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- Johnnie Walker paves the way for Scottish whiskeys from Diageo, but other brands struggle to keep up.
- Its single malt whiskeys are doing well in Britain, but rapid global growth is stagnating
- More variety in the spirit world than even Scotch, and it is now judged on "cocktail compatibility".
- Distillers look closely at how low water levels are, but say they've prepared
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For Diageo, Scottish whiskey is very important. This represents 25% of sales.
And for Scottish whiskey, Diageo also counts. It controls 40% of the industry.
It is therefore worth paying attention when the giant distiller in London releases its annual rise in financial values and market trends.
With sales exceeding 12 billion pounds and pre-tax profits up 3.7% to 3.7 billion was presented as an image of strength and consistency: growth across categories of beverage and across continents: "rigorous pursuit of the execution of our strategy."
to buy back shares.
This is a widely used means by companies to boost the course of action by concentrating the property. It's a reward for the shareholders and, of course, for the premiums of the senior management. (At the same time, Royal Dutch Shell announced a $ 25 billion stock repurchase.) Despite this, the Diageo stock price fell 1% on the day of the results. But it is up 25% over the previous year
Old Parr
Scotch whiskey is a mainstay of the company, and led by Johnnie Walker, he walked steadily, even if it is not spectacularly
% in the year to June. At least in part, this reflects marketing expenses.
Diageo is currently selecting the location of a £ 120m reception center in Edinburgh to promote Johnnie Walker, and much more for making four distillery experiences built around the brand, for those who go on the whiskey trail in Scotland.
This led the Scottish "category", while other figures were a little less impressive.
Sales volume increased by 2%, and value increased by 3%.
The Black & White brand is also doing well. But other mixtures, with forces in particular markets, have lost ground; Old Parr in Colombia, while Windsor was down more than 10% due to the continuing decline in Scotch taste in South Korea.
J & B has long performed well on the shelves of French supermarkets.
"The contraction of the category"
We got used to the fact that the stuck Scotch stagnates a little, while the single malts have taken over, the high prices fueling premium margins.
in the portfolio of whiskeys from a distiller to the key element of growth
For proof, go to the impressive new Edrington Distillery and Center of D & # 39; Home for Macallan at Craigellachie on Speyside
But here's the surprise in Diageo's numbers: the single malts barely grew by 1%.
The explanation of the company? "We've seen strong growth in some markets like Britain and mainland China, but we've seen a weakness in Taiwan because of the trade difficulties and the shrinkage of the category in this market."
led by these single malts. This is a signal that the company can see the value of putting more marketing efforts into one's own country.
Tanqueray brands have grown by 16% worldwide
Botanicals
It could do even better, though, by putting that in the gin. It accounts for only 4% of Diageo's global sales, but from this low level, Gordon and Tanqueray's brands have experienced global growth of 16%.
Tequila increased by 40%, mainly in North America and Mexico, while Smirnoff vodka and its variants decreased in Europe and North America.
The recent craze for gin has encouraged many newcomers to distill. New Scottish distilleries need cash while their whiskey casks ripen
This is reflected in the latest discoveries on the spirit world from the International Wine and Spirits Competition, held this week in London
. It has found more gin entries than Scotch whiskey – from 600 to 400. The organizers estimate that the total worldwide range is now over 3500 distillations, botanicals and different expressions.
Driven by the millennia, an industry estimates that Scotch could be ruled out in just two years. The price of the world's best whiskey / whiskey went to an 18 year old Tullamore Dew from Ireland
The gin gong went to New Zealand's Scapegrace. And a growing category is for "cocktail compatibility", judging gins by their effectiveness with the tonic. It is there that a German product, Ginstr Stuttgart, came out in the lead.
If in doubt about the craze for gin, check out the latest financial results of Fever Tree. Manufacturers of the high-end brand's tonic this week have revealed an increase in their revenues in the first half of this year, from 72 to 104 million pounds sterling. Adjusted earnings increased by 35% to £ 34m and the share price continues to climb.
Life of Water
A final reflection on the low summer rainfall, for a fully water-based industry. Diageo claims to be prepared for it and sees no major problems up to now.
After a recent dry summer that forced some Islay distilleries to stop their production, she invested in the use of seawater as a coolant in Islay and Skye.
Chivas Brothers, the second-largest distiller, closely monitors the Spey River – at its lowest level in at least 34 years.
Environmental director Richard Daalmans points out that many distilleries are closing at this time of year. which helps to reduce the pressure on the water courses. And production often comes from spring water, which is more reliable than burns and rivers.
But he says he worries that a long-term increase in water temperature means that it will take more water to have the same cooling effect. A research project is currently underway at Glenlivet Distillery on the implications of this.
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