This recent article in The Herald, quoting industry “insiders” (the Scotch Whisky Association), suggests it isn’t.
Your thoughts?
September 13th, 2009
Whisky Advocate Blog
News and views from Editor & Publisher John Hansell and the Whisky Advocate Writers
what decline?
more and more people are willing to pay more and more money on whiskey.
prices are up.
in times of depression alcohol is one thing people done wish to cut on.
People forget that the VAST majority (by magnitudes) of Scotch sold is lower-cost blends.
SO yes higher end bottles are absolutely selling worse.
In recessions people still drink, they just drink cheaper stuff.
The nice thing about single malts is that if they are not bottled today, they can be bottles tomorrow…and as such Scotch is in a better position to ride out the recession than say the way too many white liquor brands.
I suppose crisis is just a means to an end, to get rid of some people that are maybe redundant. Diageo’s cuts of 800 does not stand for that they think they will sell less in the future, I believe it is the opposite. It was the same with the industrial sector here in Europe: Trying to make you company leaner and more efficient to be prepared for the future. But unluckily the “man from the street” is the one that suffers.
If a big Whiskyplayer is cutting production for the moment, then maybe because their stocks are just full.
So I do not think Whisk(e)y is in the crisis, still much to do in the BRIC countries…and much to earn.
I agree with Kevin: the nature of Scotch whisky leaves time on its side…over priced neutral spirits bottled in tchotchkes are more dependent on current market forces.
However, the current downturn make leave a generational bad taste in the mouth for anything outside of a perceptive “price-value” ratio, and that could limit the demand for higher priced spirits in any category.
Great point Robin.
Another reinforcement that “Scotch” is just for rich people.
Gosh, Kevin, I don’t see the correlation.
To consider the real question, “is the industry in decline,” does anyone have evidence that there’s a direct relationship between production, sales, and consumption? I haven’t seen data that document the relationship.
When times get tough do hard-core drinkers drink less? I don’t think so, but they might step down. But are most single malt drinkers hard-core types? Ok, some are, but do they represent the average? I see single malt Scotch drinkers drinking the same dram today that they enjoyed a year ago. I don’t see lovers of Laphroaig or Ardbeg stepping down to McClelland’s Islay or a blend.
From my tiny perch at the skinny end of the branch, I don’t see the industry in decline.
2bc.
Again there isn’t a SMS Industry. It’s just a category in the broader “Scotch Whisky” Industry. And again SMS is only about 5% of the sales. So whether or not the average SMS drinkers is trading down (They are) has little impact on the industry as a whole – especially in terms of short-term production.
Most blends have a 3+ year life-cycle; while SMS has 10+ year life-cycle. SO the stuff that will be bottled as 10 yo for market was made 10 years ago.
Anyway. Stepping down doesn’t mean buying Tesco (though it might) but it does mean that the AVERAGE drinker may choose the Laphroaig 10 over the 15 the next time he has a choice.
People in the Whisky blogosphere tend to forget that they are NOT the average SMS drinker.
Moving one step beyond this article, may we then assume that sales of the coming Manager’s Choice from our friends at Diageo could be an indicator as to where the higher end of the market might be headed?
If indeed they are overpriced for the perceived value of the liquid within, and high-end scotch has flattened (or declined) in general, they could be useful in their own way as a market-futures compass.
For what it’s worth…
Hi there,
in decline? Yes. But in the sense that like every industry in world there is a movement away from the roots to a more abstract level of enterprise. The movement is driven by monetary need and greed. The alienation between the production side of the industry the marketing side and earnings side and the consumer side makes for the elements of the crisis.
Whisky is no longer made for being drunk by connoisseurs or the everyday man who needs or wants a drink after work or in the evening at home or at the pub.
That is what we whisky enthusiasts still believe. Whisky on a much more higher level of abstraction is – like other commodities – produced to make more money in fact.
To build a bridge to other discussions: You can see that in everything Diageo does at the moment. They took away the age statement form their Bell`s 8 years – again. They shut down Kilmarnock because of future competitiveness. They try to establish youngish single cask bottlings at the price level of 30yo rarities. And that is not all. If you ask Diageo all that are reasonable decisions from the companys point of view. But they lead to an estrangement from the product they sell in that case Scotch.
The crisis is there. And it is driven by interests which have nothing to do with the consumer products in questions but with the structures behind the industry which could lead to a bigger crisis than the colapse of demand like in 1983 could ever cause.
Given the prices of the Manager’s Choice bottles and the fact that they’re actually selling I don’t think there’s much to worry about.
The question is whether the industry is in decline, or maybe just that sales are in decline. The latter should be no big surprise, given the state of the world economy over the last year.
The truth is that most ‘scotch drinkers’ imbibe Glenlivet or Glenfiddich 12 year old malts or Chiva Reagal and Johnnie Walker Black 12 year old blends. As these are mostly lifestyle choices (does anyboy who drinks on the rocks really know what they taste like?), it is easy to find cheaper alternatives. Grey Goose vodka goes for about 2/3 the cost of 12 year old scotch, and also has social cachet. Then maybe, they discover that Absolut tastes jsut about the same, and no difference in a mixed drink, so they can save some more $$.
If the industry hasn’t figured this out with all of the suits they have working for them, then maybe the industry will be in decline if they do a bunch of stupid things. But once the economy recovers, things will go back to normal.
Slainte.
Louis
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