Whiskey or whisky? It's a new day

By Nicholas Robinson

- Last updated on GMT

Pure and unadulterated: the traditional image of whisky no longer holds true for many of today's consumers
Pure and unadulterated: the traditional image of whisky no longer holds true for many of today's consumers

Related tags: American whiskey, Scotch whisky association, Whisky, Scotch whisky

Whether it’s malt whisky, an American Bourbon or an Irish whiskey, the whisk(e)y category is vast and hugely diverse. Blended Scotch may be the biggest player in the sector, but interest is piquing in other areas and will not play second fiddle to white liquors any longer.

It’s an old man’s drink that costs a fortune and should be drunk neat while sitting in an armchair by a fire. Don’t dare add a cube of ice or even a drop of water to it – you’ll be hanged. That’s the sentiment whiskies carry for many consumers and operators too, but it is all wrong.

The brown liquid – whether Scotch, Irish, Bourbon, Rye or other – is as diverse and exciting as the white liquors that tower over them with their healthy growth in sales. When comparing on-trade whisk(e)y sales with the rest of the spirits category as whole, things do, however, look a little dire. Honestly though, it is not bad at all.

Whisk(e)y as a category has taken a sales kicking in the past 12 months, it is true. Volumes are down 3.4%, according to CGA Strategy client director Jonny Jones. Yet, segmenting whisk(e)y shows there are areas of immense growth, some of which the likes of rum and gin would envy.

Jones explains: “This volume dip is driven by blended Scotch, which still holds a 44% share of category volumes, but has seen a volume decline of 7.4% in the past year.

“It masks a growing consumer interest in other areas of the category, which is generating strong volume growth for premium American whiskey (+9.7%), Irish whiskey (+3.5%) and malt whisky (+1.2%).”

Key macro trends

The sub categories are well positioned within the key macro trends that are driving the general growth of spirits, such as premiumisation, heritage and craftsmanship, adds Jones. Moreover, successful brands are making a bigger play of these unique qualities through marketing, which is driving consumers to try new brands and flavours.

As with most alcohol categories at the moment, it is the major equity holder taking the hit – blended Scotch, in this case. The whisky stalwart, despite owning almost half of the market share, is losing its footing.

This seemingly dim picture could grow darker, as the Scotch Whisky Association warns of Brexit’s impact on the £5bn industry as well as the burden of tax, which sees 77% of the average price of a bottle of Scotch go to the Treasury.

But some Scotch makers are already ahead of the game when it comes to urning the tide on the decline. Diageo’s recently launched Haig Club Clubman​ – a more affordable and accessible variant of Haig Club – has already set about breaking down consumer drinking barriers around Scotch.

Haig’s global whisky master Ewan Gunn tells The Morning Advertiser ​(MA​) the new single grain variant is there to push the boundaries of whisky and how it should be drunk. It’s basically a rule breaker, encouraging drinkers to consume it however they like – whether neat or with a mixer.

However, Clubman could be viewed as a contradiction to one of the macro trends CGA’s Jones points out – the continued rise of premium. While it is still viewed as a premium product, Clubman’s lower price point could indicate otherwise.

Premium is important

Premium is important to Joe Tivey, ambassador of the north for Bulleit. He says: “Diageo Reserve’s 2016 Future Trends Report​ forecasts that by 2020 there will be 400m new consumers drinking luxury spirits. Premium spirits are driving the industry and leading the way in cocktail innovation, so it’s important operators capitalise on this.”

It is vital publicans stock a considered range of spirits, representing this uptick in interest. “Not only does it address the needs of experimental consumers,” he adds, “but it can result in boosting profit margins.”

Yet, diversity transcends the boundaries of premium. Most influential outlets in London, for instance, stock an average of 13 malt brands and eight American whiskey brands, making them two of the highest over-indexing categories for ranging compared with the wider premium market, research by CGA shows.

Outlets with such ranges are setting future trends for the rest of the country, claims Jones, who expects to see the category proliferate into the wider market, as seen with gin and rum.

Dan Bolton, managing director of Buffalo Trace distributor Hi-Spirits, believes the way consumers jump between gin brands is promising for whisk(e)y, especially American.

He says: “American whiskey arrives on the bar without the baggage that Scotch carries with it in terms of reverence.” Consumers, he maintains, know they can enjoy Bourbon just the way they like it, whether neat, on the rocks, with a mixer or in a cocktail – exactly what Haig Club is touting with Clubman.

American whiskey’s influence over consumers in the UK recently changed boundaries, with Jack Daniel’s (JD)​ becoming the country’s best-selling whiskey, the brand’s master distiller Jeff Arnett recently told MA​.

“The UK was one of the first exports for JD,” he says. “It is the largest and, of all the 160 countries we export to, we feel like keeping business here healthy. The pub culture is very valuable to us to understand and it’s something we will continue to work on.”

Whisk(e)y cocktails

Back to Bolton’s point about whisk(e)y cocktails​, CGA’s Jones says: “There is further opportunity for whiskies in cocktails. More than a fifth of cocktail consumers drink whisk(e)y cocktails in the on-trade, but there is still little space afforded to them on the average cocktail menu.”

So small is the space given to these cocktails that they account for just 5% of all offerings on drinks menus in the on-trade, giving more space for brands to grow the category on-premise.

Enticing consumers into the category could happen in many ways, but mixologist and former head taster at Cunard Cruise Lines Jack Sharkey says: “People are usually willing to try new things. If this is a whisk(e)y drinker trying a new cocktail then talk about which flavours in the whisk(e)y are getting brought out and why they work so well together.

“If the customer doesn’t normally drink the spirit, start them on something smooth, then offer them something with more spice. As long as you can get the depth of variety over, you should have yourself a convert in no time.”

So, as with many alcohol categories, this category is rife with positives and negatives. As a whole it has encountered some issues but, on a closer look, there is a hefty silver lining in the form of rising consumer interest in variants and space to grow whisk(e)y cocktails.

Related topics: Spirits & Cocktails

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