Whisky focus: Caledonian conquerors
Perhaps the strangest piece of the rather complex scotch whisky puzzle is the huge strength of the export market for scotch whisky distillers in comparison with the rather weak and feeble home market.
It is like comparing the size of a mammoth 24-hour Tesco, complete with mezzanine floor, with my local corner shop. It's the same concept but they exist on different planets.
Looking at last year's sales from figures provided by the Scotch Whisky Association, it is obvious just how important exports are for the industry:
• Scotch whisky contributes £78 a second to UK exports (£2.5bn in total - beating the previous value high of £2.4bn in 1997)
• Scotch represents a quarter of all UK food and drink exports
• More than one billion bottles are shipped worldwide
• The US is the largest market by value, reaching £400m for first time
• Consumer demand is broad-based, with exports to each of the key regions growing in value and volume compared with 2005:- EU (+0.2 per cent in value)- Asia (+2 per cent), - North America (+6 per cent)- Central & South America (+24 per cent).
And which brands are making inroads here? According to several experts on the issue, it is Johnnie Walker and Chivas Regal. They are both well-known brands, but are hardly tearing up the market in the UK.
Indeed, Johnnie Walker is the largest whisky brand in the world but hardly registers on the scale when it comes to UK pub sales. Diageo does say that it has been working hard with Johnnie Walker Black and the ultra-premium Blue - but this is at the top end of the market. Where is the investment down at the bottom end - surely the world's biggest whisky brand should be making as big an impact as its Diageo stablemate Bells?
The truth is companies such as Diageo realised some time ago there was little growth to be had in the UK. While scotch may be a Great British product the Great British public weren't that keen on it. The bigger opportunity lay abroad - and in fact it still does, with emerging markets witnessing stunning growth.
Take a trip across the other side of the world and Indian, Chinese, Japanese and even Taiwanese drinkers (to name but a few) cannot get enough of the stuff, as whisky consultant Dominic Roskrow explains: "In the Far East, like in China or South East Asia, you are seeing great brand names like Johnnie Walker and Chivas having real success and that is the product of the emerging middle class."
It is quite frankly a simple matter of money and more people having more disposable income. And according to scotch brand director for Beam Global UK Michael Cockram, they want to flaunt this new wealth with premium goods.
"Scotch has grown in the Asia region, including India, and strongly in Latin America due in large part to an increasing appetite for premium imported goods," he says."This demonstrates status and discernment. Its heritage helps the process, offering a fundamental quality standard, alongside the luxury."
The market is also exploding in Eastern Europe. In Russia, the very best single malt whisky from the Highlands of Scotland is as much of a status symbol to the new oligarchs and their billions as a Bentley limousine, Gucci watch or Dior dress.
"In Russia people just want to pay high prices for anything collectable or premium," says Dominic. "And single malts are a great example of that. Anything that is a Scottish single malt is big business over there."
What is important to recognise is just how global the really big scotch whisky brands have become - how they have totally outgrown their humble beginnings. According to James Pennefather at Diageo, one of the main reasons for Johnnie Walker's global success is its high-profile marketing. "A big factor is our Formula One motor racing sponsorship," he says.
"That has led to huge cut-through. And it has been backed up recently by a £100m investment in a new production line in the distillery."
A nine-figure investment in a British brand that has minimal impact in the UK on-trade? As potent a sign as any that scotch's focus has moved way beyond its homeland.
