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Scotch-in-glass

Is Scotch slipping off its high-flying perch?

Writing on just-drinks.com, commentator Ian Buxton voices his concerns for the following reasons:

  • After a non-stop flow of good news – upbeat forecasts, increasing prices, growing output and distillery expansions – the 0.8% sales drop in 2013 came as a nasty shock; as did nn 11% decline in exports in the first half of the year and little improvement by the third quarter, when a cumulative 8.6% decline in export value was recorded.
  • Scotch may be facing a perfect storm: Western sanctions on Russia greeted with consumer patriotic resistance to imported luxuries; continued Chinese Government restrictions on extravagant entertaining and gifting; a slowdown in the Brazilian economy and a marked strengthening of Sterling.
  • Diageo has been quick to respond, with a moratorium on further expansion. 
  • In its Q1 2015 Spirits Quarterly, released recently, analysts at Rabobank highlight many of the same concerns, pointing to a decline in seven of the top ten export markets, most notably the US (-10.9%) and Singapore, the latter being the main entry point for exports to China (-41.1%). Ahead, Rabobank sees Scotch losing share to “other, more innovative spirits categories, including Bourbon, Irish whiskey, rum and gin”.
  • Western consumers are starting to view many Scotch brands as expensive; offering poor value when compared to high-quality aged sipping rums, Armagnac and even the premium craft and small-batch gins, which are gaining traction with younger drinkers. 
  • The more general trend to ‘no age statement’ expressions (NAS whisky) continues to fuel furious debate on social media. While there may be no prospect of returning to age statements for many brands, at least until stocks have been re-built (which may not be quite the problem it seemed a few short months ago, if the slowdown continues), consumer acceptance of NAS whisky has been more grudging than the industry expected. While the more strident social media commentators clearly have an axe to grind, it ill behoves any category to antagonise previously loyal advocates and enthusiasts.

Source: www.just-drinks.com

 

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