Global market review of malt whisky â€“ forecasts to 2012

Global market review of malt whisky– forecasts to 2012

2008 edition

Page i

Global market review of malt whisky – forecasts to 2012 2008 edition

By Dave Broom and The IWSR

May 2008

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Page iv Contents

Contents

Single-user licence edition............................................................................................................. ii Copyright statement .................................................................................................................. ii Incredible ROI for your budget – single and multi-user licences............................................... ii just-drinks.com membership .....................................................................................................iii

Contents.......................................................................................................................................... iv

List of tables ................................................................................................................................... vi

Preface ............................................................................................................................................ ix Note about table data...............................................................................................................xii

Chapter 1 Brand performance ....................................................................................................... 1 The trend to premium................................................................................................................ 6 The major markets .................................................................................................................... 7

The US ........................................................................................................................... 11 France ............................................................................................................................ 15 The UK ........................................................................................................................... 19 Spain and Japan............................................................................................................. 24 Taiwan ............................................................................................................................ 31 Canada ........................................................................................................................... 36 Duty free ......................................................................................................................... 39 Germany......................................................................................................................... 42 Italy ................................................................................................................................. 45

Chapter 2 Brand marketing strategies ........................................................................................ 48 Who drinks malt? .................................................................................................................... 48 How do malts differentiate themselves from the crowd? ........................................................ 50 Malt as brand: a progress report ............................................................................................. 56 Can malt be luxury? ................................................................................................................ 57 The over-arching idea? ........................................................................................................... 63 The consequence of slowness (or was Cardhu right?)........................................................... 65 Are we there yet?.................................................................................................................... 67

Chapter 3 Does anyone know how much whisky there is? ...................................................... 68 Will malts pay the price for blends’ success? ......................................................................... 69 Pricing ..................................................................................................................................... 73 Play…or walk away?............................................................................................................... 75 The flight of the mavens?........................................................................................................ 78 Regional data .......................................................................................................................... 81

Asia................................................................................................................................. 81 Australasia...................................................................................................................... 84 Commonwealth of Independent States (CIS) ................................................................. 87 Europe ............................................................................................................................ 90


Page v Contents

North America................................................................................................................. 93 Rest of Americas ............................................................................................................ 96


Page vi List of tables

List of tables

Table 1: Global malt whisky consumption, 1997-2012 (‘000s nine-litre cases) and 2006 value

(US$’000s)................................................................................................................. ix

Table 2: Malt whisky consumption by region, 1997-2012 (‘000s nine-litre cases) and 2006 value

(US$’000s).................................................................................................................. x

Table 3: Global top ten brands by malt whisky consumption, 1997-2006 (‘000s nine-litre cases)

and 2006 value (US$’000s) ........................................................................................ 2

Table 4: Global top ten companies by malt whisky consumption, 1997-2006 (‘000s nine-litre cases)

and 2006 value (US$’000s) ........................................................................................ 4

Table 5: Top ten markets by malt whisky consumption, 1997-2012 (‘000s nine-litre cases) and

2006 value (US$’000s) ............................................................................................... 7

Table 6: Top ten fastest growth markets by malt whisky consumption, 1997-2012 (‘000s nine-litre

cases) and 2006 value (US$’000s) ............................................................................ 9

Table 7: Top ten brands in US malt whisky consumption, 1997-2006 (‘000s nine-litre cases) and

2006 value (US$’000s) ............................................................................................. 11

Table 8: Top ten companies in US malt whisky consumption, 1997-2006 (‘000s nine-litre cases)

and 2006 value (US$’000s) ...................................................................................... 13

Table 9: Top ten brands in France malt whisky consumption, 1997-2006 (‘000s nine-litre cases)

and 2006 value (US$’000s) ...................................................................................... 16

Table 10: Top ten companies in France malt whisky consumption, 1997-2006 (‘000s nine-litre

cases) and 2006 value (US$’000s) .......................................................................... 17

Table 11: Top ten brands in UK malt whisky consumption, 1997-2006 (‘000s nine-litre cases) and

2006 value (US$’000s) ............................................................................................. 20

Table 12: Top ten companies in UK malt whisky consumption, 1997-2006 (‘000s nine-litre cases)

and 2006 value (US$’000s) ...................................................................................... 22

Table 13: Top ten brands in Spain malt whisky consumption, 1997-2006 (‘000s nine-litre cases)

and 2006 value (US$’000s) ...................................................................................... 25

Table 14: Top ten companies in Spain malt whisky consumption, 1997-2006 (‘000s nine-litre


Table 15: Top ten brands in Japan malt whisky consumption, 1997-2006 (‘000s nine-litre cases)

and 2006 value (US$’000s) ...................................................................................... 28


Page vii List of tables

Table 16: Top ten companies in Japan malt whisky consumption, 1997-2006 (‘000s nine-litre


Table 17: Top ten brands in Taiwan malt whisky consumption, 1997-2006 (‘000s nine-litre cases)

and 2006 value (US$’000s) ...................................................................................... 32

Table 18: Top ten companies in Taiwan malt whisky consumption, 1997-2006 (‘000s nine-litre


Table 19: Top ten brands in Canada malt whisky consumption, 1997-2006 (‘000s nine-litre cases)

and 2006 value (US$’000s) ...................................................................................... 36

Table 20: Top ten companies in Canada malt whisky consumption, 1997-2006 (‘000s nine-litre


Table 21: Top ten brands in duty free malt whisky consumption, 1997-2006 (‘000s nine-litre cases)

and 2006 value (US$’000s) ...................................................................................... 39

Table 22: Top ten companies in duty free malt whisky consumption, 1997-2006 (‘000s nine-litre


Table 23: Top ten brands in Germany malt whisky consumption, 1997-2006 (‘000s nine-litre


Table 24: Top ten companies in Germany malt whisky consumption, 1997-2006 (‘000s nine-litre


Table 25: Top ten brands in Italy malt whisky consumption, 1997-2006 (‘000s nine-litre cases) and

2006 value (US$’000s) ............................................................................................. 45

Table 26: Top ten companies in Italy malt whisky consumption, 1997-2006 (‘000s nine-litre cases)

and 2006 value (US$’000s) ...................................................................................... 46

Table 27: Top ten brands in Asia malt whisky consumption, 1997-2006 (‘000s nine-litre cases) and

2006 value (US$’000s) ............................................................................................. 81

Table 28: Top ten companies in Asia malt whisky consumption, 1997-2006 (‘000s nine-litre cases)

and 2006 value (US$’000s) ...................................................................................... 82

Table 29: Top ten brands in Australasia malt whisky consumption, 1997-2006 (‘000s nine-litre


Table 30: Top ten companies in Australasia malt whisky consumption, 1997-2006 (‘000s nine-litre


Table 31: Top ten brands in CIS malt whisky consumption, 1997-2006 (‘000s nine-litre cases) and

2006 value (US$’000s) ............................................................................................. 87

Table 32: Top ten companies in CIS malt whisky consumption, 1997-2006 (‘000s nine-litre cases)

and 2006 value (US$’000s) ...................................................................................... 88


Page viii List of tables

Table 33: Top ten brands in Europe malt whisky consumption, 1997-2006 (‘000s nine-litre cases)

and 2006 value (US$’000s) ...................................................................................... 90

Table 34: Top ten companies in Europe malt whisky consumption, 1997-2006 (‘000s nine-litre


Table 35: Top ten brands in North America malt whisky consumption, 1997-2006 (‘000s nine-litre


Table 36: Top ten companies in North America malt whisky consumption, 1997-2006 (‘000s nine-

litre cases) and 2006 value (US$’000s).................................................................... 94

Table 37: Top ten brands in Rest of Americas malt whisky consumption, 1997-2006 (‘000s nine-


Table 38: Top companies in Rest of Americas malt whisky consumption, 1997-2006 (‘000s nine-



Page ix Preface

Preface

Malt whisky1 continues to rise steadily. According to IWSR figures the sector

grew in volume by xxx% in the year ending December 2006 and now stands at

just over xm cases, making it worth an estimated US$xxxbn. IWSR’s projected

figures for 2007 shows a further rise to xxxm cases.

Table 1: Global malt whisky consumption, 1997-2012 (‘000s nine-litre cases) and 2006 value (US$’000s)

Volume 000’s nine-litre cases

2006 value (US$’000s) 1997 1998 1999 2000 2001 2002

Global total xxxxxxxxx xxxxxxx xxxxxxx xxxxxx xxxxxxx xxxxxxx xxxxxx

Volume 000’s nine-litre cases Forecast

2003 2004 2005 2006 2007F 2008F 2009F

Global total xxxxxx xxxxxxx xxxxxxx xxxxxxx xxxxxx xxxxxx xxxxxxx

Forecast % change CAGR (%)

2010F 2011F 2012F 2005-2006 2006-2012 1997-2006 2001-2006

Global total xxxxxxx xxxxxxx xxxxxx xxx% xxxx% xxx% xxx%

Source: The IWSR

This rate of growth has continued at this pace for the past five years and

suggests that growth is now accelerating and that malt continues to grow

faster than blended Scotch (+x% over the same period) though it should be

noted that malt still only accounts for xxx% of the total Scotch whisky market.

1 For the purposes of this report ‘malt whisky’ refers to both single malt and blended malt.


Page x Preface

Table 2: Malt whisky consumption by region, 1997-2012 (‘000s nine-litre cases) and 2006 value (US$’000s)

Volume (‘000 nine-litre cases)

Rank Malt whisky by region

2006 value (US$’000s) 1997 1998 1999 2000 2001

1 Europe xxxxxxxxx xxxxxxx xxxxxxx xxxxxx xxxxxxx xxxxx

2 North America xxxxxxx xxxxx xxxxx xxxxx xxxxx xxxxx

3 Asia xxxxxxx xxxx xxxx xxxx xxxxx xxxx

4 Duty free xxxxxxx xxxxx xxxxx xxxxx xxxxx xxxxx

5 Australasia xxxxxx xxxx xxx xxx xxxx xxxx

6 Rest of America xxxxxx xxxx xxxx xxx xxx xxxx

7 CIS xxxxxx xxx xxx xxx xx xx

8 Rest of the world xxxxxx xxxx xxxx xxxx xxxx xxxx


Rank Malt whisky by region 2002 2003 2004 2005 2006

1 Europe xxxxxxx xxxxxxx xxxxxxx xxxxxxx xxxxxxx

2 North America xxxxx xxxxx xxxxxxx xxxxxxx xxxxxxx

3 Asia xxxxx xxxxx xxxxx xxxxx xxxxx

4 Duty free xxxxx xxxxx xxxxx xxxxx xxxxx

5 Australasia xxxx xxxx xxxx xxxx xxxx

6 Rest of America xxxx xxxx xxxx xxxx xxxx

7 CIS xxx xxxx xxxx xxxx xxxx

8 Rest of the world xxxx xxxx xxxx xxxx xxxx


Page xi Preface

Table 2 (continued): Malt whisky consumption by region, 1997-2012 (‘000s nine-litre cases) and 2006 value (US$’000s)

Forecast

Rank Malt whisky by region F2007 F2008 F2009 F2010 F2011 F2012

1 Europe xxxxxxx xxxxxxx xxxxxxx xxxxxxx xxxxxxx xxxxxxx

2 North America xxxxxx xxxxxxx xxxxxxx xxxxxxx xxxxxxx xxxxxxx

3 Asia xxxxx xxxxx xxxxxxx xxxxxxx xxxxxxx xxxxxxx

4 Duty free xxxxx xxxxx xxxxx xxxxx xxxxx xxxxxxx

5 Australasia xxxx xxxx xxxx xxxx xxxxx xxxxx

6 Rest of America xxxx xxxx xxxx xxxx xxxx xxxx

7 CIS xxxx xxxx xxxx xxxx xxxx xxxxx

8 Rest of the world xxxx xxxx xxxxx xxxxx xxxxx xxxxx

% change CAGR (%)

Rank Malt whisky by region 2005-2006 2006-2012 1997-2006 2001-2006

1 Europe xxx% xxxx% xxx% xxx%

2 North America xxx% xxxx% xxx% xxx%

3 Asia xxxx% xxxx% xxxx% xxxx%

4 Duty free xxx% xxxx% -xxx% xxx%

5 Australasia xxx% xxxx% xxx% xxx%

6 Rest of America xxxx% xxxx% xxxx% xxx%

7 CIS xxxx% xxxxx% xxxx% xxxx%

8 Rest of the world xxxx% xxxx% xxx% xxxx%

Source: The IWSR


Chapter 1 Brand performance


This rise is mirrored in the performance of most of the major malt brands.

Glenfiddich remains the category leader, rising by xxx% year-on-year2 selling

just under xm cases in 2006, with predictions that the 1m case mark will have

been topped in year ending 2007. The Glenlivet has grown strongly with a

xxxx% rise year on year, while The Macallan has risen by xx%. When the top

ten is examined by CAGR figures it is clear that these Top Three brands are

moving faster than the category.

Diageo’s Classic Malts (which is still bundled together for statistical purposes,

despite the firm’s change of strategy) is behind the market overall, though

there are indications that Talisker is bucking that trend. The same firm’s

blended malt, Johnnie Walker Green Label continues to grow in the Far East,

though the same cannot be said for Cardhu which continues to struggle in

Spain.

Campari’s Glen Grant is suffering badly, the result of continuing falls in its

Italian core market, while the effect of LVMH’s luxury makeover of

Glenmorangie has yet to be seen. In addition, the Taiwanese boom which saw

Famous Grouse blended malt enter the top ten seems to have stopped and

the brand is in decline.

There have also been strong performances from smaller bases by brands such

as Bowmore, Highland Park, The Balvenie and niche players such as Arran,

Bruichladdich, Speyburn, Old Pulteney and others. In many cases it is this

upswell of smaller brands, coupled with the strong top three which is giving the

category its momentum.

2 All figures quoted are for 2005-2006 unless otherwise stated.



Table 3: Global top ten brands by malt whisky consumption, 1997-2006 (‘000s nine-litre cases) and 2006 value (US$’000s)


Rank Top ten brands 2006 value (US$’000s) 1997 1998 1999 2000 2001

1 Glenfiddich xxxxxxx xxxxxxx xxxxxx xxxxxx xxxxxx xxxxxx

2 The Glenlivet xxxxxxx xxxxxxx xxxxxx xxxx xxxxx xxxxx

3 The Macallan xxxxxxx xxxxxx xxxxxx xxxxx xxxxxx xxxxx

4 Classic Malts xxxxxxx xxxxxx xxxxx xxxxx xxxxx xxxxx

5 Glen Grant xxxxxx xxxxx xxxxx xxxxx xxxxx xxxxx

6 Glenmorangie xxxxxxx xxxxxxx xxxxx xxxxx xxxxx xxxxx

7 Cardhu xxxxxx xxxxxxx xxxxx xxxxx xxxxx xxxxx

8 Johnnie Walker Green Label xxxxxx xxxxxx xxxx xxxx xxxx xxxx

9 Famous Grouse Malt xxxxxx - - - xxx xxx

10 Aberlour xxxxxx xxxxx xxxxx xxxxx xxxxx xxxxx


Rank Top ten brands 2002 2003 2004 2005 2006

1 Glenfiddich xxxx xxxx xxxxx xxxxx xxxxx

2 The Glenlivet xxxx xxxxx xxxxx xxxxx xxxxx

3 The Macallan xxxx xxxxx xxxxx xxxxx xxxxx

4 Classic Malts xxxx xxxxx xxxxx xxxxx xxxxx

5 Glen Grant xxxx xxxxx xxxxx xxxxx xxxxx

6 Glenmorangie xxxx xxxxx xxxxx xxxxx xxxxx

7 Cardhu xxxx xxxxx xxxxx xxxxx xxxxx

8 Johnnie Walker Green Label xxxxx xxxxx xxxxx xxxxx xxxxx

9 Famous Grouse Malt xxxx xxxx xxxxx xxxxx xxxxx

10 Aberlour xxxxx xxxxx xxxxx xxxxx xxxxx



Table 3 (continued): Global top ten brands by malt whisky consumption, 1997-2006 (‘000s nine-litre cases) and 2006 value (US$’000s)

CAGR (%)

Rank Top ten brands % change 2005-2006 1997-2006 2001-2006

1 Glenfiddich xxx% xxx% xxx%

2 The Glenlivet xxxx% xxx% xxx%

3 The Macallan xxxx% xxx% xxxx%

4 Classic Malts xxx% xxx% xxx%

5 Glen Grant (xxxx%) (xxx%) (xxx%)

6 Glenmorangie xxx% xxx% xxx%

7 Cardhu (xxx%) xxx% (xxx%)

8 Johnnie Walker Green Label xxxx% xxxx% xxxx%

9 Famous Grouse Malt (xxxx%) - xxxxx%

10 Aberlour xxx% xxx% (xxx%)

Source: The IWSR


Chapter 2 Brand marketing strategies

Chapter 2 Brand marketing strategies

These statistics give rise to the question as to whether malt whisky can be

regarded as a true spirit category and even whether it holds its own against

other sub-sets of spirits, even premium blended Scotch. Can malt, in volume

terms, be said to be the equivalent of premium vodka? If one takes the launch

of Classic Malts in 1987 as the start of the modern era of malt whisky, is the

category still in its infancy, beginning to mature or is it already mature?

Who drinks malt?

“It’s nowhere near mature. It’s at different stages in different markets and in

each it is at a different point of the product life cycle.”

Steven Sturgeon, Wm Grant & Sons

Yet, the fact remains that malt while receiving disproportionately large column

inches in simple volume terms has still to break through the xx% barrier of

total whisky volume and has struggled to do so even when blends were flat

and there was (is) an apparent malt boom underway.

If malt is to grow, it could be argued, then it needs to both disassociate itself

from blended Scotch and establish itself as a separate premium spirits

category with a wider competitive set. It could be asked that, at xxx% of the

total Scotch category and given the growing premiumisation of the market, is

malt whisky under-performing when compared to the rest of the drinks

industry?

“In the US, Glenlivet is seen very much as a ‘fortress brand’, yet in that market

brand choice is as much about usage as brand-switching. We see consumers

drinking vodka from March to October, then switching to malt in the winter

months, but it is holding its place against premium white spirits which you

didn’t see a decade ago. Malt competes in terms of usage, season and mood,

and as younger consumers become premium savvy they know what the

language of premium spirits is and they use it to identify single malt.”

Neil Macdonald, Chivas Bros.


Chapter 3 Does anyone know how much whisky there is?

Chapter 3 Does anyone know how much whisky there is?

Much of the malt category’s future growth is predicated on there being

sufficient whisky to fuel it. While this may sound like a truism, the problem is

that while each firm knows how much stock it is sitting on, no-one fully knows

how much stock there currently is overall. This, needless to say, makes

forward planning somewhat difficult.

“It’s hard to get a picture because no-one is talking, so trying to get a grip on

whether the industry is short or each firm is just protecting its stock is unclear.”

Andrew Rankin, production director, Morrison Bowmore

Malt whisky, while important in terms of image and value as well, remains very

much the junior partner within Scotch. The volume is provided by blends and

at a time when blends are growing it is they which will dictate the terms in the

years to come. Marketing may think it is leading malts into a new era; the

reality is, it is stock which will dictate whether malt brands can reach the sunlit

uplands.

At the time of writing, the major blending firms: Diageo, Chivas Bros. and

Bacardi are buying whatever stock they can as well as increasing distilling

capacity. Chivas is still well-placed, fortuitously, thanks to the stock surplus it

inherited from Seagram and claims to have the best aged stock profile in the

whisky business, but has still had to reopen its mothballed Braeval distillery as

part of its long-term planning.

Meanwhile, although Diageo’s (believed) shortage has been partially offset by

the purchase of a large consignment from Whyte & Mackay (which in turn had

bought it from Suntory) there is still, as one anonymous source said: “a run on

stock. As a result of this everyone is now talking about quadrupling production,

but without having a clue as to how much stock there actually is in the system.”

This is partially as a result of Diageo’s desire to become self-sufficient, which

lies behind the building of the multi-stilled plant at Roseisle which, if it sticks to

the original plans, will supply a number of different flavour streams for the

firm’s blends. Taking Diageo out of the equation in terms of reciprocal deals,


Global market review of malt whisky â€“ forecasts to 2012

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Transcript of Global market review of malt whisky â€“ forecasts to 2012