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July 04, 2008 Est 1999 Scotland's award-winning independent newspaper
William Grant attempts to corner the duty-free market
Glenfiddich maker to set up worldwide chain

WILLIAM GRANT & Sons, whose Glenfiddich is easily the world's biggest-selling single malt whisky, has ambitious plans to cement the brand's dominance of the booming travel retail market with a range of stand-alone outlets in airports and other duty-free locations.

The family-owned company will roll out the first wave of Collector's Corner stores next year in a big-budget programme to showcase its core brands: Glenfiddich, Balvenie and Grant's.

Negotiations are under way with World Duty Free, BAA's travel retail arm, to install the first Collector's Corner in the new £4.2 billion Terminal 5 at Heathrow when it opens in mid-2008, exposing the brands to a market of 30 million passengers a year. The main competition at the new terminal will come from World Duty Free's own outlet, World Of Whisky.

The Sunday Herald understands that a further seven stores are planned in 2008 - two more in Britain, three in Asia, one in the Americas and one on the highly protected Indian subcontinent. That last market is dominated by billionaire Vijay Mallya's United Spirits. Mallya, king of the molasses-based whisky industry, is the man in the middle of the EU and the Scottish industry's dispute over India's illegally high tariff barriers against foreign brands.

Although Collector's Corner stores will stock other brands, it is believed at this stage there are no plans to include those of William Grant & Sons's main, publicly-listed rivals - Glenlivet, owned by Pernod Ricard, and The Macallan, owned by the Edrington Group.

The strategy is bound to shake up whisky retailing in the duty-free sector but Peter Eves, the firm's regional manager for Europe, says that is part of the plan: "It is our responsibility as the category leader to create an innovative retail concept."

According to the latest figures, Glenfiddich sells more than twice as well in the travel retail sector as the second and third-ranked single malts combined. And in the global market, the Dufftown-based label boasts nearly 18% of all sales with 700,000 cases. That is about 200,000 cases more than Glenlivet, the only other single malt to crack the magic 500,000-case barrier.

According to industry sources, the secret of Glenfiddich's dominance is that the firm got into export markets early. Controlled by the fifth generation of the founder, William Grant & Sons pioneered the export market for single malt as well as blended whiskies in the early 20th century. By 1914 it had signed up distribution deals in 60 countries.

In 1963, it was the first Scottish distiller to "export" single malt into England and Wales, long before it was seen as a high-margin, premium category. And in 1964 it secured its place in the United States market by buying its own distributor there.

Some sources attribute Glenfiddich's long-held dominance to its lighter and "more approachable" flavour, which appeals to drinkers new to single malts.

Whatever the reason, over the years William Grant & Sons has consistently broken new ground in marketing, for instance with the introduction exactly half a century ago of the triangular bottle followed a decade later by tube-encased bottles and gift tins. The company was also the first distiller to open a visitor's centre, in 1969, and one of the first to see the opportunity in duty-free markets.

The firm may be 121 years old but, according to industry analysts, its marketing strategies still rate as original. Research company Euromonitor refers to Glenfiddich's "focused, quirky advertising as the key to success", particularly with younger drinkers. It is no accident that sales and marketing is handled out of the trendy and affluent southeast, in Richmond, Surrey.

Lacking the deep pockets of its rivals, the company has historically pursued a strategy of working with joint-venture partners in distribution in the 180 different countries in which it sells. But that could be changing, at least in the biggest markets.

Late last year, the firm bought out the Bacardi-Martini half-share in First Drinks Brands, its 10-year-old jointly-owned UK distribution company which also handles third-party labels. The distiller now has wholly-owned distribution in the US, China, Taiwan and Britain.

The shake-up continues Down Under. In Australia, William Grant & Sons has just ditched its eight-year partnership with Maxxium International in favour of Suntory, which will next month take over the distribution of William Grant & Sons's brands there despite the Japanese giant being a minor shareholder in rival distiller Edrington Group.

But perhaps the firm's biggest advantage in the world's export markets is its private shareholding. Because it does not have to meet half-yearly profit forecasts like publicly-listed competitors, William Grant & Sons is able to adopt strategies that may take years to produce profits. "As a family-owned company, it can afford to take the longer view," summarises one analyst.

The Collectors' Corner concept could prove to one of those long-term winners.

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Posted by: Iain on 9:08am Sun 18 Mar 07
There's a lot of Grant's marketing BS repeated as historical fact in this report. Could it be the "unnamed sources" you quote are actually just the lads and lassies from Grant's pr office?

It's a Grants-fuelled myth that Glenfiddich "pioneered the export market for single malt".

And as for blends - are they claiming they were exporting before Johnnie Walker, Haig, Dewars, etc etc? Those firms had huge export markets by the end of the 19th century, when Grants were still struggling to establish their business in Scotland!
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