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Haig Club And The Whisky Industry’s Unhealthy Obsession With Asia

by Oliver Klimek on April 12, 2016

An interesting article about an upcoming new release of Haig Club was published on the media and marketing website The Drum yesterday. It is said that the new whisky would be cheaper than the current bottling which has an RRP of £45.

The Drum suspects that Haig Club is not selling overly well, so Diageo is trying to get the brand back on track with a downward brand extension. I am not really surprised here; I already expressed my doubts about the potential for Haig Club on the whisky market in my review of Haig Club back in 2014.

Haig club is quite expensive for a cocktail spirit that is sitting halfway between vodka and traditional blended whisky. And now there is also Absolut Oak from Diageo’s rival Pernod Ricard, a major brand oak aged vodka that is much cheaper and explores this category from the other side of the spectrum. We can watch how the line between whisky and vodka is becoming more and more blurred. I am convinced that the new Haig Club release is also a reaction to Absolut Oak.

Apart from the lower price, Absolut Oak also has a psychological advantage over Haig Club. It is “vodka plus” whereas Haig Club with its lack of traditional whisky character can only be described as “whisky minus”. And since this will be a new release and not just a rebranding of the old Haig Club – that of course would be like openly admitting a failure – the new, cheaper, liquid might be even more characterless than the original release.

A large portion of the Drum article focuses on David Beckham endorsing Haig Club. What the article does not mention is the fact that David Beckham was specifically chosen because he is very popular in China. In fact Haig Club was explicitly created for the Asian market where Diageo apparently saw an abundance of well-earning young people eagerly waiting to spend the equivalent of £45 on a bottle of young grain whisky. To quote Diageo CEO Ivan Menezes:

“The blend [sic] was created to match with food and seafood in China and our choice of David Beckham as the face of Haig Club was down to the extraordinary name recognition he has in China and across the world.”

Haig Club is symptomatic for the focus on Asia in general and on China in particular that has been guiding the actions of the whisky industry in the last years to an extent that entire distilleries were built from scratch because of booming demand there.

Whisky producers have been competing for the silliest marketing stunts with anything from from special bottlings for Chinese New Year to an obscenely priced “lucky number 8” cask at the newly opened Annandale distillery. Some of these make you wonder how stupid some whisky producers believe the rich Asians actually are. Motivations range from optimism in the growth potential of the Asian market to pure greed.

But Asia is a very volatile market and the boom has already reverted. So far only distillery expansions have been put on hold. But who knows what might happen if the whisky buisness gets even worse in Asia. It is obvious that this Asian rollercaoster ride is not without consequences for the rest of the market, and one wonders if it is really the right thing to put so much focus on exports to a region that still only earns the industry a fraction of the combined Western markets.

It takes a lot more than celebrity endorsements and bling bottles to implant such a quintessetially Western tradition as whisky into Asia beyond short-lived fads. The better way to do this is to make whisky on location, but this is a slow process.

In Japan it has taken decades to convince people that there is a world beyond sake and shochu, but now the Japanese whisky industry is thriving. In Taiwan and India this process has just started, but the success of particularly Kavalan and Amrut has shown that they are on a good path. Diageo’s acquisition of India’s United Spirits so far was entirely focused on the molasses-based rotgut that makes India the world’s biggest “whisky” producer. But establishing a serious whisky culture needs a different approach.

The great advantage of creating a whisky tradition from inside is that people can also see such a development with a dose of national pride. This has the potential to create a much stronger bond between producer and customer than selling the illusion of luxury by exporting overpriced liquid in fancy packaging.

{ 6 comments… read them below or add one }

Barry Bradford April 13, 2016 at 1:23 pm

Nice article & interesting reading Oliver. The bubble expected popped pretty quickly on the Macallanisation of Mortlach. The PR department must’ve been overjoyed with themselves when they realised they could sell young Mortlach in fancy bottles and mark them with M. I suppose in the short term a few sales may be generated but the expectation of a gullibility in a whole market was never going to end well. I could rant on about the fresh-faced young graduates making these marketing and PR disasters not even being born during the last widespread distillery closures, whisky loch and market down-turn but then I’ll just be showing my age! I agree that it is still what is inside the bottle that will ultimately determine if a whisky or brand will sell. Anyway, a joy to hear your thoughts as usual, Cheers

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Oliver Philp April 20, 2016 at 8:51 am

Hi Oliver. I questioned the positioning of Haig Club in the traditional markets when it was released:

http://whiskygirl.nl/are-you-in-the-club/

Of course when it was first released to selected retailers it wasn’t even available in Scotland, an ironic betrayal of Diageo’s regard for whisky’s home market and its global aspirations. Ever since its wider roll out, though, it has regularly been on discount in supermarkets so it does appear to be foundering.

Your article also extends to Diageo’s aim of penetrating the new whisky markets but, as you point out, the project was probably equally flawed in that regard. I’m quite glad that these markets are more impervious to shoddy marketing than Diageo gave them credit. In fact Diageo seem to have a tin ear when it comes to marketing. At last year’s Evening with the Blenders event, where Gordon Motion was pouring Cutty Sark 33 and Shinji Fukoyo was pouring Yamazaki 18, Caroline Martin from Diageo was trying to tout Haig Club to serious whisky drinkers! Given the resources at her disposal I thought it was something of a faux pas.

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Oliver Philp April 29, 2016 at 5:47 pm

Well, at this year’s Evening with the Blenders event there were some very exclusive whiskies once again, almost exclusively malts. Caroline brought a Whiskey Union (note the ‘e’) product being launched in Germany and Austria called Smoky Goat. It was full of young grain with some Islay malt in it and will retail around €20. I poured half my sample away, it was pretty disappointing stuff. After the event I actually took the time to speak with her and suggested that most attendees would rather see something more ‘exclusive’. It probably sounded a little impertinent as I’d had a few and couldn’t get the words out right, poor girl, but she took it very politely. The actual point I was trying to make was that the attendees had spent £25 on tickets and were probably mainly malt enthusiasts who would happily pay well over €20 for a bottle of whisky. Even if she’d brought some JW Green I would have been happy! But a cheap blend aimed at novice drinkers in Germany was probably a bad fit for the event. It just seems that Diageo are living on another planet from whisky geeks, if this is a wider indicator of how out of touch they are with their markets there could be “trouble at t’mill” one day.

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kallaskander April 21, 2016 at 8:33 am

Hi there,

I get the feeling that being driven by marketing considerations which means living and acting in a world which is set apart from reality has infected all spirit companies.

Diageo seems to have lost its touch when you look at the Haig Club or the first products from the “creativity arm” Whisky Union or where their investment arm distill Ventures is spending money.

Could well be there is a Diageo master plan we mere mortals are to small to see but ever more often among the drinks giants’ deeds Diageo especially reminds me of the last stages of the once mighty DCL which Guinness devoured to become Diageo at one point.

Greetings
kallaskander

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Sir Huddleston Fuddleston April 27, 2016 at 6:11 pm

The biggest problem with Haig Club is the bottle makes it look like aftershave.

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Oliver Philp April 29, 2016 at 5:48 pm

Yeah, you don’t want to be heading out smelling of whisky and with a bad taste in your mouth!

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