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Beam Goes Global

by Gavin D Smith

Part I

The dissolution of the Allied Domecq drinks empire during 2005 gave Illinois-based Beam Global Spirits & Wine Inc the opportunity to gain a significant foothold in the Scotch whisky industry.

Laphroaig and Ardmore distilleries, along with the Teacher's blended Scotch whisky brand were snapped up by Beam, which is part of Fortune Brands Inc, an $8 billion leading consumer brands organisation. In total, Fortune spent around $5 billion acquiring more than 25 former Allied Domecq brands, including Canadian Club and Maker's Mark Bourbon, to add to its best-selling Jim Beam Bourbon stable.

According to Beam spokesperson Sarah Devaney, The acquisition catapulted us onto the world stage; today, we are a leading, global organisation that is well-positioned for growth. Following the acquisition of those brands we became the largest US-based spirits firm. We also became the fourth largest premium spirits firm globally - up from seventh.
  

"From being 75 per cent US-centric, our interests are now split almost 50/50 between the US and the rest of the world, so we are more diversified and have expanded our global footprint. We went from having three of the world's 'top 100' premium brands to nine, and many of our brands hold leadership positions in their category in core markets around the world."

The acquisition of whisky brands from Allied Domecq is not Fortune Brands' first foray into the world of Scotch, however. Back in 1990, when the company was known as American Brands Ltd, Whyte & Mackay was purchased through its Gallagher Ltd subsidiary. The Glasgow distiller and blender was subsequently disposed of in a management buyout eleven years later for 200 million. So, having exited the Scotch whisky business comparatively recently, why the eagerness to re-invest in it on a substantial scale?


   Essentially with Whyte & Mackay we were in the 'own label' Scotch whisky business at that time, explains Sarah Devaney, and Beam really likes to have the leading brands in any market in which it operates. 90 per cent of our sales come from number one or number two markets positions. The acquisition of Teacher's, Laphroaig and Ardmore provided an opportunity to re-enter the Scotch whisky business with globally recognised growth brands.

One of the key figures in Beam's Scotch whisky programme is former Allied Distillers' master blender Robert Hicks, who was approached by Beam Global in 2005, and asked to become master blender and brand ambassador for Teacher's and Laphroaig.

Of all Allied's whisky brands, the iconic Islay malt of Laphroaig received the most attention and marketing expenditure, and Robert Hicks notes that "Laphroaig sells six million cases per annum worldwide, and is the world's leading Islay malt. Globally, it enjoys a 2.6 per cent share of the entire malt market."

Along with distillery manager John Campbell, since taking up his new post with Beam, Hicks has been responsible for the introduction of two new Laphroaig expressions, namely a 25 and a 27-year-old, featured in Recent Releases during September 2007.

Laphroaig's output is up from 1.8 million litres to 2.6 million this year, notes Hicks. We're working 46 weeks a year, compared to 42 previously, and we're still looking for more output. We've created six new jobs on site since March of last year, and we've quadrupled the amount of malt we are making for ourselves. We now have four men working four malting floors.

"Beam has backed the distillery 100 per cent to fulfill its potential. The people who work here think it deserves that, and they're pleased to see it. The company is making a financial investment in Laphroaig and has a very positive attitude."

Robert Hicks declares himself to be "A great believer in 'flavour packaging.' Anyone can turn round and say 'I'm producing a 12-year-old,' or whatever. We mix whiskies of varying ages to give a flavour package. We're currently running five 'flavour package' experiments at Laphroaig. I can't say any more, but we're quietly confident they will work. I really think flavour packages are the way ahead."

'Flavour profiling' is most evident in Laphroaig Quarter Cask, which Hicks initiated under the Allied regime. Quarter Cask has been a huge success, reckons John Campbell, it's just amazing. It was launched in April 2005 and we're selling close to 27,000 cases a year now.

Quarter Cask was inspired by the small barrels used by distillers in the 18th and 19th centuries, and experimentation revealed that a quarter cask provided up to 60 per cent more contact with the wood compared to some larger sizes, thus significantly intensifying the maturation process.

A number of quarter casks were duly constructed and filled with Laphroaig that had previously spent time maturing in conventional-sized casks, for a further period of maturation. Quarter Cask carries no age statement and contains whisky of varying ages up to ten.
  

"The result surprised and delighted us," says Hicks. "The additional oak influence creates a soft sweetness and velvety feel when first tasted, then the intense peatiness so unique to Laphroaig, comes bursting through. The finish is very long and alternates between the sweetness and the peat."

Go to part II - Single Malts and a global vision

This feature is based on an article published by The Malt Advocate in 2007.

  

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