26 Oct

Whisky giant's 'threat' to pure single malts

NO-ONE can accuse Peter Smith of lacking fighting spirit. "Everyone talks about the whisky industry being fuddy-duddy and not going anywhere, but we as a company are not like that. We have made changes that we think will benefit everyone in the end, and if other people don’t like it, tough. What’s important is that our customers do."

Smith is the communications manager in Scotland for Diageo, the world’s largest producers of whisky and spirits. But Diageo’s tinkering with one of the best-known names in its global portfolio is now the talk of stillrooms from Islay to Orkney.

Diageo has committed the heinous misdemeanour - in some eyes - of filling its famous square Cardhu bottles with a controversial dram that is causing warfare in the highly conservative industry. What the company once sold as its 12-year-old Cardhu single malt, taken from one source as law and tradition dictates, has now been substituted with a vatted malt, blended from a number of different Speyside distilleries.

The traditional bottle and label remain the same but with one vital word altered. Single malt becomes "pure" malt and in the process makes Cardhu a different product, according to critics. Consumers will be misled, they say, into drinking a whisky that could taint the whole shiny reputation of one of Scotland’s most important industries.

Experts think this is nothing other than a storm in a quaich

Many believe the integrity and authenticity of every category of whisky produced in Scotland is threatened worldwide by the Diageo move.

John Grant, managing director of J&G Grant, which produces Glenfarclas single malt, said the move set a "dangerous precedent".

"Diageo are misleading the public by selling Cardhu in the same bottle, with the same packaging it has had for years, when what’s in the bottle is not Cardhu. People here in Europe don’t realise that they’re buying an entirely different product and we’re concerned about that and about what it means for the industry as a whole. Our importers in Europe are worried about it too as it could affect the credibility of the Scotch whisky industry globally."

At William Grant & Sons, the Dufftown-based company which makes the Glenfiddich and Balvenie single malts, a spokesman hinted darkly that it was not going to let Diageo get away with it. "William Grant & Sons is very concerned about the effect Diageo’s decision to turn its Cardhu single malt Scotch whisky into a vatted malt will have on the integrity and authenticity of the single malt industry," a spokesman said. "We are monitoring developments very closely."

When thunder clouds form over the inner sanctums of the malt whisky industry, the companies usually expect some sort of ruling from the Scotch Whisky Association (SWA), the trade body that operates from Leith, in Edinburgh. So far the association, which represents all the big players in the industry, including Diageo, is declining to come off the fence.

David Williamson, public affairs manager for the SWA, said: "In respect of the Cardhu changes, we are obviously aware that concerns have been expressed by some in relation to the change from single to vatted malt. We have been discussing the change with Diageo and these discussions are ongoing."

"It must be remembered that we represent 95% of the Scottish whisky industry. Inevitably when you represent such a diverse industry, differences of opinion are going to emerge on different issues."

But Patience Gould, editor of Drinks International, was in no doubt where she stood. "Cardhu is no longer a single malt and is not the product of one distillery. If others start doing this, it could pose a real threat to the whisky industry and the image of single malts."

Today’s supply of 12-year-old single malt relies on stocks laid down 12 years ago. Most distilleries have plentiful supplies but Diageo says it made the decision to substitute vatted malt for single malt because of an impending shortfall of single malt from its famous Cardhu distillery in Morayshire.

Cardhu’s 12-year-old single malt, the industry staple, has been a huge success for the company with sales soaring, particularly in newly created European markets such as Spain and Italy, over the last five years. The sales are part of a spectacular performance by the whisky industry as a whole which last year exported £2.28bn worth of its products, becoming the fifth-biggest exporter from the UK.

The popularity of malts has also risen sharply as customers around the world moved on from the malt and grain blends - such as Famous Grouse and Bell’s - that still make up the bulk of sales.

According to Smith, Cardhu single malt, which sells for £24.99 per bottle in the UK, became a victim of its own success, with supplies for export now dried up.

"Cardhu has been the fastest-growing malt whisky in the last five years," Smith said. "What consumers are wanting is the great taste of Cardhu and that’s what we’re still supplying. Vatted malt is in no way an inferior product.

"We have gone to great lengths to ensure that consumers won’t be confused. We have changed the labelling and changed the packaging. We have even changed the name of the distillery back to Cardow, the name it was known by until 1975. We did this because we want Cardhu now to be known as a brand and not connected to any one particular place."

Smith insisted that any fears that the industry would be damaged by Diageo’s move were unfounded.

"What we are doing is increasing the potential for the Scottish whisky industry to develop."

Spain, where the vatted malt was introduced in July, was the guinea pig for the new drink, followed by Portugal, France, Italy and Greece. It will be on sale in the UK within a year. The price will remain the same.

"We feel absolutely justified in charging the same price because this is just as good a product," Smith added. "We could charge more because it is actually more expensive to make."

Whisky experts are not convinced that the vatted malt issue is anything other than a storm in a quaich. One industry insider, said: "To my mind this is not a heinous crime because most punters will not be able to tell the difference. As long as it is made clear that it is a vatted product then there shouldn’t be a problem.

"The other distilleries scented new sales when Cardhu single malt ran out. They are now a bit miffed that Diageo has made this move. If sales of malts keep on increasing, and they run out, they too may want to do it."

Article Courtesy of The Scotsman