BevMo hasn’t had a strong run with blended Scotch in recent years. With single malt taking center stage among Scotch drinkers and other whiskies in high demand, blended Scotch has struggled, according to Jeff Feist, BevMo’s category lead for spirits. But some brands are bucking the macro-trend in a big way. Feist says that Johnnie Walker Blue Label ($169 a 750-ml.), which is up 19% year-on-year in 2020, saw growth at a time when BevMo stores were closed to foot traffic for eight weeks due to the pandemic. “It’s a brand phenomenon,” Feist adds. “During this time of Covid-19, people love trading up. They continue to trade up within the category. Once they know they like giving Johnnie Walker Blue as a gift, they realize that the perfect gift is to themselves. We see a lot of people treating themselves with more expensive items.”
Indeed, as with every category, blended Scotch has experienced sharp change due to the pandemic—and not all of it is negative. “In 2020 we’ve seen all segments return to growth, driven by the off-premise and large 1.75-liter formats,” says Brian Cox, vice president of Dewar’s Scotch whisky at Bacardi. “With Dewar’s in particular, we’re benefiting from a strong off-premise trading-up dynamic—especially on Dewar’s 12- and 15-year-olds. With consumers spending less in the on-premise, there seems to be a real desire to use that savings to trade up when buying by the bottle at retail.”
Michael Giardina, marketing director for Glenfiddich, Monkey Shoulder, and Hudson at William Grant & Sons, says blended Scotch overall is seeing increased demand driven by changes in consumption patterns due to Covid-19. “When you look at the 13 weeks through mid-July, category volume is up 10% versus the prior year,” says Giardina. “Whisk(e)y, and particularly Scotch, is typically more of an at-home consumption occasion, so it was less impacted by the shutdown of the on-premise and it benefited from the increased consumption the off-trade is seeing.”
Enjoying spirits at home “has always been a strong occasion for blended Scotch and Famous Grouse,” notes Jim Brennan, senior vice president of marketing and innovation for Edrington Americas, producer of Macallan, Highland Park, and Glenrothes single malts, as well as the Famous Grouse blend. Brennan adds that Famous Grouse has seen an uptick in demand since the start of the pandemic, noting that blended Scotch continues to enjoy a “strong and resilient consumer base.” Elsewhere, Giardina explains that the current U.S. landscape has also prompted a shift to larger sizes, like 1.75-liter bottles, and higher prices. “Although all price tiers are benefiting from the shift in demand that Covid-19 has caused, premium-plus pricing is seeing the strongest growth, as we assume people are shifting dollars that would normally be used in bars and restaurants to trade up for their at-home consumption,” he says.
Big Brand Dominance
One thing that doesn’t seem to be changing is the dominance of a few leading blended Scotch brands. The top two blended Scotch labels account for roughly half of category volume in the U.S., and the top five brands together make up about 70% of volume. Johnnie Walker leads the field at 1.85 million cases, despite a 3% decline in 2019, according to Impact Databank. Dewar’s managed to remain above the 1 million-case mark at 1.01 million cases, a 0.2% drop. At BevMo, very few blended Scotch brands have a significant presence. “Once we get past six SKUs in the blended category, it’s downhill from there,” Feist says. “The good news is those six that are doing well are really carrying the category for us.” Those SKUs include various sizes of Johnnie Walker, Dewar’s, and Monkey Shoulder blended malt Scotch.
Ellen Talbot, lead bartender at Nashville’s Fable Lounge—which offers three blended Scotches on a deep list of largely esoteric whiskies—says the big-name brands offer comfort in a broader whisk(e)y category that boasts extraordinary variety. Elizabeth Sammuri, wine and beverage director at Boulder, Colorado’s Flagstaff House restaurant, says blended Scotch has limited appeal, but the big names resonate in her bar as well. “With blended Scotches, it’s hard to sell the smaller, off-the-beaten-path brands in comparison to Johnnie Walker and Dewar’s,” Sammuri says, noting that Dewar’s is currently the restaurant’s well brand. In general, she says, selling blended Scotch is challenging due to its competition. “Right now, it doesn’t have the excitement of Japanese whisky or Bourbon.”
New blended Scotch brands have launched in recent years, but few have made significant inroads. One example is Monkey Shoulder, a blended malt Scotch. “As a blended malt, it doesn’t fit squarely into either the blended Scotch or the single malt segments, and with its whimsical personality it has broken a lot of the stereotypes of the more serious perception the Scotch whisky category traditionally has had with consumers,” Giardina says.
For new entrants and established brands, brand owners must decide whether to move forward with innovation or tap the brakes until the market resets. “Other than e-commerce and digital media, right now a lot of our plans have paused as we adapt to this new world that seems to change daily,” Giardina says, adding that “exciting initiatives” will commence once the market stabilizes.
Others are making some modest alterations to their lineups. Brennan says Edrington has “dialed up cask innovation on the core Famous Grouse brand,” and notes the particular success of Famous Grouse Ruby Cask. Dewar’s is also innovating with cask finishes. Most recent was the launch of Dewar’s Ilegal Smooth, an 8-year-old blend finished in Ilegal mezcal casks. “It’s a fantastic collaboration that is part of our new 8-year-old Cask Finish Series, which brings together two different cultures to create something unique,” Cox says. In August 2019, Bacardi launched Dewar’s Caribbean Smooth Rum Cask. Also last year, the company launched the Dewar’s Double Double series—21-, 27-, and 32-year-old whiskies in 375-ml. bottles, each finished in a different Sherry cask. The Oloroso Sherry cask-finished Double Double 21-year-old was named No. 2 in Whisky Advocate’s Top 20 Whiskies of 2019.
Packaging in smaller bottles allowed Dewar’s to price the Double Double range lower than typical for a a 750-ml, putting trial within reach of value-minded consumers. Other marketers are also experimenting with alternative packages to capitalize on current trends. Diageo recently announced a new 100% plastic-free paper-based spirits bottle, made entirely from sustainably sourced wood. The bottle will debut with Johnnie Walker in early 2021.
In addition to thwarting some innovation, the pandemic has caused a hiccup in the marketing for most blended Scotches, with brand owners forced to pivot their targets and messaging. “Marketing is in a very fluid state right now,” says Bacardi’s Cox. “Things are changing faster over three months than they typically would in three years. People’s behavior has changed and will continue to change, so whatever the curve is, we need to adapt. As with many brands, the on-premise and most experiential paused, and we pivoted some of those activities to online, partnering with on-premise accounts and e-commerce sites.” Notably, Bacardi promoted Dewar’s 12-, 15-, and 18-year-old offerings, and accelerated the rollout of Dewar’s 15-year-old in 1.75-liter and 200-ml. trial packs, which encouraged consumption at home during the pandemic.
The advent of cocktails to-go, the acceleration of e-commerce, and the emergence of a more adaptable on-premise are all results of navigating through the current pandemic, notes Giardina of William Grant & Sons. “In terms of engaging consumers moving forward, digital will take a more prominent role as long as large events and the on-premise remain closed or are limited in capacity,” he says. “Our brand ambassadors will also continue to play a critical role in how we educate and engage people with our brands.”
More generally, some in the industry believe that blended Scotch marketers need to hone their competitive edge by positioning their brands in ways adopted by their peers in Bourbon, Japanese whisky, and single malt Scotch. “It’s really a perception issue in that somehow the word ‘blended’ is a negative term,” says Ron Vaughn, owner of Denver’s Argonaut Wine & Liquor. Both Dewar’s and Johnnie Walker perform well at Argonaut, but after that the blended Scotch category drops off. “Perception is reality in marketing, and they’ll need to show their product will stand up to any comparison,” Vaughn adds. “They need to make their story as compelling as those for single malts by describing ingredients, why they were chosen, and what talent it takes to blend a great Scotch. The key to any great product is in the ingredients and the history that consumers should believe is in every bottle.”
John Kapon, chairman of New York-based Acker Wines, says blended Scotch needs to capitalize on its assets. “Given that blended Scotch is just the simple combination of grain alcohol and single malt, and that so many spirits brands have shifted to include a higher degree of transparency in their marketing, it would make sense for blended Scotch producers to embrace this move and include more details about what exactly goes into their blends right on the bottle,” he says. “If producers began to detail the percentage of malts, or to describe the casks used to age the spirit, this could be a huge move both to educate consumers and increase engagement around what is inside the bottle.”
Flagstaff Houses’ Sammuri also notes this opportunity. “It’s quite an artistic thing and very challenging to take 40 different distilleries and blend together something amazing,” she says. “I think there’s something to be said about how unique blended Scotch is and how challenging it is to make.”
Some suggest blended Scotch brands must specifically target younger consumers—an area where Dewar’s is making strides. “Reinforcing quality credentials is just as important as establishing a clear, emotional brand point of view for new drinkers, and Dewar’s innovation and positioning as a smooth, accessible, quality whisky has helped accelerate recruitment of these new drinkers,” says Cox, who adds that in the U.S., Dewar’s White Label drinkers aged 21-34 have increased three-fold over the past four years.
Blended Scotch overall may not be able to make such claims. “The demographic for blended Scotch is aging,” says Kapon of Acker Wines. “It’s out of fashion for younger drinkers who have been caught up in the niche of collectible Bourbon and single-release single malts. A serious outreach effort must be made to re-familiarize younger drinkers with blended Scotch as a value buy, and the category should rebrand in order to appeal to this younger audience who value information and education.”