You like free stuff, don't you?

Starting this month, I’m adding a new feature. Free Stuff!

There will be no hard and fast rules regarding the free stuff

  • sometimes it will go to the person who answers a trivia question
  • sometimes it will be to the first person to respond
  • sometimes it will be to the best comment
  • sometimes it will be just because I feel like it.

The rule is that you can’t win more than once a year. Sorry.

And it may not always be Scotch related.

Like this month’s Free Stuff – A DVD courtesy of Maker’s Mark Bourbon Whisky.

The distillery sent me a DVD called "Someday these barrels will be old enough to enjoy." It’s a nice, but brief overview of the creation of bourbon barrels.  Actually they sent two copies – one for me and one for a friend.

And the extra one can be yours if…

You are the first person to email me and say…send me the DVD.

Wow. Could it really be THAT easy? It can and it is.

They won’t all be that  easy – I just want to ease you into the concept.

Mailing for this one is limited to the U.S. Sorry.
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Postscript – That went fast. Jim Eastman is the fast fingered winner.

Congratulations Jim.

Integrity

At the risk of looking like I have a vendetta against Diageo (I don’t, I am a shareholder), F. Paul Pacult (which might be assumed from this previous post – I don’t, I’ve never met the guy), or the New York Times magazine (I don’t, I just prefer actual journalism), I present the following article:

A reader from New York was nice enough to send me what appeared to be an article from the October 2, 2005 New York Times magazine. I say "appeared" since what at first glance appeared to be a three-page article was, in actuality, a three-page advertisement sponsored by Diageo.

The advertisement called "From Speyside to Stateside" is actually a well-written and informative piece and a very nice introduction to Scotch whisky (Though not as good as my book The Instant Expert’s Guide to Single Malt Scotch wink, wink).

One very minor nit-pick – the title is cute and catchy, but the article talks about whiskies from all four regions: Highlands, Islay, Lowlands, and Speyside.

So what’s my beef?

I just think it’s underhanded to advertise your brand by disguising it as an article.

Ok, Ok, I understand this is an advertisement. The NYT clearly states at the bottom of page one:

This advertising supplement is sponsored by Diageo North America, Inc. Norwalk, CT. The material was prepared by F. Paul Pacult and Susan Woodley of Spirit Journal, Inc., and did not involve the reporting or editing staff of the New York Times.

Which is a good thing, because in this previous post I established that the research that the NYT reporting and editing staff did in regard to Scotch whisky was appalling.

Ok so what IS my beef? The article is well written and it is accurate. What exactly IS my problem?

Well, Diageo owns a lot of whisky distilleries, as well as a lot of blended brands. As a matter of fact, Diageo is the largest producer of distilled spirits in the world.

The problem I have is that most people have never heard of Diageo. So, even though the article is clearly labeled as an advertisement sponsored by Diageo, the average reader has NO idea that Diageo is the parent company of all of the brands promoted by the article.

Now let me be clear, while I generally do tastings with a variety of single malts from a variety of parent companies, I have done tastings on behalf of a particular company – using only the products of that one company. The difference is, I make it completely clear at the outset that I am there as a brand representative.

Diageo has not always been completely above board with advertising and marketing practices -e.g., the whole Cardhu Pure Malt Fiasco. But I guess it goes along with the mantra of  growth at any cost , especially when trying to make your numbers on a quarterly basis.

And as a shareholder, I DO want the best return on my money.

But I truly believe that being up-front and honest, and clearly stating that all of the brands mentioned in the article are owned by a single company would NOT have minimized the advertising impact.

I’m also seeing a pattern with the work of Paul Pacult, which looks like his work is primarily work-for-hire. I have no problem with a man making a living — I just ask that you are up front with the fact that you are NOT an independent expert — and let people know that your recommendations may be tainted by payments.

According to the web site,  F. Paul Pacult’s Spirit Journal is "The Independent Guide to Distilled Spirits."

Can you truly be independent when you accept employment – even as a work for hire – from the companies you are rating?

It’s also important to note that Paul Pacult says on his web site that he is the Special Projects Editor for The New York Times Magazine. The NYT magazine says NYT staff was not involved in the creation of this article, Pacult says he is NYT staff. So which is true?

As always I offer an open invite to anyone with dissenting opinions, including representatives of the New York Times Magazine, Diageo, or Paul Pacult, to chime in.

Yeah, yeah I know, I need to get a life and lighten up:)

Spice of Life

John Glaser was kind enough to send me a sample of the latest product from Compass Box Whisky.

John’s taken a different approach with this one. He starts with single malt Scotch from four different Highland distilleries: Clynelish, Glen Elgin, Teaninich and Dailuaine, all of which have been aged at least 10 years.

He then puts most of the whisky through a second maturation in casks that use new oak staves. The special thing about these staves is that they are made of 195 yer old Sessile Oak, which has been air-dried for two years after felling. The oak is sourced directly from a mill in France that has expertise in providing oak for barrels used to age some of the world’s finest wines.

John says:

This gives the whiskies an integrated, rich deep, spice character – a totally new palette of flavors for Scotch whisky.

Then he blends.

When he’s done, he has…The Spice Tree.

But unless you’ll be in Europe in the next few months you won’t be able to land a bottle of the stuff…The Spice Tree won’t be launched in the US until early 2006.

If you ARE in Europe, you may want to get your hands on one of the 4,150 limited edition bottles from the inaugural batch.

John describes The Spice Tree as having a natural, deep mahogany color and a rich nose with spices such as clove and nutmeg, and sweet stewed fruits. Palate is soft, sweet, deep and rich with a malt whisky fruitiness embellished by rich spice. The finish is very long.

I’d call the sample I was sent was more of a honey gold than a deep mahogany. I personally detect quite a bit of vanilla in the nose, mixed in nicely with the spiced fruit. Spice is an excellent word to describe the flavor of this whisky, but it doesn’t overwhelm the strong malt. And I concur that the finish is VERY long, very spicy, and very pleasant.

Looks like John has another winner to add to the excellent Compass Box line-up.

0010000027068_xlThe Spice Tree is a vatted malt Scotch whisky bottled at 46% abv, with natural color and is not chill-filtered.

I’ll let you know the price point, and expected availability as we get closer to release.

Fortune's Response

Clarkson Hine, VP for Corporate Communications at Fortune Brands emailed me with Fortune’s position on the Maxxium situation:

We’ve worked very positively with our Maxxium partners to arrive at these solutions, and we’re delighted with the outcome.  It gives us the best of both worlds: a more robust Maxxium, and the opportunity to maximize growth prospects for Courvoisier, Teacher’s and Laphroaig through separate distribution. 

We’ve said from the start that if any of the new brands presented conflicts for the Maxxium portfolio and our partners, we would arrange alternate distribution for those brands.  The U.S. is not a Maxxium market, so all brands that are sold in the United States, including Courvoisier and Laphroaig, will be handled by our Future Brands joint venture. 

It’s important to recognize that the U.S. is by far the world’s largest cognac market and nearly half of Courvoisier’s volume is sold in the U.S.  In the U.K., where Courvoisier is the #1 cognac, Teacher’s is the #3 Scotch and Laphroaig is the #1 Islay malt, distribution for these brands will not change — they’ll be handled by the same sales force that has built momentum for these brands.  In markets outside the U.S. and U.K., we see excellent opportunities to establish cost-effective distribution that will maximize the growth prospects for these brands.

Thanks.
– Clarkson

Note: Future Brands, LLC is a joint venture formed by Fortune Brands (through subsidiary Jim Beam Brands) and Sweden’s V&S (also a partner in Maxxium) to maximize US sales of their top brands. The Future Brands collaboration was prompted
in part by V&S’s push in 2001 to increase distribution of
Absolut, the top-selling imported vodka in the US.
Fortune holds holds 51% of the company; V&S holds 49%.

Howdy, Partner. Screw You.

As I’ve stated many times before, and as those of you in the industry know, the spirits industry is a convoluted and incestuous one.

Unless you keep a close eye, it’s tough to know who owns whom, and who distributes whom in what country. For example, in a previous story we talked about Whyte & Mackay, who own The Dalmore, but how The Dalmore is distributed in the US by Fortune Brands.

Now that Fortune owns Laphroaig – its own well-regarded single malt – what will happen to The Dalmore? Will Fortune continue to merrily distribute it, or will Whyte and Mackay want to find a new partner in the US – one with less of a conflict?

I don’t know, and likely Fortune doesn’t know either, because in the spirit industry, partnerships don’t always mean a whole lot.

Case in point. Illinois-based Fortune Brands (through Jim Beam Brands, it’s spirits subsidiary) decided to enter into a partnership with 2 other large spirits conglomerates in order to maximize their distribution network in Europe.

Maxxium formed in 1999 when Jim Beam Brands, Glasgow, Scotland-based Edrington Group (Macallan, Highland Park, Famous Grouse, Cutty Sark), and Paris, France-based Rémy Cointreau (Rémy-Martin Cognac) consolidated their worldwide distribution services outside of the USA. Two years later, the V&S Group (owned by the government of Sweden, and produces, most notably, Absolut vodka) joined to become the fourth equal shareholder.

Fortune, We Have A Problem

Apparently, two of the partners, Edrington and Rémy Cointreau, now have a problem with Fortune.

Actually it’s three problems: Teacher’s blended Scotch whisky, Laphroaig single Islay malt and Courvoisier cognac, all of which were acquired by Fortune in July as part of a £2.8 billion purchase from Allied Domecq.

Fortune had anticipated (rightfully so, owing to the standing partnership) that these brands would be distributed through Amsterdam-based Maxxium. But partners Edrington Group and Rémy Cointreau, have blocked the addition of Teacher’s, Laphroaig and Courvoisier to the Maxxium offerings, apparently fearing conflicts of interest with their own key brands, which are already distributed through the alliance.

This will certainly cause a disruption in distribution of the three brands in question, at least in Europe, while Fortune seeks a new distribution channel.

This should be less of an issue for Fortune distribution in the UK – Allied’s former sales and marketing division in the UK, which Fortune acquired as part of the deal, will continue to distribute former Allied brands. It is no longer to become a part of Maxxium. Also three-quarters of Courvoisier’s volumes are in the UK and US and Teacher’s largest market is the UK – where distribution is unaffected.

But Its Just Business, Baby

One would think that there is no way that Fortune could continue to hold its 25% stake in Maxxium after this – but there is a hurdle to a graceful exit. If Fortune chooses to exit the distribution joint venture they will have to cough up €50m-€100m under an “exit clause.”

Not only that, Fortune had agreed to move the European distribution of other Allied-Domecq acquisitions including Sauza, Canadian Club and Clos du Bois wine under the Maxxium network. In Spain and Germany, the former Allied distribution operations are already being merged with Maxxium operations.

To divorce themselves completely from the Maxxium partnership,  Fortune would have find/create alternate European distribution for all of the other brands under the Jim Beam Brands umbrella.

Due to the complicated nature of spirit distribution, Fortune may very well decide to continue to participate in Maxxium, at least for the short-term. But let’s face it, when your partners start to screw you to protect their own interests, you don’t have much of a partnership.

I smell a rift, some bad blood and an eventual divorce. With the Allied acquisitions, Fortune has likely outgrown the long-term need for the distribution partnership.