Whisky Advocate

Whisky Boom?

November 18th, 2008

We’ve been in one, but it might be a short one.

I’ve been in this business for close to 20 years and have seen ups and downs. When the industry falls on tough times, one of the first things they cut back on is advertising. And the smaller companies pull out first, because they don’t have the momentum the big guys have to sustain themselves.

I just received this note from one of my advertisers (and WhiskyFest participants):

We have decided to not participate in your Chicago WhiskyFest (in April) and to pull our ad.  The reason is that given the tougher times, we need to re-allocate the funds toward distributor and retailer activities which we control better and will deliver additional points of distribution.

I’m not going to say who this came from, but it looks like this global recession (or whatever the hell you want to call it) is beginning to take the wind out of the sails of this industry.

Maybe the boom isn’t over. Maybe this is just a bump in the road. Time will tell.

But don’t worry, Malt Advocate and WhiskyFest will still be around to see the next boom (and bust). And there will always be whisky.

13 Responses to “Whisky Boom?”

  1. Bill Groot says:

    Does this suggest a lowering of prices to stimulate purchases, or a raising of prices to accelerate profits? I guess we will have to wait and see.

  2. John Hansell says:

    Bill, I have no clue. They might just play it safe and do nothing and wait and see how the economy does in 2009. That would be the easy decision, but maybe not the best decision.

  3. Dear John,

    I find this news extremely disheartening. I can understand cutting back on their ad budgets, but WhiskyFest is an event where whisky enthusiasts gather to sample new products and learn more about their favorites. I have several friends who will be attending their first WF in Chicago in April.

    WF is a target rich environment, where companies know attendees are already prone to the dark spirits and have the opportunity to expand their knowledge & palates. Too bad for us & this company, as I know many whisky drinkers whose six month whisky budgets are based on what they taste at WF & the surrounding events & what they learn from the distillery reps. Please feel free to forward my comments to anyone contemplating similar actions.
    Cheers,

    Bill

  4. John Hansell says:

    William, regarding this company pulling out of WhiskyFest Chicago, I think this will be the exception rather than the rule. We just came off of a great WhiskyFest New York and this company was at this event. Plus, as you know, WhiskyFest Chicago is always a wonderful show.

    The good news is that this company has a four months to change their mind, which they might do.

  5. Harvey Fry says:

    our whisk(e)y boom is based mostly on better than average
    economic times in the western world (+ Japan) as we know it.
    any sustained diminution of these conditions would, by itself,
    be a huge problem for any industry that traditionally gets way
    ahead of itself. when you add to that what is clearly an overly
    optimistic forcast for the rest of the world, the headlong rush
    to be ready to serve all those imagined customers & the huge
    borrowing to expand capacity so far beyond present demand,
    you might just get an inkling of the proportions of what looms.

    China, India, Russia, Brazil & all the others who were hoping
    to be (& drink) ‘like US’ won’t even get close WITHOUT US. if
    we can’t even buy our own cars, their dreams (as well as many
    of our own) will have to be put on indefinite hold. & when all
    the hoped for new players fail to materialize, a whole lot of
    these overextended casinos are gonna go poof= probably
    taking with them some of our most loved distilleries. sadly,
    the handbag people already nudged Glen Moray towards the
    Lossiemouth= it’ll be taking a dive without the divas.

    & when it starts to come back, i’ll betcha more than a few of
    the deliberately manipulative (not to mention greedy, arrogant
    & counterintuitive) practices that have multiplied in recent years
    will be in short supply:

    1. self promotion to luxury status or so called market positioning
    with scant real value added (Macallan, Glenmorangie plc, among
    others) should pay much smaller dividens in future. Balvenie’s
    long success with the (sometimes older than) 15 year old single
    cask format proves limited editions can be reasonably priced.

    2. excessive concentration on age for its own sake= the idea that
    older is just about always better, regardless of the myriad variables
    that come with such a fragile process. even the threshold lead time
    that we presently think of as standard (for most makes) is likely
    to be cut. if they’re smart, we’ll see a lot younger things coming
    out. for my money, PC 5 & 6 were much better than 90% of the
    competition + such as the recent young Benromachs are proof that
    young=good is not an Islay exclusive. in fact, for several years
    some of us have been talking up making the promotion & marketing
    of cask strength ‘new makes’ a way to hit the ground running.

    i can rant on at length, but for now i’ll be satisfied with:

    our boom has been getting out of hand for too long. there’s little
    doubt it’s headed for a big humpty-dumpty. for most of modern
    history, whisk(e)y has been a fairly commonly held & generally
    affordable good. maybe it’s high time it came back down to
    earth!

  6. Harvey Fry says:

    I FORGOT TO SAY= I’M ONE OF THOSE PEOPLE BILL
    MEYERS IS TALKING ABOUT COMING TO THE NEXT WF=
    SEE YOU ALL IN CHICAGO!

  7. Alex V. says:

    I work in the legal marketing industry. I recently posted this passage from David Ogilvy book “Ogilvy on Advertising on my blog. I think it applies here too.

    “What should you do in times of recession, when you need every penny to sustain your earning? Stop advertising?

    If you stop advertising a brand which is still in its introductory phase, you will probably kill it – for ever. Studies of the last six recessions have demonstrated that companies which do not cut back their advertising budgets achieve greater increases in profit than companies which do cut back.

    In a Morril survey of 40,000 men and women involved in the purchase of 23 industrial products over five years, it was found that share-of-market went up in bad times-when advertising was continued.

    I have come to regard advertising as part of the product, to be treated as a production cost, not a selling cost. It follows that is should not be cut back when times are hard, any more than you would stint any other essential ingredient you product.

    During World War II, the British Government prohibited the marketing of margarine under brand names, but Unilever continued to advertise one of their brands during all the years it was not on the retailers’ shelves. When the war ended the brands returned, the Unilever brand emerged at the top of the heap.

    Keynes might have advised manufacturers not to advertise during boom times, but instead set aside the money in a reserve for advertising during recessions.”

    David Ogilvy

  8. John Hansell says:

    Alex V, I agree 100%. And I will put my money where my mouth is. You will find a 1/4 page Malt Advocate/WhiskyFest ad in tomorrow’s (Friday’s) Wall Street Journal in the special Whisky section I wrote for them.

  9. Thomas Molitor says:

    John, did you pay for your advertising? I just assumed in exchange for writing the surrounding content that attracted three paid advertisers that your 1/4 pg ad was your payoff? If not, Murdoch is cheaper than I thought.

  10. John Hansell says:

    Thomas, I don’t want to get into specifics, but the ad is part of an overall alliance that Malt Advocate has with The Wall Street Journal, which includes the WSJ sponsoring our WhiskyFest events, my authoring the special whisky in the WSJ, and more.

  11. Louis says:

    Hi John,

    Just curious, when exactly did you compse the October editorial? Or maybe I should put it another way, which Wall St. firms had gone belly up when you wrote it. Unfortunately, I think it may take a while for the bubble to burst in the local liquor stores. There is probably plenty on scotch that has been shipped over to the US that was paid for at the wholesale level with weak dollars, and shipped with expensive fuel. We night do better on the bourbon front.

    Slainte.

    Louis

  12. John Hansell says:

    Louis, I would have written my editorial sometime in August.

  13. […] my previous post about the current whisky “boom” which may be short-lived or experiencing a significant […]

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