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Marketers Look To Move Upscale In Effort To Revitalize Blended Scotch Segment

September 28, 2011

Single malts have been growing sharply, but it’s been a different story for blended Scotch in the U.S. market. “Sales of blended Scotch priced between $15 and $22 a 750-ml. bottle were down 5% last year, while the value brands (below $15) slipped 4%,” says J.C. Iglesias, director of Scotch and Cognac at Pernod Ricard USA. Total Scotch volumes in the United States fell 3.7% to 7.52 million nine-liter cases last year, according to Impact Databank, with blends accounting for virtually all of that decline. And in the 52 weeks ended this past September 4, single malt Scotch sales grew 10.6% by value while blends declined nearly 6%, according to Symphony IRI.

Historic blends like Cutty Sark and J&B remain mired in an inexorable slide. J&B’s annual volume is around 270,000 cases today, down from a couple of million cases back in the 1970s. Cutty Sark depleted 155,000 cases in the United States last year compared to 1.8 million cases back in 1980, when it was the market’s third-largest Scotch behind J&B and Dewar’s. Last year other blends including Clan Macgregor (-6.8%), Grant’s (-16%), and Passport (-5.6%) all showed declines. One exception was Buchanan’s, which rose 27% to 202,000 cases. “The old fan base for blends is rapidly aging, while the base for single malts is expanding,” says Marlon Paltoo, Scotch buyer at Park Avenue Liquor Shop in New York City. “A few years ago, guys aged 40 or older were the typical single malt buyer. Now young people in their mid-20s to mid-30s are asking for them.”

The notable exception for blended Scotch is Johnnie Walker, led by Johnnie Walker Black, which rose by 2.5% last year to 810,000 cases. Brand-owner Diageo’s annual ad spending on Johnnie Walker approaches $10 million—twice that of its nearest spending rival The Glenlivet. Rival luxury blend Chivas Regal eked out a 1.3% gain last year to 402,000 cases, thanks to strong marketing support. But Chivas is still 20% off its 484,000-case total in 2005. By comparison, single malt brand The Glenlivet saw sales rise 8% last year to 309,000 cases, and its volumes are up by one-third over since 2005.

For Johnnie Walker and its blended Scotch competitors, moving upmarket is more of a priority than ever. This month, Johnnie Walker is introducing Double Black (previously exclusive to duty free) in the United States, retailing at $40 a 750-ml. bottle, compared with $34 for the regular Black. Diageo also lately made a major push for its elite Johnnie Walker Blue Label, which retails at $225 a 750-ml. bottle. Late last year, Bacardi USA unveiled a significant repackaging of the Dewar’s line, with a focus on Dewar’s 12-year-old, which sells at about $32 a 750-ml. bottle. Bacardi USA also is offering more trade-up options on Dewar’s, launching a Dewar’s 18-year-old at $75 last year. Elsewhere, Rémy Cointreau USA is doubling distribution of Famous Grouse line extension Black Grouse ($29 a 750-ml.) to 25 markets this year.

Blended Scotch marketers also are seeking to bump up pricing where possible. “Brands like Grouse, Dewar’s and Johnnie Walker Red are moving beyond $20 at retail,” says Jim Brennan, vice president of whisky at Rémy Cointreau USA. His company has raised prices on Famous Grouse by 2%-5% this year, with little impact on sales. “We thought that would be a major issue, but sales have been growing,” Brennan says.

USA – Scotch Consumption by Type – 1990-2010
(millions of nine-liter cases)
Category Share
Year Blended Single Malt Blended Single Malt
1990 11.27 0.30 97.4% 2.6%
1995 8.75 0.40 95.6% 4.4%
2000 7.73 0.58 93.0% 7.0%
2005 7.29 0.79 90.3% 9.7%
2006 7.20 0.83 89.6% 10.4%
2007 7.17 0.87 89.2% 10.8%
2008 6.96 0.90 88.5% 11.5%
2009 6.89 0.92 88.3% 11.7%
2010 6.54 0.98 87.0% 13.0%
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