takeover

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

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.

Posted by: Ted

The whisky scene in Australia, by its very nature as a young and emerging industry, has hitherto always been gloriously independent. Brave and adventurous souls carving out their own mark in this new frontier of whisky making, men and women free to pursue their own ideologies and dreams. Very different to the crusty, entrenched old world, where the multitudes of distilleries are weighed down by centuries of tradition and the idea of a truly independent producer is hard to come by in the face of hungry multinationals.

It was always going to happen you know. Never a doubt. You can bet your bottom dollar that ever since Bill Lark emerged from the Tasmanian Highlands as an enlightened being, the big boys have been keeping a very close eye on developments in the antipodes. If the Australian whisky scene succeeded in its ambitions, and my word it most certainly has, the sharks were always going to be circling ready. There have been a few nibbles here and there over the years, but finally someone has taken a proper bite.

Diageo, global spirits bigwig and owner of globally renown brands such as Johnnie Walker, Smirnoff and Baileys, has decided to take a chance navigating by the southern constellations and bought a minority share in Victoria’s New World Whisky Distillery, makers of Starward whisky. Starward, with excellent releases such as the Apera cask single malt or the quirky ginger beer cask, has been making waves both at home and increasingly overseas, so it is no wonder that Diageo has considered it to be a worthy venture to invest in.

How this moment changes the landscape in Australia is yet to be seen. It is only logical that as the industry increases, the big boys will continue to invest in distilleries they consider to be appropriate extensions of their brand. To be honest this is actually a really good thing for Australia, as it will allow for much greater growth within the sector, solidify the local market, give better extension into new overseas markets and help whisky in this country mature and gain further acceptance as an world class product.

But… at the same time we have to hope that this evolution doesn’t come at the cost of the attitude and culture that makes Australian whisky unique. It would be sad if that spark was lost through homogenisation and the finance-driven whims of corporate overlords. The whisky produced by Australian distillers is exceptional, a sentiment backed up by a slew of prestigious awards; if the quality of the spirit was diminished through bottom-dollar bean-counting it would be a slap in the face to the ideals of the men and women who have worked hard to bring this industry to life. Then again, even the hardest-boiled rager-against-the-machine has to admit somewhere along the line that these guys seem to have some vague idea about what they’re doing, so hopefully good stewardship and passion for the product will win the day.

Actually, come to think of it, something quite extraordinary may emerge out of all this. As we all know, Diageo’s flagship whisky is the Johnnie Walker, the highest profile blended whisky in the world. If Diageo keep adding Australian cup winners to its stable, who knows, maybe we’ll see the release of a true-blue Aussie blend! Strewth, prepare ya cakehole for the dinky-di Jonno Walkabout “MAAAAATE” travel-exclusive series, featuring the likes of the ‘Bronze Surfie’, the ‘Flamin’ Pink Galah’ and of course, the ‘Blue Bogan’.

The future is here and it’s a Brave New World. Watch this space.

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