Getting UK consumers to come around to the idea of enjoying a dram of Scotch whisky has been something of a thankless task in recent years.
Younger consumers have been shunning it in favour of the more flexible party drink, vodka, while the over-45s, traditionally the demographic that would sit down with a whisky after dinner, are also abandoning the spirit.
Yet, perversely, while domestic sales are flagging, the export Scotch market is booming, with sales hitting a record high of 拢2.8bn in 2007, up 14% on the previous year, while volume sales increased by 8%, according to the Scotch Whisky Association.
The problem of how to arrest the decline in the spirit's popularity in the UK has taxed the brains of some of the best drinks marketers and proved a vexed issue.
Diageo's answer for its Bell's brand, which despite being the top-selling Scotch in the UK is losing share to The Famous Grouse, is to axe its core eight-year-old product, replacing it with a new blend, Bell's Original, in a launch backed by a 拢4m marketing spend (Marketing, 21 May). Diageo claims it made the decision because it believes that the category's future growth can be driven by shifting consumer perceptions of Scotch.
James Pennefather, whisky brand director at Diageo GB, says that five years ago 5% of Bell's was consumed after dinner; the equivalent figure today is 30%. He adds that Bell's Original's 'nutty, spicy' character is designed to play into this and will prove a success among new and existing consumers. 'The age is merely one of the indicators of quality when it comes to Scotch,' he insists.
Pennefather admits that the domestic Scotch market has been a 'tough' category in which to operate. 'It has seen reduced marketing investment and a lack of new news,' he says. However, Pennefather is convinced the combination of a new blend, supported by TV ads, created by Adam & Eve, and fresh packaging, which will attempt to establish the brand's founder, Arthur Bell, as its icon, will create a buzz around the brand.
Nonetheless, a closer look suggests that rising costs may have driven Diageo's decision to axe the aged blend. Despite being cheaper to produce, Bell's Original will have the same recommended retail price as its predecessor.
'It could be a way to combat increased tax, glass shortages and the increased price of grains and freight,' says Tim Simmons, an analyst at the International Wine and Spirit Record. He adds that recent IWSR research shows that people are moving toward lighter aperitifs such as sparkling wines and rose rather than whisky.
Defending the pricing issue, a Diageo spokeswoman says that in the face of the rise in input costs that has taken place over the past 18 months, the company needs to 'ensure we manage our business responsibly so that we can continue to offer customers and consumers brands of the highest quality which also represent good value'.
Premium prospects
More than ever, Scotch brands are targeting consumers in markets enjoying new-found wealth, such as China, as well as European territories such as France, where sales are soaring. Diageo has increased its global marketing investment by 60%, while other firms are also gearing up for major assaults. Pernod Ricard has hired Euro RSCG to run campaigns primarily in Asia and the US for its Chivas Regal brand, while William Grant & Sons is investing 拢35m this year globally, with just 拢3.8m earmarked for the UK.
'It may be that individual distillers take a decision on where they are going to market their products based on where there is the biggest demand,' says a spokesman for the Scotch Whisky Association. But he expresses optimism that the industry would be able to cope with global demand without distilleries having to cut back on investment in the domestic market.
While drinks companies continue to plot ways to turn UK consumers back to the home-grown spirit, they will also be keeping a close eye on the international scene. After all, sales of Scotch, widely perceived as an affordable luxury, are said to be an excellent bellwether of economic prospects as they tend to rise and fall in parallel with the global economic curve.