With Newly Revamped Lineup, Johnnie Walker Looks To Tap Further U.S. Expansion

There continue to be winners and losers in the U.S. market’s blended Scotch category, but it’s no surprise that Diageo is gaining share on the strength of its premium offerings. While Diageo’s Johnnie Walker range saw sales finish roughly flat in the U.S. last year at 1.65 million cases, the Buchanan’s label enjoyed a robust 13% sales gain from a smaller base of 260,000 cases. Buchanan’s historically has been popular in Mexico and elsewhere in Central America, giving it strong appeal within the U.S. market’s Hispanic demographic.

Diageo director of Scotch Brian Radics says the company has higher ambitions for Johnnie Walker’s U.S performance. “We’d like to see more growth, though we’re dealing with a (blended Scotch) segment that’s been in decline,” he says. Radics notes that blended Scotch, particularly for bottom-shelf brands, still struggles with a somewhat dusty and stodgy image.

Seeking its own path, Diageo has been fervently promoting its more upscale brands, advertising heavily for Johnnie Walker Blue Label ($225) along with its other upscale marques. The entry-level Red Label ($25) is almost getting lost in the mix as consumers increasingly move to Black Label ($35) and Double Black ($42), which is now a permanent fixture in the Diageo lineup following its U.S. entry more than two years ago.

The goal now is to boost sales of Double Black, which was outsold by Black 10 to 1 last year. “We currently have nearly unlimited quantities of Double Black to sell,” Radics says. “We think we can increase its sales by 50% this year.”

In the past, Johnnie Walker’s higher pricing tiers were filled by Green Label ($65) and Gold Label ($85). But both have been dropped, and Diageo has begun a U.S. rollout of Johnnie Walker Platinum Label ($110), which has an 18-year-old age statement. Platinum Label, blended from whiskies sourced from two dozen distilleries, has a rich and more complex mouth feel than Green or Gold.

Platinum’s $110 retail price leaves a nearly $70 gap in the Johnnie Walker ladder down to Double Black’s $42. Moving upward from Platinum, there’s a more than $100 void until Blue Label at $225. But Diageo is likely to fill out the range eventually. Radics observes the company sells labels like Silk Road and Gold Label Reserve at around $70 in travel retail, and either might be a future candidate for the U.S market. In any event, Diageo should have plenty of supply further down the road, as earlier this year it announced a $163 million investment to expand and improve its Cameronbridge distillery in Fife, Scotland.

Tagged : Diageo, Johnnie Walker, Scotch, spirits, whisky

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