Mon, Nov 17, 2008 - Page 11 News List

INTERVIEW:Diageo counts on brand loyalty as economy dips

Charles Allen, global brand director of malts and Scotch heritage at London-based Diageo PLC, the world’s largest alcoholic drinks group, talked with “Taipei Times” staff reporter Jerry Lin during a recent visit to Taipei about the affect the global economic downturn is having on the industry and Scotch whisky trends

Charles Allen, global brand director of malts and Scotch heritage at Diageo PLC, gestures during an interview in Taipei last week. Allen said the Scotch industry was in the middle of a renaissance.

PHOTO: LIAO CHEN-HUI, TAIPEI TIMES

Taipei Times (TT): What is the current trend for Scotch whisky in Asia and worldwide?

Allen: While some regions were growing, other regions were declining, so the general environment was flat for many years in Scotch whisky. Over the last two or three years, what is being defined by the Scotch Whisky Association (SWA) as a renaissance in Scotch whisky is happening. So Scotch whisky is back in growth, and that is great news for the industry and for Diageo.

It really does show the results of a continuous investment by the industry and by the big brands in the future of this category. And it’s growing for a variety of reasons. First of all, in some of the more mature regions like North America and Europe, business performances have improved.

So Europe is back to flat from having declined and North America is back to growth. And those are very mature and valuable markets, where a lot of Scotch whisky brands and Diageo brands are present in the market.

TT: Are these two the biggest markets for Diageo?

Allen: North America is the biggest market. And then what’s happened in Asia and Latin America is that growth in some of the markets within those regions has accelerated. So we’ve seen amazing growth in China, Russia, Brazil and Mexico, and India is one of the untouched opportunities for this industry.

Obviously, at the same time, we are seeing different consumer trends. I think now there is a return in terms of a trend towards products that offer genuine authenticity and quality. So consumers are prepared to pay premium prices for products as long as they are reassured that they are high quality.

The other trend that is really helping at the moment is the fact that consumers want to believe these products are being made by real people from real places. So a lot of brands and products out there in old categories are quite faceless — the perception is that they are being produced by big corporations and factories. But the beauty of Scotch whisky is you can trace the origins right back to individual distilleries and communities.

So it’s a combination of consumer trends, macroeconomic trends, and general states of market development in Scotch that is fueling this growth.

You may have read in newspaper reports that we are building a brand new distillery up in Scotland, called Roseisle distillery. It will be the largest single malt distillery ever built in Scotland. It will open in March, April of next year and it will secure the future for Diageo in Scotch whisky for many years to come.

That level of commitment in terms of investing in a new distillery, I think it’s a clear sign that Diageo believes long-term in this category.

TT: How does this new distillery differ from the previous ones?

Allen: It’s a lot bigger. In terms of output, our largest single malt distillery today produces about 6 million liters of alcohol a year. Roseisle distillery will produce about 10 million liters of alcohol. It’s almost twice the size of our largest distillery at the moment. The other difference about Roseisle is that in the past, these distilleries have grown up in communities and buildings where people have to fit things in. The Roseisle design is in one long line, from the input of raw materials to the output of whisky at the other end. It’s more efficient.

TT: How is Diageo’s sales performance in Taiwan this year? Has it been affected by slowing domestic consumer spending?

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