Scotch Blends: Look out for the wave

Number one market

Overall China has developed into Chivas Brothers number one market largely through the development of its 12-year-old blended Scotch whisky flagship Chivas Regal. Figures have yet to come through for the all important trading period for both Scotch and Cognac that is the Chinese Year – but the Chivas camp is in positive mode, and along with its 18-year-old and above is the leader in the super premium sector of the market.

“The jury’s out at the moment over China, there’s a growing up phase, and that with the new government is throwing up a few changes,” says Chivas international brand director James Slack. “Chivas has a great reputation when it comes to gifting.”

Given this it’s not surprising that the brand has such a high profile in the duty free world, which is underpinned by its international visibility. With annual case sales around the 1 million mark, duty free per se is really the brand’s number one market.

Outside this channel its China, the US, Mexico and France which top Chivas Regal’s export league and in terms of development it’s eastern Europe which “is building across the board”, and India. “Russia is showing strong growth,” says Slack. “It will not be long before it’s a top 10 market. As for India it’s an important battlefield – Chivas is growing by 20% year on year, aided and abetted by the massive acceleration of its middle class.”

Chivas Regal’s main rival is Diageo’s Johnnie Walker, which, with its core six-strong range, has powered ahead over recent years and now weighs in with an impressive annual case tally of 18.9 million cases in 2012 (DI Millionaires Club). This represented a5% growth on 2011 and, by all accounts, will be much improved on this year.

According to Diageo’s half-year results, Johnnie Walker delivered total net sales growth of 14% – that is up 6% in Europe, 38% in Africa, 12% in Latin America and a massive 27% in south east Asia. Clearly the Johnnie Walker Keep Walking campaign in Mexico and Brazil, Walk with Giants in Nigeria and the Step Up campaign for Johnnie Walker Red Label in South Africa underpinned growth in these respective regions.

Latin American success

“Clearly there are some downbeat parts of the world but everyone seems delighted with Latin America, Africa, Russia and the US,” says Dr Nick Morgan, head of whisky outreach for Diageo. 

In terms of Latin America two other brands have motored ahead – Buchanan’s and Old Parr. The latter, with its stamping grounds in Mexico, Colombia and Venezuela has done “exceptionally well” and is now on course to exceed the 1 million case mark. Over in Brazil, Diageo extended its category leadership and crucially gained market share. 

In west Latin America and the Caribbean net sales growth for the trio, Johnnie Walker, Old Parr and Buchanan’s were up 16%, 50% and 43% respectively. There was increased investment behind both Old Parr and Buchanan’s under the Life from A Different Perspective and Mark Your Difference campaigns.

But overall Johnnie Walker remains the Diageo star, and the secret behind its dynamic performance, apart from the support investment, is put down to the launch of more variants, in particular Johnnie Walker Double Black and Platinum. 

“Double Black has surpassed all expectations and not cannibalised on Black Label,” says Morgan. “We also have new releases in duty free, such as the Johnnie Walker Explorers Club, and these come in at very accessible price points.”

Interestingly, though, the single most important innovation of the year to date has been the judicious launch of the Johnnie Walker Red Label in 20cl bottles. “Red Label is the growth engine of the brand it attracts consumers in then they can trade up the Johnnie Walker ladder.”

In the faster growing markets of Asia, Diageo is upbeat and hardly surprising considering it “continued to deliver strong double-digit top line growth”, which was aided and abetted by the 28% net sales growth of super-premium Scotch.