”
Malt is often described as a “discovery” product, suggesting that you cannot just sell people a brand, but must sell them a concept, an idea, a flavour – a technique made more challenging by the fact that the malt audience appears to be a fragmented one. “We don’t target the typical malt drinker,” says Bruichladdich’s Mark Reynier. “I’m doing with whisky what I’ve done all my life with wine; taking people away from standardisation and into individuality. We’re looking for wine drinkers, people who appreciate subtlety and nuance. Our job is to open their eyes to taste.”
Chivas is taking a more traditional approach with The Glenlivet, which has just been relaunched, complete with new pack and advertising campaign. “It’s about branding as much as anything,” says Macdonald. “In the past, the category has been pretty generic. Consumers have bought into ‘malt’ and not into a brand. The real challenge for the category is to change this generic approach to one with strong brands with strong points of difference. The younger consumer is interested in roots, substance, heritage, something which is real, something which is safe. The new campaign is based on heritage, the tag ‘the malt that started it all’ is a different approach.”
Is this new, or just more of the same? “The balance has to be struck between abovethe-line communication – which is somewhat at odds with the idea of discovery – and below-the-line activity, such as relationship marketing,” says Morgan. “If the category is about discovery then our job is to give people subtle signposts and potential routes to follow. Having said that, I’m a great advocate of tartan, bagpipes and golf courses – deeply thought-out promotional tools and greatly motivating to younger consumers, and especially women. I greatly admire the work that our competitors are doing in this startlingly innovative area.”
One of Macdonald’s claims is that malt is “difficult to get into”. Is this not the crux of the argument? Why should malt be difficult? Could it be that malt is just happy preaching to the converted? “It is prone to that,” says Robbie Millar. “What is the corporate mindset of the big boys? Is it for revolution or steady progress? If they are looking for overall growth within younger drinkers, do they do it with malt or something else? It’s a hell of a lot easier to attract younger drinkers with a white spirit or a brown spirit from the USA than malt whisky. If there’s no pressure to do this with malt then what is going to happen to the category 10 years down the line?”
Are big firms guilty of complacency? “There is a danger of that,” says David Robertson at the Easy Drinking Whisky Co. “A lot of the bigger brands are caught in a fur-lined rut. They’re enjoying reasonable global success, but concentrating on new markets takes focus away from growing volume and value in the mature markets. It’s more cost-effective to preach to the converted because it is easier – you can talk about imagery, heritage etc. It’s an approach which will quite easily come back and bite them on the bum. Something has to change.”
Reynier sees a greater plot. “Diageo wants you to drink vodka,” he says provocatively. “Remember, these are the same firms which destroyed the British beer industry. They’ll do the same with whisky because vodka is cheaper to make and it is easier to make people drink. There’s no incentive for them to get people to drink whisky.”
There does seem a wide disagreement on how to take malt forward. The larger firms are talking branding (Macallan’s leap into this arena is examined overleaf) while the smaller players are, perhaps through necessity, talking more radical language; new products, new packs, simplified language, the emphasis on flavour rather than brand. The difference between the Compass Box and Easy Drinking approach and that of Chivas is vast, the language increasingly antagonistic.
“‘Hidden Malts?’” says Reynier of Diageo’s new(ish) range. “Hidden by who? This sector has evolved by default and not by design. If you take out the anoraks you’re not left with much. They don’t want people to know, and you know what, they almost got away with it. Malt’s renaissance was driven by the smaller players, by people who can see the potential from the vacuum that’s been left by industrialised whisky.”
“The industry has focused on 45+ ABC1 males and now we must broaden our horizons,” says Justin Penman at Whyte & Mackay. “There is complacency out there by the majors at the very time when there’s a need to produce drinks specific to need-states, there is scope to talk a plainer language to everyday consumers.”
The accusation that the majors don’t care is easily countered by news that Allied, which has managed to ignore malt for decades, is now embarking on a multi-millionpound investment in distillery plant and single malt brands. “Laphroaig has been coasting,” says Cockeram candidly. “It is like an Oscar winner of 10 years ago who has been sitting on his laurels. It needed a rocket boost.” A new Laphroaig variant – a young malt finished in small quarter casks – is being launched into travel retail this autumn, while a range of malts from Scapa, Glendronach and Tomatin is also in the pipeline. “We’re a plc and any plc will struggle over a 20 year horizon,” Cockeram says. “Scapa won’t recoup its investment in 10 years and that’s not standard plc behaviour. We are committed to malt and have a long-term vision for it.”
But does malt need a radical rethink? “There’s a massive opportunity for us to act differently to the rest of the category,” says Robertson. “What we’re doing is similar to what New World wine did: market by variety, but realise that the assemblage can change, allowing you to make a Cabernet which tastes of red fruit or black. Our approach is to get out there, put whisky in nonwhisky arenas, talk to people about their sense of smell, about flavour and taste, taste, taste … and it’s working.”
Perhaps surprisingly for a self-proclaimed “whisky zealot”, Millar doesn’t think malt needs to be too radical. “Malt is about exclusivity, and that and radicalism are not happy bedfellows. That said, whisky’s potential is constrained by all these rules which have been set by the industry: ‘drink it like this, not like that.’ Where would other categories be if they took the same approach? If vodka distillers said you could only drink it neat then the market would collapse. But there are these knuckle-heads out there applying ridiculous rules to whisky!”
For Cockeram, now is the time to adapt or die. “I can see three scenarios in the UK. The darkest is we lose users and there is an increasing desire to use price to get market share. Malt then shrinks in size and there’s no profit; or someone gets the idea across that malt is relevant and we get younger drinkers consuming Laphroaig.”
Despite the ferocity of some of the language, all distillers agree that some form of shift is needed in this relatively young category. For Compass Box and Easy Drinking it means new-look, contemporary products and new ways of talking about whisky. For others it is a more traditional brand-building approach. “We should be able to handle single malt recruitment well and ensure steady growth by recruiting discerning consumers who are looking for the values that single malts offer,” says Morgan. “The bigger opportunity is in talking to those consumers who aren’t on a natural path towards single malts – which could be where blended malt whiskies come in.” Strangely, that’s exactly what Compass Box and Easy Drinking have also realised. Maybe there is more agreement than first seems apparent.
CAN MACALLAN SEE THE WOOD FOR THE TREES?
In August, Macallan made a dramatic break with its tradition of ageing its single malts only in European oak (sherry casks) and launched eight new products aged predominantly in American oak. The commercial rationale is to try and build Macallan into a major brand – and that, the distiller argues, necessitates appealing to as many potential consumers as possible. I asked two of the UK’s top whisky retailers their opinion on this dramatic move.
“It is a bad move,” says Keir Sword of Royal Mile Whiskies. “Had they not been so adamant that they only use European oak, then it would have made sense commercially. Now, however, many loyal followers will assume that European oak is not as important as they had been led to believe, and more importantly that they had been lied to when they were told at the distillery that they only ever fill into European oak. It will lose them loyalists.”
“As a business model it makes sense, at a risk,” says Loch Fyne Whiskies’ Richard Joynson. “The long-term, major brandbuilding argument is feeble. They have a long-term major brand already. A fierce culture of greed prevails at Macallan. It is being treated as a cash cow, which is in conflict with the longnurtured ethos of, premium, small stills, only sherry cask USP – one that other distillers would kill for.”
So what of Macallan’s USP? “It’s been destroyed … on a meteoric scale!,” says Sword. But surely, by sticking to European oak exclusively, they immediately restrict the number of people who will become future Macallan consumers which isn’t good for major brand building. Sword remains unconvinced. “They’re trying to be all things to all men, and in doing so have sacrificed their position as master of one. Will the business they steal from the huge number of non-sherried brands replace the amount of their traditional business that they will lose? I would imagine there is a lot of hand-rubbing going on in Aberlour.”