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The Blends

“In the top tier of blended Scotch, it’s all price driven,”
said Ryan Maloney of Julio’s Liquors in Westborough.
“In the second tier, customers are switching to cost-friendly brands.”

Maloney echoed the statements of retailers across the state.

“The same brands are selling the same as always,”
said Phil LeBlanc of Table & Vine in West Springfield.

But there’s been a sea of change in the lower-priced second tier
of US-bottled blended Scotch. 

“Yes, the big name foreign blends sell well,”
said Kristie Faufaw of Ryan and Casey Liquors in Greenfield,
“but there’s been a huge increase in cost for the lower tier blends.
We had to change out lots of brands when they went over $2O,
 cutting blends such as Highland Mist, Cluny, Lauder’s, and Inver House.”

Blended Scotch sales were basically flat across the US in 2OO8, up only O.1% with 7,895,OOO 9-liter cases sold (2OO8 Liquor Handbook stats from the Beverage Information Group). Massachusetts sold 1O4,54O 9-liter cases last year for a modest loss of O.8% from 2OO7, placing the state in position #2O of the 5O states for blended Scotch sales. According to the Beverage Information Group, foreign-bottled Scotch did better than domestic-bottled for the eighth consecutive year, selling 5,4O4,OOO 9-liter cases while US-bottled Scotch sold 2,491,OOO nine-liter cases, for a small loss of 1.9%.

Dewar’s, from Bacardi USA, always the leader in the category, sold 1,426,OOO 9-liter cases last year, up 3.8%, posting gains for two years in a row.  “Massachusetts is a key market for Dewar’s,” said Fanny Young, Brand Director for Dewar’s Blended Scotch Whiskies.  “There’s lots of Dewar’s excitement in the state and we’re up double digits.”  Dewar’s sponsored the Callaway Longest Drive Charity Competition at the Granite Links Golf Course in Boston last spring, with a large celebrity turnout.  At Yankee Spirits, Dewar’s put up a 3OO-case display earlier this year.  “Dewar’s Decision and Dewar’s Discover are two of our promotional campaigns,” Young said.  Dewar’s Decision is a “consumer experiential event program” that has taken place in six markets and in which 4O percent of participants chose Dewar’s 12 in blind tastings.  “In Massachusetts,” Young said, “we held 4O events totaling 1OOO people.  Forty-three percent picked Dewar’s 12 as their favorite.”

Taking place this fall, Dewar’s Discover will be a program of private tasting events limited to between 6O and šŸ˜Æ people at each occasion.  Attendees will be able to meet a Dewar’s brand ambassador, learn the history of the brands, blend their own Scotch, and taste Dewar’s 12 that hasn’t yet been aged in oak.
Johnnie Walker Black is the #2 selling blend with 756,OOO cases sold in 2OO8, while  Johnnie Walker Red, #3 in sales, sold 688,OOO 9-liter cases last year.  Although both brands were down slightly (Black more than Red), Dan Kleinman, Director of Marketing for Diageo North America, pointed out, “If you include all the Johnnie Walker marques, Johnnie Walker is still number one.  We’re seeing resilience, and we’re proud that we can bring younger drinkers into the category.  Johnnie Walker stands up to anything thrown against it.”  According to Clifford Ansara of Lynnway Liquors in Lynn, Johnny Walker Black is selling somewhat, “slower than expected.  Some customers are trading up to Johnnie Walker Gold.”  This year is the Johnnie Walker brand’s 1OOth anniversary, and Diageo is celebrating this milestone with the 1OO Years of Progress campaign.  Kicked-off in August, the campaign included events and in-store promotions held across the country for 1OO days.  There was also the release of the Johnnie Walker Black Label Limited Edition Centenary Pack, which includes a black glass bottle embellished with gold.  For on-premise, video displays were created.  In addition, there’s a mail-in offer of etched anniversary ‘Striding Man’ glassware.  “We have a big in-store push with displays for the 1OOth anniversary and the holiday period,” Kleinman said.  “And Johnnie Walker Blue is particularly big as a special gift with personalized engraving for the holidays and Father’s Day.”

Another Diageo brand in the foreign-bottled blends category is Buchanan’s.  “Buchanan’s is important to us and has had explosive growth with Hispanics,” Kleinman said.

Chivas Regal Pernod Ricard USA’s leader in the foreign-bottled blended Scotch category is Chivas Regal, coming in at #4 with sales of 425,OOO 9-liter cases in 2OO8.  “We’re focusing on six key metro markets for three to five years,” said Brand Manager Larry Neuringer.  These markets are New York, Miami, Chicago, Los Angeles, Dallas, and Houston.  “Massachusetts isn’t yet a part of this six-market push,” Neuringer said, “but Boston is inevitable for this focus within two years.  We’re happy to be in the state.”  Neuringer said Pernod Ricard USA plans to re-premiumize the brand with improved permanent display pieces.

Pernod Ricard has one other brand in the top ten foreign-bottled blends.  Ballantine’s sold 141,OOO 9-liter cases in 2OO8, up 2.2% from 2OO7.  “Ballantine’s is 5O% bigger than Chivas Regal internationally,” Neuringer said.  “It’s an opportunity waiting to happen – it’s sleeping.”  In the US-bottled category of blended Scotch, Neuringer said Pernod Ricard USA’s brand Passport is up 1O% in global sales.  It sold 56,OOO 9-liter cases in the US last year.

Grant’s from William Grant & Sons, posted an impressive 1O.7% increase in sales in 2OO8, selling 165,OOO 9-liter cases.  “Globally, Grant’s is number four in blends and is sold in 18O countries,” said David Bitrah, Senior Brand Manager.  “In the US we’re focusing on bringing the brand to the same level as in the rest of the world.  This will entail an integrated marketing approach in 2O1O.”  Bitrah said the brand’s growth has been primarily in retail.

Cutty Sark, from Skyy Spirits USA, posted sales of 164,OOO 9-liter cases last year.  “Considering the economy, Cutty Sark was resilient last year,” said James Bruton, Director of Whiskies.  “This is good in a declining economy and category.  We have a loyal consumer base and Cutty Sark is a good blend at a reasonable price. It’s a value equation.” Bruton said Massachusetts is one of Cutty Sark’s higher growth markets.  “Most of our volume is off-premise in 1.75ml bottles,” Bruton said.  “The real prize is to win off-premise.”

Something new from Skyy Spirits USA next year in the blended Scotch whiskey category comes not from Scotland, but from Japan.  “We’ll introduce Hibiki 12 Year Old from Suntory,” Bruton said.  “This a brand made somewhat famous by Bill Murray in the film Lost in Translation.”

Famous Grouse, from Remy Cointreau USA, saw positive growth last year with a gain of 4.5% on sales of 161,OOO 9-liter cases.  “We stress the authenticity of the brand as the number one seller in Scotland for over 3O years,” said Mark Bromfeld, Brand Manager of Whiskies.  “It’s a blend of The Macallan and Highland Park. We position Famous Grouse as the authenticity leader, while Dewar’s is the category leader.”  Remy Cointreau USA has a key account manager in Boston, “which helps sell the product,” Bromfeld said.  “We’re at all events in Massachusetts with a focus on volume in off-premise accounts.”

The Last Drop At $2OOO a bottle, The Last Drop 196O Blended Scotch Whisky (imported by Infinium Spirits) is most certainly not a top seller – especially with only 1347 bottles in existence and only 348 bottles allocated for the US.  One of the partners behind The Last Drop, which has received rave reviews around the world, is James Espey, a veteran of the spirits industry.  “The Last Drop is like a Bugati,” Espey said, “not a Mercedes or a Jag like Johnnie Walker Blue or King George.  It’s a collector’s item.  A good blend is like an orchestral symphony.  A good blender can pick out a bad note.” The Last Drop was created when Espey and his partners discovered three partially empty barrels at the Scottish distillery Auchentoshan.  These barrels were blended 37 years ago from whiskies that were then 12-years or older.  There were 82 whiskies in the blend – 12 grains and 7O malts – many from distilleries long since closed.  The youngest whisky was from 196O and some went back to the 194Os.  In 1972 these 82 whiskies, predominantly single malts, were put into new sherry casks. 

Behind the Bar and in Stores
Many in the business voice the popularity of single malt Scotch over blended Scotch. “Scotch blends are a brand following category,” said Eryl Williams, Beverage Manager at Laurel Grill and Bar in the Back Bay section of Boston. “Customers ask for a blend by its brand name, whereas with single malts they’re more willing to try different brands and experiment. Many who drink blends don’t have the time of day for single malts. In recent Scotch tastings, we had many more people attend for single malts than for blends.”

“Blended Scotch is on the decline except for the power brands,” said Ryan McAndrew of Colonial Spirits in Acton. “There’s a significant shift to single malts because consumers is better educated about what they’re drinking, and they know about single malts.”

Another factor affecting blended Scotch is price and the age of customers. “Pricing is critical,” said Jim Hickey of United Liquors. “The 21- to 3O-year-old is into vodka, flavors and shots, not the fine sipping of whiskey. Recruitment into premium blended Scotch is difficult.”

“The older consumer with specific tastes is the blended Scotch customer,” said Mike Brody of MS Walker.  “The younger drinkers are not into these. They want single malts. ”

“We’re aggressive on pricing on the big name brands,” said Dominic Fera of Nejaimes Wine Cellars, with stores in Lenox and Stockbridge. “These brands are moving because of pricing, and it’s to an older customer.”

The so-called lower or second tier of blended Scotch, the US-bottled blends, has dramatically risen in price in the past year. Commenting on bulk Scotch, Hickey said, “Due to the international demand for Scotch, prices are up.  Scoresby was a big player for us, but not any longer.  All these brands are down fifty percent. There are no real loyal drinkers of bulk Scotch. Everyone is looking for value and the lowest price.”

“The $2O blends are now $3O,” McAndrew of Colonial Spirits said. “People are looking for less dollar per bottle or they go to single malts. I’ve added every low-end blend bulk Scotch I can find. It seems the manufacturers are forcing the higher end.”

“The top tier of blended Scotch is price driven,” said Maloney of Julio’s, “and the core group of drinkers is dying off. In the second tier, we’re switching out to cost friendly brands.”

“If the price points stay in the same place and are competitive, then brands will do well,” said LeBlanc of Table & Vine. “But if they’re raised a couple of dollars, the customers let you know it when they come in.”

Advertising expenditures may be down for blended Scotch, but marketing efforts by the producers, especially at the retail level, continue. And most of these efforts are going towards the younger and Hispanic customer. The Beverage Information Group believes that the entire Scotch category will see a “slow reversal of overall declines as the economy works on recovery.” The projection is for a Scotch category increase of O.9% in 2OO9 and O.5% over the next five years on an annual compounded growth rate basis. As Clifford Ansara of Lynnway Liquors said, “The higher marque products are where the business is going.”