NEWS ANALYSIS: Defining moment

Government proposals to protect the Scotch whisky industry have been widely welcomed, although there is dissent over the term ‘blended’. Ben Grant reports

An announcement by the government last month looks set to tighten up the rules protecting the Scotch whisky industry. Hilary Benn, secretary of state for environment, food and rural affairs (Defra), unveiled government legislation proposals that aim to bolster the protection of Scotland’s most famous export, guarding against damaging counterfeiting that is being carried out by unscrupulous operators in other countries. The move – which will update the Scotch Whisky Act 1988 and the Scotch Whisky Order 1990 – has been widely welcomed north of the border as a comprehensive safeguard for the industry. However, there is one notable bone of contention that is causing consternation among many of the smaller distillers.

Benn’s announcement came after protracted negotiations between the Scotch Whisky Association (SWA) and the UK and Scottish governments. The government department has now commenced a period of consultation on the proposals and, according to a statement issued to the press, it has “a view to enacting secondary UK legislation in spring 2008”. Safeguarding against the growing number of foreign-made products that misappropriate traditional Scottish imagery and use fabricated brand names is a necessary cause that has the unwavering support from everybody in the industry – as Morrison Bowmore brand director Glen Moore puts it, “anything that protects the image and integrity of Scotch whisky should be applauded”. However, included among the new rules is one particular clause that has been the cause of significant debate, and which is vehemently opposed by many – though few are prepared to declare their dissatisfaction publicly.

In the statement issued to the drinks business jointly by Defra and the Scotland Office, the contentious phrase runs thus: “The proposed Regulations will: Define five categories of ‘Scotch Whisky’ (Single Malt Scotch Whisky, Single Grain Scotch Whisky, Blended Scotch Whisky, Blended Malt Scotch Whisky and Blended Grain Scotch Whisky) and will require these category names to be used.” It is the fourth of these definitions, Blended Malt Scotch Whisky, that has been questioned by several smaller players, who ask why there is a need to replace the existing term, Vatted Malt Scotch Whisky.

Notes from a scandal
This debate dates back to an incident that most in the industry would love to forget: the Cardhu scandal. In 2003 Diageo enraged many within the trade when, no longer able to meet growing demand for the popular single malt brand, it blended malt spirit from a number of distilleries and attempted to present it in the same bottle format and packaging as the single malt. William Grant & Sons led the charge against the move, claiming that it would confuse consumers. The company – and others – petitioned the SWA and eventually forced the industry’s leading player into a humiliating about turn. While peaceful resolution was eventually achieved, the debacle bought to the surface a deep fault line within the industry. And four years later it appears this schism is still evident.

the drinks business spoke to a host of small independent distilleries, many of whom privately expressed a deep dissatisfaction with the use of the term blended malt. However, while this view was widespread, few were willing to “put their heads above the parapet”, as one source put it, and express their concerns in print. Indeed, one highly regarded and long-standing industry figure spoke at length about the link between this move and the Cardhu affair but threatened that if db attributed his comments he would “come after us with a gun!”

One notable exception was feisty Islay distiller Bruichladdich. Within hours of the announcement by Defra and the SWA, the plucky independent fired out a press release to journalists suggesting that the new rules “may have more sinister implications”.

“Most distillers disapprove of the ‘blended malt’ title which replaces the existing term ‘vatted malt’, but are ignored by the SWA. The new term appears to deliberately confuse two titles, the widely accepted ‘blended whisky’ and the highly misleading and illegal term ‘pure malt’. Critics claim this deliberate confusion is precisely what the SWA, run by Diageo and Pernod Ricard, wants to engender following the unsavoury Cardhu debacle.” While the statement – issued by Bruichladdich managing direct Mark Reynier – may be rather aggressive in its tone, it appears to make some pretty valid points.

Fred Laing, managing director of Douglas Laing & Co says, “We disagree with the term ‘blended malt’. It is supposed to give more clarification but we feel that it is misleading. ‘Vatted malt’ is excellent terminology to explain the process that we use … as soon as the word ‘blended’ is used it will confuse consumers. We have aired our view with the SWA – and I know that others concur – but we’ve not got the clout to change their views.”

Nods of assent
It would be misleading, however, to infer that all the independents follow this line of thinking. Indeed, there was a widespread feeling that the move is a fundamentally positive development. “I’m fully in favour,” says Inver House senior brand manager Iain Baxter. “Standardisation will result in clarification, which has got to be a good thing for the industry.” Bowmore’s Moore, meanwhile, comments, “It makes sense to make it as clear as possible what, exactly, Scotch is. [The new rules are] going in the right direction to help consumers know what they are purchasing. I understand that there was a huge amount of discussion about the term blended malt. ‘Blended’ is a term that is already well understood, so it makes sense; the terms ‘vatted’ or ‘married’ are not understood by the consumer.”

Aside from this divisive issue, there is widespread support for government regulations that give the industry maximum protection in the face of growing infringement from abroad. Notable areas in the proposal include:

• Prohibit labelling, packaging, presentation or advertising suggesting that a single malt was made at a distillery other than the actual distillery where it was made (eg, using made-up names);
• Require all Scotch whisky to be wholly matured in Scotland;
• Prohibit the export from Scotland of Scotch whisky in wooden casks;
• Prohibit the export of single malt Scotch whisky unless it has been bottled and labelled.

Once the proposed legislation has been enshrined in law it will undoubtedly give the SWA significantly more power to protect an industry that is reliant upon its well-deserved reputation for excellent quality. However, many of Scotland’s venerable independent distillers are left wondering if it might also give some of their competitors the power to deliberately pull the wool over consumers’ eyes when it comes to marketing inferior products.

© db November 2007