Spirits giant Diageo told wholesalers at a recent meeting it plans to quadruple sales of its signature Scotch whisky within the next three years. Should Diageo pull that off, Johnnie Walker -- already the world's largest Scotch brand -- would become one of the largest premium-spirits offerings in the world. It would beat Absolut vodka by about 1 million cases annually and trounce rumrunner Captain Morgan by about 400,000 cases.
That blueprint is ambitious to say the least (one beverage-marketing consultant questioned whether Diageo could make enough whiskey to hit that goal even if it managed to sufficiently raise customer demand). And it would be reliant on a marketing surge in markets outside the U.S. But not everyone is counting out Johnnie Walker, which has thrived in spite of a tough market for brown spirits in general and for whiskey in particular in recent years.
Sales of Johnnie Walker, including its flagship Red Label and Black Label, as well as pricier versions such as the hyperpremium Blue Label blend, rose 9.5% last year compared with 2% growth for the category, according to spirits trade magazine Impact. That's an acceleration from the 5% annual clip at which it's grown since 2000, compared with 1.4% growth for all Scotch in that period.
Of course, a quadrupling of sales in three years would require much larger annual increases, and, through a spokeswoman, Diageo said it wasn't prepared to offer any insight into how it intends to manage that.
Veteran spirits-marketing consultants, however, said such growth would be possible only with a huge marketing surge in relatively untapped, huge-upside markets such as China, India and Russia.
"They're going to have to flood the Chinese market and flood the Indian market if they want to get anywhere close to that," said veteran beverage marketing consultant Brian Sudano. He said he's curious about the supply. "There's not exactly a river of Scotch out there."
Arthur Shapiro, a former Seagram executive who has consulted on a number of major spirits brands, was a little more optimistic. "Years ago I consulted with Absolut in Russia, and it was very popular there because of its Western credentials," he said. "Just as the U.S. market has shifted from being a traditionally brown-spirits market to vodka, as it is now, you could see the opposite trend in Russia."
Diageo executives have said in recent interviews on other topics that they do see signs of a Scotch resurgence in the U.S., where explosions in vodka and tequila sales have generally come at the expense of whiskey and beer.
They're likely to continue to ramp up media spending, which rose about 20% to $12.6 million during 2006, including the brand's first TV push, a $2 million outlay on cable, according to TNS Media Intelligence. The brand has been riding the same multimedia "Keep Walking" campaign since 1999. Its agencies are Bartle Bogle Hegarty and AQKA.
Experts, however, attribute much of Johnnie Walker's success to clever tactics that aren't measured, such as a new engraved-bottle program designed to encourage gifting; the luxurious silk-lined boxes that hold rarified, serial-numbered bottles of Blue Label; and one of the more innovative online loyalty programs in the category.
"They've cracked the code on franchise identity," said Mr. Shapiro. "That [quadrupling] goal is a bit audacious, but they are very well-positioned right now."
Sources: Company reports, AC Nielsen, Impact