Stuart Derrick explores the secrets of US export success for UK whisky brands
Yesterday a unified cry of 'slainte' arose from Scottish and Irish distilleries at news that the US has agreed to suspend tariffs on Scotch whisky and Northern Irish whiskey, among other UK exports, while the two countries agree a solution to a dispute about aerospace subsidies.
Since October 2019 distillers on these islands have faced a 25% tariff on US imports of single malt Scotch whisky and single malt Irish whiskey from Northern Ireland.
According to the Scotch Whisky Association, in 2020 exports to the US fell by 32% to £729m, a loss of £340m compared to 2019, and accounting for around one third of total global export losses.
‘Building back global exports’
SWA chief executive Karen Betts said the suspension of tariffs allowed the industry “a sigh of relief”.
“It means that companies can now really focus on recovery – on building back the American market as well as on building back global exports hit by the coronavirus pandemic,” she said.
With sales, prior to the introduction of tariffs, of more than £1bn a year, the US is the biggest market for Scotch whisky in the world, worth more than twice the second largest, which is France.
Complex market
It is a complex and competitive market. The US has around 2,000 distilleries of its own and Northern neighbour Canada has long been a major exporter of its whisky to the US.
According to Whisky Advocate, one outcome of the US experiment with Prohibition (1920-33) is that the country has “one of the most complicated systems of alcohol sale in the world”.
Three tiers
A compulsory separation of the three tiers of alcohol production, distribution and retail has created a fiendish knot of regulation and distribution, where no entity may occupy more than one tier.
A brewery can’t own a bar and a distillery isn’t allowed to sell directly to a liquor store.
The federal government licenses producers and importers (the top tier), as well as distributors and wholesalers (the middle tier), but leaves licensing of retailers (the bottom tier) up to the states.
Going direct by selling online can also be problematic. Because of the separation of the tiers, most states don’t allow distillers to sell and ship you a bottle. And because each state has its own system, few allow out-of-state retailers to ship spirits across state lines.
Some states make exceptions for small craft producers.
50 US marketplaces
Instead of a single marketplace, the US functions as 50 different markets and distillers have to work with each state. It’s often not worth going through the process in every single state, so new brands begin by focusing on the largest markets, like New York and California.
Be that as it may, Scotch whisky has been highly successful in the US. Whereas its approach to marketing can sometimes appear mired in tartan, castles and stags, the approach in the US has shown a more creative approach in recognition of the diversity of consumers in this vast market.
Here is how some of the biggest players are doing it:
Johnnie Walker
Between its Red and Black whiskies, Johnnie Walker racks up the most US sales, with more than 1.8 million cases in 2019 (Statista).
Secrets of its success include:
1. Marketing longevity
Its global ‘Keep Walking’ campaign has run for more than 20 years, emphasising the brand’s focus on progress. In this respect, it has been alive to the changing nature of whisky drinkers.
2. Targeting females
No longer the tipple of middle-aged white guys, Johnnie Walker has recognise the growing female market - according to Nielsen Spectra, 29% of scotch buyers are women, and women account for 24% of scotch sales.
The brand has targeted female drinkers by using more than 1,000 social media influencers in global influencer marketing campaigns since 2016 to help tell the brand’s story and demonstrate brand promise through activism and progressive marketing.
It has pushes celebration for cultural progression and diversity, while recently spotlighting women’s equality with the limited launch of the Jane Walker label.
3. Cultural events
A recent visual identity refresh was accompanied by a cocktail campaign, the Johnnie Walker Cocktail Grocer, which evokes the original John Walker & Sons grocer, where the whisky was created nearly 200 years ago. It is used at cultural events across the US, serving drinks alongside local popular foods.
Dewar’s
Whisky consumption in the US is as much about the cocktail market as straight serves.
1. Experiential marketing
Dewar’s has long adopted an experiential approach with events such as its Scotch Egg Club, where whisky cocktails are served up with ‘chicken-inspired games’ (referencing the fact that the founder’s son, Tommy Dewar, was an award-winning chicken farmer) and Scotch eggs with a twist, featuring local mixologists, chefs and artists.
Its latest multi-million dollar marketing campaign, ‘Stay Curious’, encourages drinkers to “seek out new, memorable experiences across cultures”, and is a direct reflection of the brand’s history and ethos over nearly 225 years.
The 360° campaign, Stay Curious will stretch across product innovation, gift packaging and new cocktail serves coupled with sponsorships, experiential and below-the-line promotions.
2. Innovation
Dewar’s has also innovated to bring new drinkers into the category. The Double Double range, comprises three whiskies aged 21, 27 and 32 years that have each undergone a four‐stage maturation process.
Dewar’s followed this with its Cask Finish Series, with whiskies finished in various casks from rum to mezcal to position as a smooth whisky accessible to new drinkers.
In the US, the number of drinkers of Dewar’s White Label have increased threefold over the past four years.
Buchanan
The leading premium Scotch in Latin America has leaned into the huge Hispanic market in the US.
1. Emphasising togetherness
Its latest ‘Life is Better Shared’ campaign emphasises the importance of togetherness. This includes a focus on feeding families with 40,000 meals for hard hit Hispanic communities. It has also teamed up with popular Colombian singer, J Balvin, who drinkers can share a virtual toast with.
2. Cocktail mix
As a way to continue fostering shared moments together and support locked down bars, the brand is also partnering with Sourced Craft Cocktails to offer Buchanan’s cocktail kits created and hand-delivered by local bartenders.
Chivas Regal
In 2014, the blended scotch whisky maker started Chivas Venture, which holds a competition for social entrepreneurs.
1. Socially-minded
It donates $1 million dollars annually to fund projects with potential for growth and impact. Since its inception in 2014, more than 10,000 start-ups have applied, 120 have received funding and mentorship with no strings attached.
2. Sports tie-up
Chivas has teamed with that great global sports franchise, Manchester United, with creative focused on the “blended backgrounds” of the United squad, leaning into the blended heritage of Chivas’ portfolio.
Of Man United’s massive Facebook profile, a substantial slice are based in the United States.
Bushmills
Northern Ireland-based Bushmills has been around since 1608 and lays claim to being the oldest distillery in the world.
1. No to marketing ‘paddywhackery’
However, to grow its share in the important US market, it steered clear of its heritage with a St Patrick’s Day campaign that invited American whiskey drinkers to “leave your green shit at home”.
Its Red Set Go campaign created a pop-up in an old-school Brooklyn bar with Irish rock band Kid Karate emphasising the importance of people, food, music and drink.
2. Scotch challenge
According to Forbes, sales of Irish whiskey in the US grew 12.5% to 4.5 million cases in 2018 and about 10% to 4.95 million cases in 2019, according to ISWR, a research firm covering the alcoholic beverage market.
Globally, Irish whiskey sales grew 8% to 10.6 million cases in 2018 and 7.5% to 11.4 million cases last year.
The Irish Whiskey Association predicts that if current trends continue, sales of Irish whiskey in the US will overtake sales of Scotch within the next six years.