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Company wanted to 'innovate'

Diageo’s secret move to change whisky rules

Johnnie Walker Christina

Johnnie Walker is Diageo’s best-selling whisky brand

Whisky purists and the world’s biggest producer are at loggerheads after proposals emerged to change the distilling process.

Drinks giant Diageo formed a ‘secret task force’ to explore the possibility of changing Scotch whisky’s strict production regulations in the light of increasing competition and the threats posed by Brexit.

Among the proposals considered was one to ‘finish’ Scotch whisky in casks previously used to mature Don Julio tequila.

The company, which owns brands including Johnnie Walker and Talisker, also explored the possible creation of a new category of ‘Scotch whisky infusion’, including flavoured or low-alcohol blends sold under existing brand names.

In order for a product to be labelled Scotch, it must adhere to legal stipulations such as being distilled domestically with ingredients sourced from Scotland and then aged for at least three years in sherry, port or wine oak casks.

According to a leaked report seen by the Wall Street Journal Diageo bosses looked at whether regulatory, technical, legal or other barriers are constraining Scotch.

Their concerns come ahead of Britain’s withdrawal from the EU which they fear could cause further trading problems.

The Scotch Whisky Association is understood to have rejected Diageo’s ideas, only for the task force to have recommended challenging “the SWA’s overreach”.

In response to the leak, Diageo said: “Scotch is the most important category for Diageo and we have an unwavering commitment to the integrity, long-term success, history and tradition of the category. ”

He admitted that “as champions of Scotch, we are always looking at ways to innovate to both protect and secure the future success of the category.

‘In doing so, we work with the Scotch Whisky Association on a range of ideas that seek to strike a balance between tradition and innovation, in a way that ensures consumers get the great products they want.”

Scotch whisky generates more than £4bn in exports to almost 200 markets.

The SWA said it regularly engages with its membership on a broad range of ideas to ensure that the category is well-placed to grow in an increasingly competitive global marketplace.

While the proposed changes have been shelved for now, the competitive challenges are evident. Apart from Brexit, consumers are turning to other drinks whose producers are not afraid to experiment. Diageo’s trading update this week revealed that growth came from its gin brands, including Gordon’s, as well as its beers.

This is not the first time Diageo has created controversy over plans to innovate with whisky. In 2004 it was forced to withdraw a controversial product after angering other distillers.

The company changed the recipe of its Cardhu single malt whisky, which had become a bestseller in Spain and Portugal, while failing to change the name or appearance of the product.

It produced a spirit using a mixture of malt whiskies from different distilleries, instead of whisky from one distillery, which it referred to as a “pure malt”.

Its rivals said the move threatened to tarnish the reputation of Scotland’s famous single malts abroad, and Diageo later agreed to repackage the brand to make clear that it was a different whisky.

However, it went a step further by withdrawing the pure malt version, and reintroduced Cardhu single malt.

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