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Interview: Diageo’s Head Of Whiskies, Nick Morgan

October 20, 2014

While the Johnnie Walker brand—with retail sales of $5.8 billion annually, according to Impact Databank—may be the standard-bearer for Diageo’s Scotch whisky portfolio, the company is also actively cultivating global demand for its upscale single malt Scotches. In Diageo’s fiscal year ended in June, its single malt stable—including Talisker, Oban, Lagavulin, The Singleton, Dalwhinnie, Clynelish, Cragganmore and others—showed collective 18% net sales growth. SND senior editor Daniel Marsteller recently interviewed Diageo head of whiskies Nick Morgan to get his take on the rapidly developing market for single malts and the opportunities and challenges ahead.

SND: What factors have you excited about the future of single malt Scotch?

Morgan: The trends driving single malt include the continued passion of many whisky consumers for peated, smoky whiskies and extreme flavors. In parallel, (we’re seeing) the recruitment of new consumers attracted to the category by accessibly flavored single malts, for example The Singleton. A recent emphasis on crafted flavor profiles rather than simply age statements is opening up a new spectrum of taste to be explored, and putting a premium on innovation by master blenders.

SND: Where do you see potential obstacles for the category?

Morgan: Potential challenges to the further growth of single malt include the recognition among consumers that blends can be just as complex and rewarding as single malts and may also be more affordable. (Another issue is) the success achieved by American whiskey (notably Bourbon), rums and Irish whiskey in marketing their brands in clothing “borrowed” from the single malt Scotch category—especially their emphasis, since the 1980s, on features such as age and heritage.

SND: How has Diageo’s single malts collection fared in the run-up to the holiday season? Which markets are showing strength? Are any areas notably challenging?

Morgan: In our full-year results for 2014 (fiscal year ended June 30th), our malts sales were up 18%. So Diageo’s single malt portfolio is in fine health as we approach this key selling period. While markets like Spain and Greece continue to be challenging, we’re seeing lively growth across the rest of northern Europe and in North America, and a gradual but significant uptake in Asia. The hugely important blended Scotch whisky markets of Latin America are yet to develop a serious taste for single malts. Singleton (up 17%) remains the star performer in Diageo’s portfolio, followed by Talisker, Oban and Lagavulin (up 23%).

SND: Which areas of the single malts portfolio are attracting particular interest?

Morgan: There is huge value flowing from our segment of ultra-premium, limited-edition and esoteric bottlings from established labels (for example, our annual Special Releases). The volumes are very small, but this segment is increasingly becoming a playground for speculators and investors. A significant and sometimes opaque secondary market is also developing around these products.

SND: Do you expect to release any new single malts over the rest of this year?

Morgan: As we approach the holiday season we’re launching another collection of our Special Releases—limited-edition, cask-strength bottlings of single malts from long-closed distilleries, and unusual expressions from our active distilleries. This year these include further very limited and expensive releases of cult single malts like Port Ellen and Brora, and a sophisticated and seductive variant of Clynelish, mature but carrying no age statement. A 30-year-old Caol Ila is also getting rave reviews from those few who have tasted it.

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