Whisky Advocate

Whisky is still a business…

May 14th, 2009

I try to keep Malt Advocate magazine focused on consumer information (new products, reviews, trends, etc.) Ditto WDJK. I enjoy telling you about these things rather than the business stuff.

But whisky is still a business. And the business decisions do have an impact on you, for better or worse. Here’s just one more example.

Okay, back to the fun aspects of whisky.

27 Responses to “Whisky is still a business…”

  1. Chris says:

    “No-one at Diageo was available to comment last night.”

    Shocking.

    This move pretty lame of Diageo. As if locking out the small distilleries is going to somehow positively affect their business.

  2. bgulien says:

    This is a very successful marketing strategy. Very cheap, £50.000 and all your competitors banned.
    All people are seeing is your marquee.
    How have they been suckered in this ploy from Diageo?
    It means Diageo is afraid to compete on the merits of it’s products.

  3. Tim F says:

    I believe there are already moves afoot to have an unofficial whisky ‘fringe’ at Homecoming – Good Luck to them!

    I also believe that this instance of corporate bullying may end up backfiring on Diageo, especially as the fringe, if it happens, will almost certainly be more popular with whisky fans than the all-Diageo ‘official’ version.

  4. sam k says:

    Excellent PR! Nothing like going out of your way to seem like a bully.

  5. Louis says:

    Since the EC has gone after Microsoft and Intel, surely we can expect them to investigate Diageo for monopolistic behaviour, right ?!?!?!?

  6. Neil Fusillo says:

    Sad. But it’s hard to tell if Diageo is pushing this, or if it’s some ‘well-intentioned’ local government fellow. All of the comments seemed to imply that it was a decision made in deference to the wonderful sponsorship by Diageo — not necessarily made as a result of an exclusivity agreement.

    If there WERE such an agreement, it would be an incredibly BAD marketing decision. It’s one thing to pay the 50,000 for sponsorship (which is essentially marketing capital) and have your name and banner up all over the fair. That’s just good business sense. Nothing says “We’re a world class whisky” like having your banner flying high above the rest of the producers. However, it’s entirely different to push the competition out of the game because you feel you’re entitled after blowing your marketing budget on a shindig such as this. If it were the Diageo Homecoming Festival, it might be a very different thing. If it’s their own fair, they can run it however they want.

    But it’s supposed to be a big, cultural fair with representation from all over Scotland. Do they only allow one producer of each sort of item?

    • John Hansell says:

      The reality is that, like it or not, major sponsorship (and exclusivity) is commonplace in big festivals like this when it comes to booze. My local celtic festival, Celtic Classic, which draws tens of thousands of people, has an exclusive beer sponsorship for all the beer tents. Last time I went it was Budweiser and all their brands.

      As you know, I host all the WhiskyFests here in the U.S. and it is this reason why we don’t have any major sponsors. Everyone is treated equally. Each whisky company gets the same shot at participating and the fees are the same for everyone. No exception.

  7. sam k says:

    Wow. I’m so impressed with the official response! “If you’ll just travel to a room in Edinburgh, we’ll prove how diverse and encompassing an enterprise we really are!”

    …and someone gets paid for this.

  8. Louis says:

    Uh huh. They didn’t know that there was going to be a food and drink festival, just like Manny Ramirez didn’t realize he was taking a female fertility drug that just happens to be used after completing a steroid cycle. Sorry I got caught, not sorry I did it.

  9. JC Skinner says:

    Diageo break my heart.
    I wish they’d sell Bushmills and Guinness before they destroy both entirely.

  10. Chris says:

    “As you know, I host all the WhiskyFests here in the U.S. and it is this reason why we don’t have any major sponsors. Everyone is treated equally. Each whisky company gets the same shot at participating and the fees are the same for everyone. No exception.”

    And we all thank you for it, John.

  11. Red_Arremer says:

    When I hear about stuff like this, I’m always suprised that no one brings up the “B” word: boycott.

    Diegeo may have monopolized the politics of whisky in Scotland, but doesn’t have a monopoly on the production of good whisky.

    Why not compule a list of whiskies produced by companies not owned by Diageo and agree not to buy them for the next three or four months? Why not just send them a message that whisky drinkers take this kind activity seriously.

    There are great whiskies that Diageo, has no hand in producing, availble from every region and in every style. Why not stay away from Diageo and stick to other whisky them for a while?

  12. Mike Dereszynski says:

    Hi John,
    I understand why you focus on the “fun” aspect of Whisky.I appreciate that you do ,it helps us the consumers make our choices wether they be saving for a special release,visiting a distillery, festival or participating in a tasting ect.
    Bottom line besides being enjoyable its educational.
    The “business” part of whisky, also is educational , but unlike the art & craft of making whisky is less appealing to the majority of whisky lovers.
    One only need to read some of the comments to this blog to see that.
    Like most industries there are big and little players.I’m not going to get into what I think of either.What I would hope is that your readers take into concideration that the people at the distilleries are rarely the owners.They often have little or no control over what happens to them.They just want to make whisky they can be proud of.
    Read Richard Paterson’s book,listen to Willie Tate or Jim Rutledge and you will understand that.When people talk about boycotting the big D,please remember the fine people at Caol Ila, Craggenmore,Dalwhinnie,Glenkinchie,Lagavulin,Oban,Talisker or any of the others in Big D’s portfolio are the ones that would be effected by it.Many of us remember the loss of distilleries in the 80’s some that never returned,I for one hope to never see it again.
    When I attend the Edinburgh Festivals I appreciate the “Official” as well as the “Fringe” and The Royal Mile Whiskies “Festival” I have my favorites but wouldnt exclude any of them.
    Back to the WHISKY and the FUN and MORE OF IT!!

  13. Red_Arremer says:

    Mike, I love WHISKY and FUN too, but no one who buys Caol Isla buys it because they’re looking for a way to give their cash to the fine people who work there.

    The distillery closings in the eighties had nothing to do with well informed, passionately concerned consumers expressing their interest in terms of boycotts or any other market pressure tactics.

    Reconciling ourselves, the consumers, to the destructive and disrepectful things Diageo does in pursuit of total market control will not make things more fun in the long run.

  14. sam k says:

    I agree. Thanks for the perspective, Mike, but it doesn’t make the parent company any more cuddly!

  15. Josh_Bacarolle says:

    “They [the people at the distilleries] often have little or no control over what happens to them.” Wow, that sounds like a pretty dismal state of affairs. I would hope that’s not true. In any case, it’s no reason to shy away from criticizing or boycotting the owners that “control” them.

    And to end on a more positive note, I just had some wonderful Longmorn 15.

  16. Thanks, John, for giving us a chance to share our thoughts. Priceless!

    So far none of the responders have mentioned the members of the Diageo family who recently lost their jobs. I wonder how long Diageo might have continued to emply them if not for the purchase of that 3,000-bottle collection. Clearly the important issue wasn’t the people but rather making the company name look good, as in “look what we did.”

    And then there’s the issue of availabilty. John, thanks much for the Going Global article in the latest MA! Jonny McCormick does a terrific job of explaining why I get so frustrated (primarily at Diageo) when I hear or read: “not available in (my state).” Once I went to Diageo’s Web site and attempted to share my comments with the company — but there’s NO email link to communicate with the BIG company. Are they afraid of what I might tell them? (Every other distillery seems to have a “contact us” email address, and somebody in those companies always answers my notes.) Of course I have called the phone number listed on Malts.com to speak to one of the Diageo customer service reps. A complete waste of my time. Each time I’ve called, a too-polite young man has told me he’d share my comments with the appropriate person; I’ve never received a follow-up call or email to let me know somebody cared about my concerns.

    So, does Diageo deserve to be bashed? We each must decide, based on our personal experiences. From my vantage, I say, “bash away.” For every Diageo expression I can’t get, I have found another distillery’s offering that actually betters the world’s largest drinks company’s.

    My two bits worth.

  17. Todd says:

    I wondered if the pin-headed execs that worked at Allied a few years ago that attempted to bully Murray McDavid (and this back-fired into a wonderful marketing opportunity for the small independent, remember “Leapfrog?) ended up with jobs at Diageo?

  18. Red_Arremer says:

    I hope that no one here is mollified by Diageo’s response.

    Diageo’s contention that the Valdiz Collection is “inclusive and representative of the industry” is highly misleading.

    Diageo will be conducting tastings of and selling whiskies from the distilleries it owns. The rest of the industry will be “included” and “represented” in Diageo’s “collection of Scotch Whisky bottles and memorabilia.”

    This is like a car show where Toyota shows of it’s newest cars and gives attendees the opportunity to test drive and purchase them– while all other car manufacturers are “included” and “represented” only by a massive musuem display, containing rare, discontinued models that have been kept in good condition.

    Not only is the situation straightforwardly commercially advantageous for Toyota, but it also sends an important message: Toyota is the present and the future; the rest of the industry is the past. Toyota is accessible and known to average consumers; the rest of the industry is obscure and of real interest only to collectors.

    That’s what Diageo is doing.

  19. Red_Arremer says:

    http://news.scotsman.com/14684/Diageo-open-to-rethink-on.5270700.jp

    The latest on this thing. Basically Diageo says they’ll relax the ban, but warn that this will come at the price of a renegotiation of their sponsor ship (they’d cut some funding).

    No big boycott was officially organized. No one signed up for anything. But the idea of a boycott or something like it started sounding normal and rational to a lot of people– and that was enough for Diageo to go from “no comment,” to a lame excuse, to an admission of embarassment and an attempt to back away from the whole thing. What more can you hope for?

  20. Lew Bryson says:

    This isn’t going to be popular, but… I would say that Diageo is not the villain here.
    There was a similar explosion of bad feeling in the beer world a few years ago when Anheuser-Busch bought exclusive beer sale rights to the FIFA World Cup. As I said then, A-B was not the villain, not the entity people should be upset with. Rather, it was FIFA: the people who sold those exclusive rights, who considered them theirs to grant, who made their fans and supporters a captive buying audience.
    If Diageo had not paid the money (and sponsored the event), some other company would have. The objectionable part of this is that our choice was considered something to be sold to the highest bidder. The Diageo spokesman said this was ‘absolutely standard,’ and they’re right, and I find that absolutely appalling.

  21. John Hansell says:

    Excellent point, Lew.

  22. Josh_Bacarolle says:

    Lew, the innumerable corporate entities, such as Diageo, who will pay any money to promote their own interests no matter what the consequences are all villains. There’s nothing natural or excusable about their behavior.

    It’s important to realize that not all corporations are alike. I hear Diageo being compared to Anheuser-Busch. But I don’t hear it being compared to, for instance, Bruichladdich (Murray McDavid if you want to get technical). It’s true Bruichladdich doesn’t have the money or clout that Diageo has, but it isn’t just a matter of how much money a corporation has. Even if the folks working at Bruichladdich now, somehow magically came into all that money, I doubt they would strive to have such an awful impact on an important cultural festival, even if it would benefit them somewhat.

    Are the organizers of the gathering also to blame? Of course. Does that in any way whatsoever absolve Diageo (which is the more visible and important part of this to most of us scotch drinkers)? No.

  23. patrick says:

    I have just read the whole story for the first time today and I found interesting going through the different posts.
    I am sharing the opinion of Lew and Josh.
    Diageo is not to be blamed. They put money in the event, in order to promote their brands. The deal with the organizers is a standard one.
    Diageo was offered the exclusivity for apparently £50,000 and they took it. Why not?

    From an “ethical point of view”, this could be argued and my personal opinion is that the organizers should have thought a bit more about the consequences of signing such deals. Diageo is playing fair and it is willing to allow other people selling whisky, at the condition of revising the sum of the deal.

    Diageo is a company and like all companies (whisky related or not), their objectives are to sell their products and to make money. Advertising in such event in standard practice.
    I might disagree with Diageo (and many other whisky companies) about their way of conducting business but at the end, what matters is the final product.
    What I want is a good whisky that I can afford, enjoy and share!
    Slainte

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