Scotch Euro woe due to Spain and Greece

Economic and social troubles in Spain and Greece are distorting growth figures for the Scotch whisky category across Europe, according to Diageo’s category director David Gates.

Gates has also called for greater appreciation of the work done by master blenders in the Scotch sector, saying they should be afforded the same respect as Michelin-starred chefs.

Speaking to the drinks business at the newly-opened Roseisle Distillery in Speyside, Gates said the 2% negative growth shown by Scotch in Europe over the past year is down to particularly poor performance in Spain and Greece.

“Spanish consumers are going out a lot less at night due to the economic situation in the country,” he said. “Add to this the fact there is 20% unemployment across the country, and an even higher percentage among younger age groups, it all adds up to a very difficult market.

“It’s the same with Greece, and these two countries are dragging the whole category down across the continent.”

Gates added: “The UK has also been in the doldrums for a while now, but I can see hope on the horizon across all under-performing countries.

“The last generation of new drinkers rejected Scotch as they associated it with their father’s generation, or they had bad experiences while binging on whisky in their youth that persuaded them never to touch the stuff again.

“Fortunately now we have a new generation of drinkers coming through who do not have such prejudices, and hopefully we will see that transcend itself through increased sales.”

Gates also believes that the art of whisky blending should receive more recognition.

“People sometimes take whisky blending for granted, or view blended malts as inferior to single malt’s, but the truth is we should be much more appreciative of the skill involved in blending.

“People never take the craft of a Michelin-starred chef for granted, but is their work any more complicated and perfectionist than that of a whisky blender? I can’t see how it is. Whisky blenders are equally as creative.”

The Roseisle Distillery has been built in response to rising global demand for blended Scotch. All whisky to come out of the distillery once the first batch is suitably aged will be used in creating Diageo’s blends. Managers expect output to be in the region of 82-83 million litres each year.

“A family of blends, such as Johnnie Walker, encourages trading up and this is the sort of thing we need,” Gates added.

Indeed, it is blends such as Johnnie Walker and J&B that are driving growth in Scotch in emerging markets such as Latin America and Asia Pacific. With those markets expected to continue their upward trajectory for the foreseeable future, Diageo wants to make sure it is well-placed to meet the demand.

However, Gates also stressed the need to “reinvigorate developed markets” alongside pushing further into new ones.

“Scotch’s global platform allows for localisation when it comes to brand strategy, and we as a category must ensure that every part of the world is specifically catered for.”

Alan Lodge, 29.09.2010