Diageo pulls sale of top brands in Canada

Published on Thursday 6 November 2008 21:52

SCOTLAND'S biggest whisky producer, Diageo, has withdrawn three of its iconic brands from sale in Canada as it struggles to keep up with rocketing global demand for the product.

The drinks giant also admitted it has increased its selling prices across the world to cash in on Scotch whisky's international surge in popularity.

Diageo yesterday told The Scotsman that it had been forced to review its stock distribution to meet the growing demand for products in emerging markets – axing Johnnie Walker Green Label, Black & White and Bell's from Canadian stores.

Higher disposable income in countries such as Brazil, Russia, India, China and Mexico has led to more people drinking "premium" spirits such as Scotch. And the drink's fashionable status in emerging markets means customers are willing to pay a higher premium.

A spokeswoman for Diageo, which employs some 4,000 people in Scotland and runs distilleries and support sites from the Lothians to Skye, said: "Globally the demand for Scotch whisky, and in particular premium and deluxe Scotch, is at an all-time high creating what the Scotch Whisky Association (SWA] are referring to as a 'Scotch Renaissance'.

"There is evidence this will continue and the industry has announced about 500 million of capital investment in Scotland to support this growth."

She added: "This will mean some important changes to the way we sell and market our whisky. Our future success in Scotch will depend on our ability to increase net sales value and margins per case and build brand equity rather than primarily driving volume.

"Stocks and marketing investment will be allocated accordingly – a fundamental change to how the industry has been doing business through more than two decades of flat growth."

Whisky producers north of the Border have invested hundreds of millions over the past 18 months in ramping up production as the popularity of the drink soars worldwide.

Last year, Diageo announced it was to invest 100m alone on increasing production of whisky, building a new malt distillery in the north of Scotland and expanding the Cameronbridge grain distillery in Fife.

It yesterday said it was set to drive up prices worldwide in response to increased demand.

Diageo's spokeswoman added: "Across our business, Diageo is also addressing the critical issue of how we unlock the value tied up in liquid stocks representing many years of investment and commitment to the highest possible quality.

"Our commitment to driving value over volume will lead to price increases especially where demand is so high."

A spokesman for the SWA said: "The industry is experiencing exciting international growth in recent years.

"Last year was a record year for whisky worldwide, exports reaching nearly 3 billion."