As Single Malt Thrives, Blended Scotch Looks To Turn The Corner

As whiskies surge in the U.S. market, blended Scotch is being left out of the boom. Last year, total Scotch shipments to the U.S. posted a 0.1% increase by value to £749.3 million ($977m), with depletions slipping 0.4% to 7.6 million cases. Those numbers include the white-hot single malt segment, whose volumes were up 9% last year to 1.5 million cases—making it clear that blends are impeding overall category growth.

The first six months of 2016 saw some improvement in the value equation, as total Scotch rose by 9% to £357 million ($467m). But volumes slipped by 3%, according to the Scotch Whisky Association.

Still, top marketers are fighting back with premiumization strategies. Category leader Johnnie Walker slid 9% in the U.S. market last year to 1.6 million cases, but a 23% net sales increase at the Reserve level led it to a 7% sales boost in brand-owner Diageo’s fiscal year through June. Late last year, Johnnie Walker unveiled its largest-ever global marketing push, titled “Joy Will Take You Further,” which appears to be paying dividends.

Several other leading blended Scotch players—including Johnnie Walker portfoliomate Buchanan’s and Bacardi USA’s Dewar’s—are also gaining. Buchanan’s, with a strong following among Latino consumers, recently released a new campaign called “Es Nuestro Momento” (It’s Our Moment), hoping to build on last year’s 7.5% growth to 425,000 cases. Meanwhile, Dewar’s has been staging a turnaround over the past year, thanks to new efforts such as Scratch Cask, a Bourbon-influenced offering.

Meanwhile, single malt Scotch brands like Pernod Ricard’s The Glenlivet and Edrington’s The Macallan are buoying the overall category. The Glenlivet, up more than 8% by volume in the U.S. last year, has focused on new product development, recently unveiling Founder’s Reserve ($45), a new expression made with both aged oak and American first-fill oak casks. The Macallan recently added to its core lineup with Double Cask 12-year-old ($65), which combines the influence of American oak Sherry-seasoned casks and European oak Sherry casks and is positioned between the brand’s existing Sherry Oak and Fine Oak ranges.

U.S. - Top Seven Scotch Whisky Brands (thousands of nine-liter cases)
Rank	Brand	Importer	2012	2013	2014	2015	Percent Change1 2014-2015
1	Johnnie Walker	Diageo North America	1,724	1,741	1,733	1,638	-5.5%
2	Dewar's	Bacardi USA Inc	1,158	1,293	1,140	1,196	4.9%
3	Buchanan's	Diageo North America	300	360	425	465	9.5%
4	Clan MacGregor	William Grant & Sons USA	510	444	454	441	-2.9%
5	The Glenlivet	Pernod Ricard USA	361	388	386	418	8.3%
6	Chivas Regal	Pernod Ricard USA	394	391	357	357	-0.1%
7	The Macallan	Edrington Americas	155	186	203	217	6.9%
Total Top Seven2			4,602	4,802	4,697	4,731	0.7%
1 based on unrounded data 2 addition of columns may not agree due to rounding Source: IMPACT DATABANK

Bardstown Bourbon Company Has Big Plans, With Constellation Along For The Ride

Bardstown Bourbon Co., the Kentucky distiller that recently took on Constellation as an investor, is planning to expand capacity from 1.5 million proof gallons (roughly 750,000 nine-liter cases) to 6 million proof gallons (3 million cases) looking ahead. Led by entrepreneur David Mandell and former Maker’s Mark master distiller Steve Nally, Bardstown began production at a new, $25 million facility last month. The company’s strategy is based on its “Collaborative Distilling Program,” which creates customized whiskies for craft distillers and brand owners. Following Constellation’s recent acquisition of High West Distillery, Constellation CEO Rob Sands said the Bardstown investment “jumpstarts our opportunity to further explore innovation in the brown spirits category.”

News Briefs:

•AdVini, a French wine company that owns more than a dozen wineries in France and South Africa, purchased the Burgundy négociant house Maison Champy on October 14. The deal also includes Domaine Laleure-Piot, which Champy acquired in 2010 but operates as a separate brand. The sale price wasn’t disclosed. Wine Spectator has the full story.

•375 Park Avenue Spirits, a division of Sazerac Co., is rolling out new packaging for its Van Gogh Vodka brand. French artist Joy Olney was commissioned to create 16 paintings inspired by each of the vodka’s expressions, which serve as the new labels. The brand’s new bottles are exclusive to the U.S. market. Van Gogh ($25) sells about 115,000 cases in the U.S. annually, according to Impact Databank.

•Louisville, Kentucky-based Michter’s Distillery is launching the second and final 2016 release of its Michter’s 10-Year Kentucky Straight Bourbon ($120) and the sole 2016 release of Michter’s 20-Year Bourbon ($600). Meanwhile, the company has named Pamela Heilmann as master distiller, succeeding Willie Pratt, who will become master distiller emeritus.

Craft Brewing and Distilling News:

•Boston-based Harpoon Brewery is set to enter Wisconsin and Minnesota this fall. Harpoon has linked with Breakthru Beverage to launch in Wisconsin, while partnering with J.J. Taylor Distributing to bring its portfolio to Minnesota’s Minneapolis/St. Paul region. The brewery will debut in both markets with its core Harpoon IPA, as well as its Sweet Spot, Winter Warmer and ‘Tis the Seasonal Winter Mix variety pack. The move marks Harpoon’s first market expansion in eight years, bringing the brewer’s footprint to 27 states.

Recently in the News:

• As Napa Valley Booms, Rising Direct Sales Have Retailers Feeling Left Out
• Wine Spectator: More On Constellation’s Washington Wine Purchase
• Strong U.S. Performance Drives 4% Sales Growth For Rémy Cointreau