This article is a response to our article: A Brave New World

Posted by: The Cynical Scot

So Ted. The big boys are coming to town are they? The fathers of Scotch are looking at the colonials and are coming over to gobble us up?

Come off it!  ‘Big Industry’, ‘sharks circling’, ‘crusty entrenched old world?’ Diageo buying into Starward? A chance to get some big bucks into the Australian whisky industry? You do know that Diageo owns far more distilleries than they care to slap a name on the front of. They have done a very clever job of maintaining the branding and character of individual distilleries as the industry recovered in the ’80s and ’90s. They have reopened distilleries that had been moth-balled after not having a legitimate business case.

Saying Scotch is ‘weighed down by centuries of tradition’ misses not only the importance of the tradition, but also the dynamic changes that have taken the industry to what it is today. This has also created quality recognisable products (have a look in every duty free in every international airport in the world). Whisky is something that if you put a cheap and an expensive dram into plain bottles and labelled them both ‘whisky’ it would be difficult for the layman to differentiate between them. Selling of whisky involves more than just touting a nice tasting beverage. It is the selling of an image, a lifestyle, a legend and sometimes a dream. I don’t buy Diageo whisky, I buy Talisker, Caol Ila, Lagavulin and when I have to, Johnnie Walker.  http://www.diageo.com/en-row/ourbrands/categories/spirits/Pages/Whiskey.aspx

So it seems Australia is selling out. Diageo have bought in, and as a minority shareholder in a single distillery at that. So what?….  What’s in it for them and what’s in it for Starward?

Well, for Diageo they can dip their foot in the water and get a first hand look at the Australian business environment. They can get a taste for a new market and they have a fresh brand to expand and work with.

For the distiller they have the knowhow of a company that has many very successful whisky brands under its belt and certainly knows how to flog the stuff. Having a big producer on board will probably make it easier for them to weather ups and downs in demand. Not only that, an individual distiller with higher production could also better standardize their product. Don’t get me started on ‘vintaged’ releases.

It’s one distillery. It’s a minority share. I don’t think Diageo is going to weaken the idea of Australian whisky, but they may change it in time. They may produce an affordable Australian brand. No more expensive bottles you may ask? Not at all. You’ll still see 500ml bottles priced at over $150. What you will have is diversification into the wider market. Imagine being able to taste something from Bothwell in Tasmania and say ‘Yup, that’s definitely Nant. That’s how it tastes’, and it only costs $85 (or whatever). Well, then you could buy a bottle for a friend. Two years after you tasted the stuff you’d still know what they were getting!

This would be a move in the opposite direction from the Scottish market, which traditionally seems to have existed in the mass-produced signature single malt or blend. More recently there has been a trend for creating a broader high-end range and raiding the history books for thought provoking names (I’m thinking of Highland Park in particular here: http://highlandpark.co.uk/taste/). But that’s how whisky works isn’t it? A single recognisable product becomes the poster boy for the new entrant and the budget conscious enthusiast. Then you have a few fancy, expensive types that allow the distiller to show off the finer points of their art and the consumer to have something extravagant to crack open when Grandpa has his 80th. No bad thing.

But where do you want the growth within the sector to come from? Do you want the Australian industry to grow from the inside as demand rises and production increases to meet it? Or do you want a big boy from out of town to buy it all up and franchise the lot? I would say that one aspect that sets Australian whisky apart is the fact it is a small craft industry. You sell out from that you’re like an IT Startup selling out to Google. Sure you’ve made your money, but did you really care about your product or was it just a means to an end?

So many questions. Fortunately, the Australian distilleries I know of don’t seem to be like this. They’ve been founded by distillers who have often made their money elsewhere and are using that to fund a business in something that matters to them – whisky. And good whisky at that.

So hello Diageo. Welcome to Australia, there’s work to be done but let Australian whisky speak for itself and find its own formula. It already has its own character. I’d hate to think that Australian whisky just became another branch of the Scotch map – Speyside, Lowlands, Highlands, Islay and Australia. If it ever gets to that I’ll find an island somewhere that Diageo hasn’t heard of and start growing some barley. Maybe Bill Lark will already be there.