WHITE PAPER SEPTEMBER 2020

The new world of new world whisky THE NEW WORLD OF NEW WORLD WHISKY

Whisky consumers are varied in their While the instability and uncertainty demographics and purchasing behaviours, created by Covid-19 continues to unfold, but we’re now seeing the emergence of a for New World producers the path forward new, younger (18-34) generation who are involves harnessing digital opportunities and more affluent, curious and confident in partnering with retailers to create ways for their whisky knowledge1. the curious new whisky consumer to discover and enjoy their products. At the same time a new band of passionate whisky makers from outside of the traditional Through interviews with whisky makers, whisky-producing countries are creating retailers, bartenders and analysts, the exciting, innovative and quality liquid. latest category insights and data, as well as Distill Ventures’ own US and UK consumer While innovation continues across the survey, it’s clear the segment is on the category, these ‘New World’ whisky makers cusp of real change, with New World whisky are delivering more choice than ever before, playing an important role in helping develop appealing to consumers’ search for new the whisky industry. experiences while connecting with their inherent values and behaviours. However, much rests on the ability of both producers and retailers to collaborate As such, New World whisky has the potential and adapt to the changing buying and to influence the whisky category as a whole, consumption habits of this new generation setting the stage for a new defining era. of whisky consumer.

1SOURCE: DISTILL VENTURES/DYNATA WHISKY CONSUMER SURVEY, FEBRUARY 2020. SEE PAGES 13-15. DISTILL VENTURES THE NEW WORLD OF NEW WORLD WHISKY Contents

01. 04. INTRODUCTION THE NEW RETAIL Defining New World Whisky ENVIRONMENT Where are we now? Key Trends A New World of Whisky Off-Trade Whisky-Making Countries To Watch E-Commerce What’s In The Future? Distribution Channels 01—08 On-Trade 24—36 02. 05. 01 THE NEW CONCLUSION WHISKY CONSUMER The Future Introduction Who is the New Whisky Consumer? About Distill Ventures Our Whisky Portfolio Partners 09—15 37—43 03. THE NEW WORLD WHISKY MAKER

Who is the New Whisky Maker? A Future Of Opportunity 16—23 1 INTRODUCTION DISTILL VENTURES THE NEW WORLD OF NEW WORLD WHISKY

DEFINING NEW WHERE ARE WORLD WHISKY WE NOW?

New World distillers are In 2018 the global whisky category grew On an international level a flourishing cocktail culture bringing exciting areas of by 7% to 440million nine-litre cases1. and whisky’s aspirational image have helped attract innovation to the category. new consumers3, in turn inspiring a wave of New World Located in places not whiskies from emerging distillers and blenders in non- usually associated with Much of whisky’s volume growth can be attributed to traditional whisky countries. whisky production, these the success of premium local and international brands in India, while Scotch, American, Japanese and Irish While whisky is traditionally considered a product producers have respect for whisky all posted strong global growth2. of Scotland, Ireland and the US, today there are over tradition, are inspired by their 30 countries making whisky around the world. environment and are focused on quality innovation. New World also encompasses the unconventional whisky made GLOBAL WHISKY SALES ARE FORECAST within established whisky- 4 making countries, such as TO GROW 5.7% CAGR BETWEEN 2018-23 American single malt or Scottish rye. IN 2018 BY 2023 440m 581m New World NINE-LITRE CASE VOLUMES OF WHISKY NINE-LITRE CASE VOLUMES OF WHISKY Whisky /n(y)oo/wәrld/'(h)wiskē/ The landscape has changed significantly (noun) since these projections were made by CATEGORY DRIVERS: IWSR in 2018. However whisky has been growing, driven by continued innovation 1. A whisky not produced in Scotland, in cocktails, liquid production and the Ireland, Canada, the USA or Japan. retail environment. COCKTAIL CULTURE 2. A whisky made in a style not LIQUID INNOVATION traditionally associated with the country that it is made in. RETAIL EVOLUTION

1234SOURCE: IWSR DRINKS MARKET ANALYSIS GLOBAL DATABASE, MAY 2018

2 3 INTRODUCTION DISTILL VENTURES THE NEW WORLD OF NEW WORLD WHISKY

A NEW WORLD CANADA PERU ICELAND SWEDEN FINLAND RUSSIA SOUTH KOREA OF WHISKY USA BRAZIL SCOTLAND NORWAY POLAND INDIA JAPAN MEXICO BOLIVIA IRELAND DENMARK AUSTRIA THAILAND TAIWAN ARGENTINA ENGLAND NETHERLANDS ITALY AUSTRALIA CHILE WALES BELGIUM ISRAEL NEW ZEALAND FRANCE GERMANY SOUTH AFRICA SPAIN SWITZERLAND

New distilleries are springing up all over the world, in both traditional and non-traditional whisky countries such as England, Denmark, New Zealand and even Bolivia. Many of these emerging New World whisky producers are forging their own styles, combining traditional practices with their own take on innovation.

4 5 INTRODUCTION DISTILL VENTURES THE NEW WORLD OF NEW WORLD WHISKY

WHISKY-MAKING WHISKY MAKERS IN TRADITIONAL COUNTRIES COUNTRIES TO WATCH ARE INNOVATING TOO

ALTERNATIVE AUSTRALIA & NEW ZEALAND INDIA GRAINS & MIXED HEAT MASHBILLS Although Australia and New Zealand are home to Innovation and premiumisation in Indian whisky CYCLING dozens of whisky distilleries, only a handful have are helping attract new domestic consumers, started selling outside their local market. Styles include while simultaneously introducing Indian whisky wine cask matured single malts, peated expressions, to international audiences. High quality and often and most recently, blended whisky. Expect to see more experimental single malts from emerging distillers NICHE OAK YEAST SINGLE SPECIES VARIATIONS MALT choice for locals as distilleries release mature liquid and like Amrut and Paul John are gaining the attention make pricing more accessible. of curious whisky consumers around the world.

SCANDINAVIA UK

A new generation of distiller is emerging across While innovation continues in Scotch, with some Denmark, Finland, Norway and Sweden, each focusing producers experimenting with oats or rye, some on a different aspect of Scandinavian provenance, 50+ distillers in England, Wales and Northern Ireland from distilling organic local grains to harnessing are busy establishing their own styles, from London SCOTCH AMERICAN IRISH the sub- zero climate. Whisky styles are varied and rye to Norfolk peated single malt. individual, ranging from single malt made with glacial water (Aurora Spirits) to 100% rye (Kyrö).

ALTERNATIVE COUNTRY- WOOD- NON-OAK GRAINS WIDE WHISKEY SMOKING CASKS MAKING GRAINS

INFLUENCE BLENDING OF TERROIR BONDED & CLIMATE WHISKEY

MEZCAL & TEQUILA CASKS

While New World whisky hails from countries not usually associated with its production, established distillers in Scotland, North America and Ireland are also experimenting with raw materials and processes to create new flavours and non-traditional styles.

6 7 INTRODUCTION DISTILL VENTURES THE NEW WORLD OF NEW WORLD WHISKY

WHAT’S IN THE FUTURE?

Exciting innovations from New World whisky producers have driven growing interest in the category, providing consumers with a wider choice of styles, flavours and regions than ever before. 02 With the rise of social media With consumers increasingly By focusing on establishing and online retailing, more discerning, emerging strong partnerships between consumers can easily access New World distillers need producers and retailers, and navigate a growing to consider how to engage and maximising new digital The New selection of whiskies from and educate consumers, gain opportunities to engage all over the world. visibility in a busy category consumers in a post-Covid and set themselves apart world, there is a pathway Whisky Consumer However with greater choice from the competition. for the New World whisky can come greater confusion, category to emerge from this and without appropriate Over the long term, stronger, and with deeper guidance and education New some consumer behaviours consumer connections. World whisky can quickly go forged during Covid and from exciting to overwhelming. the subsequent global lockdown will likely continue for the foreseeable future, impacting the way people discover, interact with and purchase brands.

8 9 THE NEW WHISKY CONSUMER DISTILL VENTURES THE NEW WORLD OF NEW WORLD WHISKY

“ WE DO HAVE PEOPLE COME IN WHO KNOW ABOUT THEIR WHISKY. BECAUSE IT’S SUCH AN AMAZING CATEGORY WITH ITS HISTORY AND PROCESS YOU’LL ALWAYS HAVE THAT GEEKY FAIRY DUST ELEMENT. BUT THERE’S A WHOLE NEW CONSUMER OUT THERE WHO JUST WANTS TO KNOW HOW IT TASTES.”

– AND Y GEMMELL, OWNER, THE GATE PUB, GLASGOW. Values

Knowledge Adventure Transparency Diversity

“ Whisky’s liquid quality, variety of styles, diverse founder THE CONSUMER NOW IS SOMEWHAT stories and aspirational reputation are attracting a new PROMISCUOUS WITH THEIR WHISKY – THEY’RE OPEN TO NEW BRANDS AND JUST generation of adventurous consumers. WANT SOMETHING THAT TASTES GOOD. IT DOES THE WHOLE INDUSTRY A JUSTICE Our belief is that these younger consumers (LDA-34- – IF EVERYBODY WERE BRAND LOYAL WE years-old) are digitally savvy, willing to spend more on PROBABLY WOULDN’T SURVIVE” first purchases and take their time researching new bottles to buy.1 – T OMMIE TARDIE, OWNER, FLATIRON ROOM, NEW YORK.

1SOURCE: DISTILL VENTURES/DYNATA WHISKY CONSUMER SURVEY, FEBRUARY 2020.

10 11 THE NEW WHISKY CONSUMER DISTILL VENTURES THE NEW WORLD OF NEW WORLD WHISKY

TODAY'S WHISKY “ THE DISCERNING WHISKY CONSUMER CONSUMERS IS LOOKING FOR DISCOVERY AND NEW EXPERIENCES TO TRY. PEOPLE CHOOSE We commissioned Dynata to survey over WHISKIES BASED ON REFERRALS FROM 3,000 US and UK consumers. We asked them EXPERTS. THEY NEED HAND HOLDING, BUT about their whisky preferences, buying habits IF IT’S GOOD THEY’LL COME BACK.” and values, to build a picture of who the new whisky consumer is.1 – MICHAEL VACHON, FOUNDER, MAVERICK DRINKS, UK. PERCENTAGE OF WHISKY RESPONDENTS WHO CONSUMERS DRINK WHISKY: ARE:

64% MALE % Behaviours 30 36% FEMALE

drink better, not more AGE * THE LEGAL DRINKING AGE Brand fluid IS 18 FOR UK CONSUMERS, AND 21 FOR US CONSUMERS. Curious exploration Craves newness Expects quick, concise information

Values experiences *LDA-24 24-34 35-44 45-54 55-64 65+ + knowledge over 9% 20% 22% 19% 14% 16% belongings

1SOURCE: DISTILL VENTURES/DYNATA WHISKY CONSUMER SURVEY, FEBRUARY 2020.

12 13 THE NEW WHISKY CONSUMER DISTILL VENTURES THE NEW WORLD OF NEW WORLD WHISKY

WHISKY CONSUMERS AGED LDA-34 RESPONDENTS’ PREFERRED WHISKY CONSUMERS PLACES TO PURCHASE WHISKY: AGED 35-54 WHISKY CONSUMERS AGED 45-54 WHISKY CONSUMERS AGED 55+

SPLIT OF RESPONDENTS WHO PERCENTAGE OF RESPONDENTS DESCRIBE THEMSELVES AS BEING A WILLING TO SPEND OVER £75/ WHISKY ‘EXPERT’ OR ‘CONNOISSEUR’: US$75 ON A BOTTLE OF WHISKY THEY’VE NOT TRIED BEFORE:

69% 64% 44% 45% 48% 47% 36% 44% 41% 22% 28% 27% 42% 28% 8%

ON-TRADE SUPERMARKET SPECIALIST INDEPENDENT ONLINE ALCOHOL GROCERY RETAILER STORE

41% 26% 17% 16% 35% 26% 21% 18%

WHISKY CONSUMERS AGED LDA-34 With this new generation of whisky consumer more WHISKY CONSUMERS likely to use the Internet for discovery and purchases PERCENTAGE OF RESPONDENTS PERCENTAGE OF RESPONDENTS AGED 35-54 than their older peers, New World whisky brands WHO SPEND A WEEK OR MORE WHO PRIMARILY USE THE INTERNET WHISKY CONSUMERS will benefit from greater digital engagement, as well RESEARCHING A NEW WHISKY TO FIND OUT ABOUT NEW WHISKIES: AGED 55+ as partnerships with tech-savvy retailers that enhance PURCHASE: the user experience and educate new customers while providing new sampling opportunities. This is Based on the results of our survey, the burgeoning especially important in light of Covid-19 restrictions New World whisky category is more likely to appeal affecting consumer confidence in the on-trade, to a new, younger generation of whisky consumer who LDA-34-year-olds’ preferred channel where trial is appear more confident to explore different styles, most likely to occur. are willing to spend more on a new bottle they’ve not yet tried and take their time discovering and learning However, with supermarkets, specialist retailers and about new brands. the on-trade still popular destinations among younger consumers, the evolution of bars and the bricks-and- Although whisky consumers are not defined by mortar retail space will be more important than ever their age, older consumers are more likely to be for New World whiskies. brand loyal and less likely to purchase a new brand. They are also less likely to invest time in researching In addition, those brands that champion quality new whiskies online and have a self-confessed limited innovation with a real focus on accessibility through 44% 27% 14% 14% 87% 81% 60% 24% whisky knowledge, with an overwhelming majority how they market and sell their products, are well of those aged 55+ classing their expertise as novice placed to capture the imagination, adventurous or average (81%). spirit and spend of today's whisky consumer.

1SOURCE: DISTILL VENTURES/DYNATA WHISKY CONSUMER SURVEY, FEBRUARY 2020. 14 15 DISTILL VENTURES THE NEW WORLD OF NEW WORLD WHISKY

New World whisky makers are emerging in countries all over the world, in both traditional and non-traditional markets. While each of these producers has their own personality, they share many traits.

NEW WORLD WHISKY MAKERS ARE:

Driven Innovative Imaginative Creative Unbound Respectful of tradition A reflection of their surroundings Inspired by local culture & heritage 03 Modern Agile Relatable The New World Whisky Maker

While New World producers have learned from the whisky industry’s pioneers, without their own local traditions they are free to focus on creativity and defining their own segments. With an audience seeking innovation and new flavours, New World producers have a clean canvas on which to paint their own whisky vision.

IMAGE SOURCE: STARWARD WHISKY.

17 THE NEW WORLD WHISKY MAKER DISTILL VENTURES THE NEW WORLD OF NEW WORLD WHISKY

A future of QUALITY INNOVATION opportunity Innovation and the development of exciting new flavours are hallmarks of the New World whisky set, with many distillers exploring the impact of manipulating raw materials and processes in ways that reflect their own locality and cultural identity.

SOME CURRENT AREAS OF INNOVATION INCLUDE 01. 02. 03. THE ADOPTION OF THE EXPLORATION COLLABORATION BREWING TECHNIQUES TO OF LOCAL, HEIRLOOM WITH LOCAL BEER, ROAST AND SMOKE MALTS AND NON-TRADITIONAL WINE AND SPIRITS WITH LOCALLY-SOURCED GRAINS, AND THE IMPACT PRODUCERS IN CASK PLANTS, WOOD OR PEAT. OF TERROIR. EXCHANGE PROGRAMMES.

CORSAIR: TENNESSEE, USA. COPENHAGEN DISTILLERY: VIRGINIA DISTILLERY CO.: MACKMYRA: GÄVLE, SWEDEN. COPENHAGEN, DENMARK. VIRGINIA, USA. EDEN MILL: ST ANDREWS, WESTLAND: SEATTLE, USA. STARWARD: MELBOURNE, SCOTLAND. WATERFORD: WATERFORD, AUSTRALIA. IRELAND. CARDRONA: WANAKA, NEW ZEALAND. New World whisky makers have an exciting opportunity to capture the imagination of consumers seeking new experiences and “ different flavours. 04. 05. 06. WE’RE NOT TRYING TO MAKE A FERMENTATION USING MATURATION IN EXPLORATION OF CUSTOMISED YEASTS ALTERNATIVE OAK SPECIES LOCAL CLIMATE’S EFFECT Successful producers are the ones releasing DANISH WHISKY THAT TASTES TO ACHIEVE SPECIFIC AND WOODS SUCH AS ON MATURATION. quality, innovative liquid with a ladder of LIKE SCOTCH; THIS IS A WHISKY QUALITIES AND FLAVOURS, ACACIA AND CHERRY, expressions at various price points. They’re EVEN CULTIVATING WILD CHINQUAPIN AND STAUNING: SKJERN, DENMARK. STRAINS, AND EXPLORING GARRYANA. MILK & HONEY: TEL AVIV, ISRAEL. engaging curious audiences by focusing on THAT TASTES DIFFERENT. ” BIVROST: LYNGEN, NORWAY. education and accessibility with modern INNOVATIONS IN SWEET AND SOUR MASHES. TEELING: DUBLIN, IRELAND. branding and genuine stories, are connecting – ALEX MUNCH, CO-FOUNDER, CMO, WESTLAND: SEATTLE, USA. BALCONES: TEXAS, USA. and building meaningful relationships with STAUNING DISTILLERY, DENMARK. WESTWARD: PORTLAND, USA. followers and are driving digital discovery in LAKES DISTILLERY: CUMBRIA, ENGLAND. new and exciting ways. LONE WOLF: ELLON, SCOTLAND.

IMAGE SOURCE: STAUNING DISTILLERY.

18 19 THE NEW WORLD WHISKY MAKER DISTILL VENTURES THE NEW WORLD OF NEW WORLD WHISKY

GENUINE, ENGAGING STORYTELLING… The power of compelling storytelling cannot be underestimated. Research shows1 over half of consumers would be more likely to buy a product having heard a brand story they love.

Often established by groups of friends, or a passionate whisky-loving founder, most New World brands already have genuine, people-centric stories that consumers can relate to and get behind. Coupled with their innate drive to collaborate with and support their local communities, quest to discover new flavours and fresh approach to whisky, these businesses are sitting on a goldmine of engaging stories.

While production innovation “ is key to giving new whisky WE ARE VERY MUCH PROVENANCE FIRST, consumers more choice in their SO EVERYTHING WE DO IS IN ONE WAY OR search for unique whiskies, it ANOTHER CONNECTED TO THE CULTURE, should be in service of flavour, THE PLACE OR THE PEOPLE OF THE and shouldn’t come at the AMERICAN NORTHWEST. WHETHER IT’S expense of quality or value. “ PORTLAND’S BREWING CULTURE THROUGH IN INTERNATIONAL BRAND MARKETING The most successful producers AN IPA FINISH WITH CULMINATION THERE’S SO MUCH FROTH, AND MANY are those innovating in ways BREWERY OR PARTNERSHIPS WITH CHEFS STORIES THAT ARE COMPLETELY that deliver on flavour, reflect LIKE KEN FORKISH WHOSE SOURDOUGH FABRICATED. WE WANTED TO BE AN their terroir and perspective, STARTER WE’VE USED TO FERMENT A BATCH ANTITHESIS TO ALL OF THAT, TO EXHIBIT use locally sourced ingredients OF WHISKY. WHEN SOMEONE THOUSANDS THIS MENTALITY OF TRANSPARENCY AND or champion partnerships with OF MILES AWAY TAKES A BOTTLE OF HONESTY TO THE FULLEST, FROM BEING local businesses. A variety WESTWARD HOME, THEY ARE BRINGING of interesting new world INDEPENDENT AND MAKING OUR OWN innovations are available for OREGON HOME.” SPIRIT, TO USING LOCAL INGREDIENTS. IT’S ABOUT OWNING OUR ROOTS. IT event the most considered – T OM MOONEY, CEO, curious whisky consumer - who WESTWARD DISTILLERY, PORTLAND. ALL NEEDS TO BE THERE FOR THE is often going 'straight to great' WHOLESOMENESS OF OUR STORY. WE with their initial purchases. DON’T WANT A CLEAN, GLITZY, GLOWING START-UP CULTURE IMAGE, WE JUST WANT TO SHOW HOW IT’S DONE.”

IMAGE SOURCE: WESTWARD DISTILLERY. – MIIKA LIPIÄINEN, FOUNDER & CEO, 1SOURCE: L.E.K. EXPERIENCES WITH KYRÖ DISTILLERY COMPANY, FINLAND. CHARACTER: THE NEW LEISURE ECONOMY, AUGUST 2019. IMAGE SOURCE: KYRO DISTILLERY. THE NEW WORLD WHISKY MAKER DISTILL VENTURES THE NEW WORLD OF NEW WORLD WHISKY

…WITH AN BUILDING DIGITAL INCLUSIVE MEANINGFUL DISCOVERY APPROACH RELATIONSHIPS

As innovators, it can be easy for New World Consumers are looking for a connection With finite shelf space in traditional bricks- brands to complacently market solely to with the brands they support. This means and-mortar stores, digital channels have the knowledgeable whisky enthusiast. New World whiskies need to take meaningful become the place for consumers to discover While these consumers may wish to action to show they understand their and engage with New World whiskies. discover intricate process details, many consumers’ interests, values and needs. Simply having a presence in online retail or new consumers simply want to understand That might be through supporting local on social media isn’t enough; brands need to the brand story and the whisky’s flavour. charities and communities or enriching their go further to actively engage both new and Tailoring language, imagery and stories consumers’ lives through education, added existing audiences. to different audiences will be vital to a value or even building a community that New World whisky’s ability to recruit new provides a sense of belonging. Digital tastings have been a lockdown consumers while engaging existing ones. success, with brand ambassadors and whisky Serving suggestions and cocktail tutorials makers hosting live-streamed Q&As, will be a big part of attracting younger festivals, cocktail tutorials and masterclasses whisky consumers. to thousands of viewers at a time across social media. These have allowed whisky Similarly, consumers wish to see more of makers to broaden their reach and connect themselves reflected in brands’ marketing1. with new and existing fans all over the If brands wish to attract a diverse audience world, presenting an opportunity to build they must consciously feature a broad a dedicated group of followers. range of faces embracing different ages, genders and ethnicities. Particularly in light The personal nature of these tastings of recent movements to recognise and resonates with consumers’ desire for champion diversity. authenticity and engagement with the personalities behind the whisky. Candid Transparency and authenticity are important stories of passion, intent, trials and values for today’s whisky consumers, and mistakes are more engaging. should be adopted as core drivers of brands’ communication and product development. As in-person tastings and events start to resume for small groups, authentic live- streamed events will continue to be a part of brands’ marketing outreach, as they have the potential to reach larger audiences and engage new customers.

1SOURCE: L.E.K. EXPERIENCES WITH CHARACTER: THE NEW LEISURE ECONOMY, AUGUST 2019.

22 DISTILL VENTURES THE NEW WORLD OF NEW WORLD WHISKY 04 the New Retail Environment

The way whisky brands are discovered, bought and consumed is rapidly shifting as at-home consumption rises, digital advances make discovering and purchasing easier, and the market becomes busier with new entrants. These were growing trends already but in many ways, the Covid-19 pandemic has accelerated their growth.

25 THE NEW RETAIL ENVIRONMENT DISTILL VENTURES THE NEW WORLD OF NEW WORLD WHISKY

KEY TRENDS OFF-TRADE

AT-HOME EXPERIENCES TRY BEFORE YOU BUY RISE OF CLUBS AND There are several ways retailers can optimise their offer DIRECT SHIPPING to champion New World brands and appeal to consumers The growth of the experience Most specialist whisky retailers economy has seen consumers have historically offered a selection The relaxation of shipping laws in seeking new flavours. allocating more of their disposable of open bottles for customers to some US states has allowed brands income on entertainment and sample before making a purchase to continue to serve consumers events for some time1, a trend that in-store. But with shops and bars affected by from the closure of TASTING OPPORTUNITIES COMMUNICATE FLAVOUR CLEAR MERCHANDISING the Covid-19 crisis has transformed closed during lockdown, brands and tasting rooms, bars and restaurants. into an at-home phenomenon. retailers have found innovative ways Home delivery platforms such as Enabling safe and responsible The new generation of whisky Intuitively merchandised and Domestic experiences such as to drive trial and online conversion Drizly and Reservebar are helping trialling of whiskies at appropriate consumer is willing to spend signposted shelving arranged by virtual tastings, happy hour drinks through hosting virtual tastings, more brands get discovered opportunities. “We wouldn’t have more on a bottle they’ve not region, style or even flavour helps and digital festivals have been and sending sample packs and through connecting consumers sold as much Kavalan as we do now tried before1, but selling a new consumers navigate categories. popular with consumers during tasting kits to consumers at home. with local retailers. Meanwhile if we didn’t have a bottle of Kavalan brand at a premium price point Retailers might even consider lockdown and as restrictions ease. exclusive whisky membership open to show the consumer what can be challenging. New World grouping New World whiskies clubs such as Flaviar, Caskers a Taiwanese whisky tastes like.” – brands should introduce a ladder together as a category in its own and Drammers enable global Dawn Davies, Head Buyer, The of expressions and communicate right, or creating a dedicated GROWTH OF ONLINE SHOP LOCAL MENTALITY whisky-loving communities to Whisky Exchange their whisky’s unique flavour, discovery area for consumers to RETAIL PRESENCE find new whiskies and connect provenance and story. easily find new, innovative whiskies. The Covid-19 pandemic has with like-minded consumers. Covid-19 has also accelerated a renewed the importance of CONFIDENT STAFF growing need for all retailers to supporting local communities, The increased investment in SUPERMARKET VISIBILITY develop online shopping platforms, with neighbours helping one quality at-home experiences, Retail staff are on the front line of not just those specialising in another and consumers shopping emergence of new ways to try consumer education. Teams must According to Distill Ventures/ “ e-commerce. Drinks have with local businesses. Specialist at home and expanded availability be equipped with the knowledge Dynata’s whisky consumer survey, BRANDS IN THE NEW traditionally lagged in this area whisky retailers, especially those online all create conditions for and confidence to assist customers. almost half of those aged LDA-34 WORLD WHISKY SEGMENT but are growing steadily. Due to with a great online presence, are New World whisky to thrive, Founders have a big role to play (45%)2 purchase new bottles at SHOULD BE GROUPED the impact of Covid-19, Oregon set to benefit, as are New World particularly where brand-retailer in sharing what makes their supermarkets, which traditionally changed its direct shipping laws, whisky producers that support and relationships are formed and brand magic and drumming up stock mainstream brands. In the TOGETHER. CURRENTLY, helping brands like Westward market to their local community. sophisticated digital advances are enthusiasm for their product. UK, this number rises to 63%. WE'RE IN AN UNDER maintain sales levels. The trend is set to continue with made and established distribution MERCHANDISED AND almost a third of UK consumers channels flourish. With the supermarket clearly a intending to support local retailers DRAM DIVERSITY key area of discovery, there’s an UNDER REPRESENTED more often in the future.2 opportunity for both large multiple PART OF STORE.” Stocking a diverse range of styles retailers and New World producers and price points is key to attracting to benefit from greater visibility of – DAVID VITALE, FOUNDER, “ a wide range of consumers. Having the category. STARWARD WHISKY, AUSTRALIA WE WON THE RIGHT TO TAKE AN ORDER, PUT IT IN A BOX exclusive bottlings and proprietary blends that are of high value and AND SHIP IT TO PEOPLE IN OUR STATE. IT’S MADE ALL THE which communicate an engaging 1SOURCE: L.E.K. EXPERIENCES WITH DIFFERENCE IN THE WORLD.” CHARACTER: THE NEW LEISURE story can also help create intrigue ECONOMY, AUGUST 2019. and loyalty, especially among more – T OM MOONEY, CEO, 2 SOURCE: GLOBALDATA UK experienced shoppers. 12SOURCE: DISTILL VENTURES/ WESTWARD DISTILLERY, PORTLAND. CONSUMER SURVEY, MAY 2020. DYNATA WHISKY CONSUMER SURVEY, FEBRUARY 2020. 26 27 THE NEW RETAIL ENVIRONMENT DISTILL VENTURES THE NEW WORLD OF NEW WORLD WHISKY

E-COMMERCE MASTER OF MALT WHISKY 104% AUSTRALIAN VOLUME GROWTH 2018-19

62% AMERICAN (NON-BOURBON) Whisky is one of the fastest- growing categories in the world. AMERICAN (ALL) For UK-based online retailer 49% Master of Malt, although they make up a small percentage 41% EUROPEAN While the online marketplace is of total sales, whiskies from New World producers have 36.4% INDIAN developing at different speeds BN been hugely popular. around the world, there’s plenty of $6.5 THE VALUE OF 36% AMERICAN (BOURBON ONLY) opportunity for producers and retailers USD GLOBAL SPIRITS SOLD ONLINE to collaborate, evolve, and seize digital 29% JAPANESE trends and technological advances to OF ALL GLOBAL SPIRITS SALES make the most of this vital space. 12% SCOTCH SINGLE MALT 2% MADE ONLINE 1 10.3% SCOTCH (ALL)

in 2018 7.7% ENGLISH

6.2% IRISH “ A LOT OF CUSTOMERS COMING TO SPIRITS E-COMMERCE SITES NOW ARE NEW TO IT. PEOPLE ARE COMING ONLINE WHO ARE COMPLETELY NEW TO THESE BRANDS. INFORMATION AND VISIBILITY DIVERSE OFFERING IT’S A HUGE OPPORTUNITY AS WELL AS A CHALLENGE. Clear product descriptions with accurate Stocking a curated, diverse selection will BRANDS NEED TO WORK CLOSELY WITH THE RETAILER, product names and categorisations can aid stand retailers apart. Including New World EVEN ON THINGS LIKE PRODUCT DESCRIPTIONS. consumer discovery. Further collaboration whisky categories provides more choice and between brands and retailers to ensure ultimately more chance of conversion and THE ON-TRADE MAY HAVE BEEN WHERE PEOPLE GOT listings are correct and New World whisky future loyalty. brands are effectively signposted can help RECOMMENDATIONS; IT’S NOW GOING TO BE ONLINE.” guide consumers as they shop.

– K RISTIANE SHERRY, CONTENT EDITOR, New World whisky brands can also help MASTER OF MALT, UK. retailers to tell their unique stories: know what’s newsworthy, and make sure when a new expression is ready to drop all the product information, backstory, brand communication and imagery is lined up ahead of time.

1SOURCE: IWSR DRINKS MARKET ANALYSIS, ‘THE IMPACT OF E-COMMERCE ON ALCOHOL TRADING’, JULY 2018. 28 29 THE NEW RETAIL ENVIRONMENT DISTILL VENTURES THE NEW WORLD OF NEW WORLD WHISKY

“ ALCOHOL VIRTUAL TASTINGS HAVE BEEN VERY HARNESS SOCIAL MEDIA IMPORTANT FOR US. WE LAUNCHED DELIVERY Retailers can use their platforms to OUR FIRST COMMERCIAL RELEASE communicate the unique stories behind JUST BEFORE THE COVID SITUATION brands, tailoring content to individual STARTED, SO WE HAD TO USE EVERY channels. By tracking engagement, On-demand alcohol delivery platforms are growing in Wineapp, which delivers over 700 beers, wines and brands can also better understand their MEANS OF COMMUNICATION WE COULD popularity in many markets around the world, many of spirits to Londoners in under 30 minutes, reported audience’s interests and work to connect TO SPREAD THE WORD. IN SOME CASES which have the capacity to help New World whiskies a 1600% increase in daily sales between March-April 2 further with them. AND MARKETS THE TASTINGS WERE A get discovered. 2020 . Google searches for ‘alcohol delivery’ were up 250% in April alone. GREAT SALES GENERATOR. NOW WE ARE According to US-based platform Drizly, prior to MOST EFFECTIVE WAYS FOR LAUNCHING THE SECOND TIER, THE March 2020 the majority of US consumers purchased The ability for New World whiskies to succeed on these U.S. BRICKS-AND-MORTAR ELEMENTS SERIES, SO WITH NO WHISKY their alcohol from local independent liquor and grocery platforms depends largely on their distribution in each RETAILERS TO MAKE AND stores. Asked where they expect to purchase alcohol state or market. SHOWS AROUND THIS IS OUR WAY TO RETAIN CUSTOMERS1: from for the rest of 2020, 81% (many of whom have REACH MORE CONSUMERS. ALSO, IT used Drizly before) named alcohol delivery apps, Visibility is also key. Although on-demand delivery IS A GREAT WAY FOR CONSUMERS TO followed by local liquor stores (59.8%) and large liquor platforms are a huge growth area, their layout and SOCIAL chains (59.8%)1. functionality can often favour big brands. For New ACTUALLY SEE THE DISTILLERY AND MEDIA World whisky to get noticed, specialised, signposted 70% MEET THE TEAM, WHICH IS NOT ALWAYS In the UK, home delivery services such as Deliveroo sections helping consumers to discover local and IN-STORE POSSIBLE AT IN-STORE TASTINGS AND and UberEats are capitalising on the upward trend for alternative whiskies are vital. EVENTS WHISKY SHOWS.” at-home drinks by delivering alcohol purchased from 64% local retailers. OFFERING – D ANA BARAN, VP MARKETING, DELIVERY 62% MILK & HONEY DISTILLERY, ISRAEL.

U.S. CONSUMERS U.K. CONSUMERS

INCREASE IN WINEAPP “ “ SALES SINCE MARCH 2020 AS A RETAILER WE WANT TO GET BRAND DIGITAL PLATFORMS WILL CHANGE STORIES OUT THERE BECAUSE IN THE VERY THE ALCOHOLIC DRINKS LANDSCAPE % COMPETITIVE WORLD OF E-COMMERCE FOREVER, PROVIDING A MARKETPLACE 1600 YOU’VE GOT TO OFFER SOMETHING THAT’S FOR A PLETHORA OF BRANDS AND GOOGLE SEARCHES FOR NOT JUST A SHOP FRONT. WE WANT TO CONCEPTS.” 'ALCOHOL DELIVERY' WORK WITH CRAFT PRODUCERS BECAUSE ALCOHOL IN APRIL THE RICH AND DIVERSE PORTFOLIO THEY – "THE IMPACT OF E-COMMERCE ON ALCOHOL TRADING", IWSR. 81% DELIVERY APPS 2020 CREATE, AND THE STORIES THEY HAVE TO LOCAL LIQUOR UP TELL, GIVE US AN EDGE.” 59.8% STORES – K RISTIANE SHERRY, CONTENT EDITOR, % MASTER OF MALT, UK. LARGE LIQUOR 250 59.8% CHAINS

1SOURCE: DRIZLY CONSUMER SURVEY REPORT 2020, JUNE 2020. 1SOURCE: DRIZLY CONSUMER SURVEY REPORT 2020, JUNE 2020.

2 2SOURCE: DISTILL VENTURES/DYNATA SOURCE: THE INDEPENDENT, ‘MORRISONS AND DELIVEROO NOW DELIVERING WHISKY CONSUMER SURVEY, FEBRUARY 2020. 30 ALCOHOL ACROSS THE UK IN UNDER 30 MINUTES’, PUBLISHED 5 MAY 2020. THE NEW RETAIL ENVIRONMENT DISTILL VENTURES THE NEW WORLD OF NEW WORLD WHISKY

SUBSCRIPTIONS On-TRADE & CLUBS

With curious consumers willing to invest Flaviar witnessed a ‘significant uplift’ of In most markets, the on-trade is adapting to more time and money into exploration and new members during lockdown as consumers new ways of hosting customers safely. Even experiences, whisky clubs are gaining in turned to affordable luxury and ways to with bars and restaurants reopening, limited popularity and provide an exciting avenue connect with friends and family. “It will capacities and social distancing measures for New World whisky discovery. probably level off to some extent, but mean trading will not return to ‘normal’ for not entirely, because these are also habit the foreseeable future. Members of subscription service Flaviar forming times and in many industries digital enjoy benefits like free tasting boxes, full- transformation is accelerated. A lot of However there are ways New World whisky sized bottles every quarter and access to people are shopping for alcohol online for brands can work with bars and restaurants rare and exclusive liquid. “Whisky clubs are the first time and many of them will to speed the channel’s recovery and forge a democratising access to spirits,” says founder continue to do so.” symbiotic relationship. Grisa Soba. “Through those clubs smaller brands can reach a much wider audience with much less money, while the consumer can more easily find new favourites.” The popularity of more exclusive whisky AT-HOME clubs such as Drammers is also rising. An invite-only global society with regional COCKTAIL chapters and events, Drammers helps members discover new whiskies through EXPERIENCES exclusive tastings and special limited edition single cask bottlings that are available only to members. At-home cocktail making became popular for consumers during lockdown, while bottled cocktails sold for takeaway and delivery “ became a lifeline for some bars. OUR FOCUS IS ON THE PEOPLE, This trend is expected to continue, and is THE COMMUNITY. OTHER CLUBS an area New World whiskies can embrace FOCUS ON THE WHISKY, NOT through mutually beneficial bar partnerships. THE SOCIAL NETWORK. THERE’S The continued popularity of simple whisky cocktails, particularly the Highball, has NO DRESS CODE, WE NORMALLY created an avenue for brands to enter POUR 2-3 DRINKS, TAKE A BREAK potential new consumers’ homes in a AND IN BETWEEN PLAY HIP-HOP different form. AND EAT PIZZA. IT’S ACCESSIBLE TO ANYBODY.”

– CHARLIE PRINCE, PRESIDENT, DRAMMERS CLUB.

IMAGE SOURCE: FLAVIAR.

32 33 1 THE NEW RETAIL ENVIRONMENT THE WORLD’S BEST BARS WHISKY COCKTAILS AT FIVE BEST-SELLING SOURCE: FAVOURITE COCKTAIL) OLD FASHIONED DRINKS INTERNATIONAL 2020 BRANDS REPORT. (THE WORLD’S MANHATTAN

PENICILLIN

DISTILL VENTURES WHISKEY SAZERAC SOUR 34

1 signature serve. signature serve. by embracingtheirown they’re partofthemovement key cities,brandscanensure Walker in promoting theserve and green tea.With Johnnie cola andgingerbeertoIrn Bru of carbonatedsoftmixer, from canfeature anytype the serve whisky tofourpartssodawater, Traditionally amixofonepart other long, refreshing drink. consumption occasionasany and tonicplaysinthesame Whisky’s answertoagin THE HIGHBALL 1/5 WHISKY 4/5 SODA and positiveexperiences. a significant role inbotheducation bartenders willcontinuetoplay majority ofconsumers,and and relatively unknownbythe New World Whisky isstillemerging comes tosuggestingwhisky. their staffare educatedwhenit that bothbarsandbrandsensure 1 BOUDREAU, – “ Now more thaneverit’s vital INTERACTIONS.” COMES FROM ON-TRADE REGARDING SPIRITS AVERAGE GUEST HAS KNOWLEDGE THAT THE THE VAST OF MAJORITY EDUCATION FOCUS ON SOURCE: JAMIE  PROPRIETOR, DISTILL VENTURES/DYNATA WHISKY CONSUMER SURVEY, FEBRUARY 2020. CANON , SEATTLE.

THE NEW WORLD OF NEW WORLD WHISKY 62% RECOMMENDATIONS TRUST BARTENDER CONSUMERS OF UK WHISKY point andserves. ineducation,range,price industry bars offerlessonsforthewhole themselves connoisseurs.These also cateringtothosewhoconsider while through thewhiskycategory warmly guidingnewcomers whisky barsare excelling at A newgenerationofspecialist increase awareness. to workwithbartenders whiskies, there isanopportunity a greater numberofNew World restaurants andhotelsstocking With more non-specialistbars, 35 – THEY’RE HIGH UP ON A – “ 82% RECOMMENDATIONS TRUST BARTENDER CONSUMERS OF US WHISKY SHELF GATHERING DUST.” VERSED IN THEIR WHISKIES OF BARTENDERS ARE LESS GENERAL ON-TRADE A LOT SPIRITS. BUT IN THE KNOW ALL ABOUT THEIR BARTENDERS HAVE TO AWARENESS NOW AS TRAINING AND BRAND BARS THERE’S WAY MORE IN MODERN COCKTAIL KATIE GROVES, MILROYS OF SOHO

, LONDON. 1 THE NEW RETAIL ENVIRONMENT DISTILL VENTURES THE NEW WORLD OF NEW WORLD WHISKY

CASE STUDY: THE GATE, GLASGOW Describing itself as a modern Scottish pub, The Gate serves all manner of beer, wines and spirits, although its specialty is its 200-bottle whisky selection. Language used is simple and flavour focused (a ‘swear jar’ is implemented for use of geeky terms), cocktails are bright and attractive (there’s a dedicated Highball menu), and prices are affordable (ranging from £3.50 for a malt of the month up to £24 a dram) with bottles clearly labelled with coloured stickers. 05 Conclusion

“ THE NEW CONSUMER IS SO PUT OFF ASKING FOR SOMETHING IN CASE IT’S AN £18 DRAM. OUR PRICE CHART HAS MADE PEOPLE A LOT MORE COMFORTABLE AND REALLY DRIVEN OUR SALES.”

– AND Y GEMMELL, OWNER, THE GATE, GLASGOW.

IMAGE SOURCE: THE GATE.

36 CONCLUSION DISTILL VENTURES THE NEW WORLD OF NEW WORLD WHISKY

REFERENCES

Whisky is a truly global spirit, enjoyed Brands can navigate the instability by millions around the world and now created by Covid-19 by supporting the produced on six continents by a new recovery of the on-trade, exploring generation of blenders and distillers emerging sales channels and adapting with boundless creativity. to a digital frontier that’s become more important than ever. Not least, forming These New World whisky makers are genuine connections with new whisky DRIZLY CONSUMER SURVEY REPORT EUROMONITOR/THE SPIRITS BUSINESS DRINKS INTERNATIONAL 2020 free-thinkers. They are passionate consumers and reflecting their values 2020, JUNE 2020 BRAND CHAMPIONS REPORT, JUNE 2020 BRANDS REPORT about taking whisky to the next level, through their actions. Report based on a survey conducted by Drizly Euromonitor International collates global Annual poll of 109 global bars from 38 during June 2020 among a representative and local company data and accounts, global countries, either winners of or nominees from maximising flavour and connecting with sample of 15,000+ adults of legal drinking age research, material in the public domain, worldwide awards such as The World’s 50 Best their local climate and culture. While New World whisky has developed so who had used and not used Drizly before and first-hand checks of place, product, price and Bars (1-100) and Tales of the Cocktail’s Spirited their innovative whiskies offer more quickly that the existing retail landscape includes some data points directly from Drizly’s promotion to form its database of market trends Awards, or regional awards. database. Respondents were recruited from across several categories. Euromonitor supplied variety than ever before, their values has struggled to keep up. But we’re on Drizly’s database and results were gathered via overview spirits industry growth figures to BARCLAYCARD/OMD SURVEY 2018 resonate with a new generation of the cusp of real change, and New World online survey. For the purposes of this survey, industry publication The Spirits Business for its consumer who is driven by provenance whisky has the potential to catapult the Gen Z is defined as age 21-26, millennials as age 2020 Brand Champions report of the world’s A nationally representative survey of 27-41 and Gen X/Above as age 42 and older. best-selling spirits brands. 2,000 British adults and 250 businesses was and new flavours and experiences. whole category into a new defining era conducted by OMD on behalf of Barclaycard for the spirit. between June-July 2018 into the value of the DISTILL VENTURES/DYNATA WHISKY IWSR DRINKS MARKET ANALYSIS experience economy. New World whisky makers are playing CONSUMER SURVEY, FEBRUARY 2020 GLOBAL DATABASE, MAY 2018 an important role in developing Survey conducted by Dynata on behalf of Distill The IWSR is the leading source of data and GLOBALDATA CONSUMER SURVEY, the whisky category through liquid Ventures of a representative sample of 2,000 intelligence on the alcoholic beverage market. MAY 2020 innovation, digital communication, US and 1,014 UK consumers of legal drinking The IWSR’s database quantifies the global the formation of real connections CONTACT US: age who had and had not consumed whisky in market of wine, spirits, beer, cider, and mixed GlobalData’s survey of 2,000 nationally the past six month. Participants were selected drinks by volume and value in 157 countries, representative UK respondents conducted and their own followers. Distill Ventures is committed to from across all Dynata’s proprietary online and provides insight into short- and long-term in early May 2020. research panel assets and the samples quota trends, including five-year volume and value developing innovation in whisky. controlled to reflect the population on age, forecasts. The IWSR tracks overall consumption Yet for the category to fully realise L.E.K EXPERIENCES WITH CHARACTER: We’re proud to work hand-in-hand gender and region. Interviews were conducted and trends at brand, price segment and THE NEW LEISURE ECONOMY, its potential there are numerous with the best entrepreneurs and online in the US and UK from 17th to 20th category level. AUGUST 2019 challenges that must be faced. their cutting edge whisky brands, February 2020. Report compiled using various sources and Stronger partnerships between brands but we collectively continue to IWSR DRINKS MARKET ANALYSIS, Dynata is the world’s largest first-party L.E.K insight and analysis. L.E.K is a global learn and evolve. ‘THE IMPACT OF E-COMMERCE ON and retailers need to be forged, data and insights platform with a reach that management consulting firm that uses industry ALCOHOL TRADING’, JULY 2018 e-commerce must become more encompasses 60+ million consumers and expertise and rigorous analysis to help business Email: [email protected] business professionals globally, and an extensive A paper published by IWSR in July 2018 leaders achieve practical results. sophisticated, communication more library of individual profile attributes collected Twitter: @distillventures exploring the effect of digital sales on the inclusive and an agile mindset adopted. through surveys. global drinks industry using insight from Facebook: @distillventures IWSR’s global database.

38 39 CONCLUSION DISTILL VENTURES THE NEW WORLD OF NEW WORLD WHISKY

ABOUT OUR WHISKY DISTILL VENTURES PORTFOLIO PARTNERS

We’re dedicated to helping entrepreneurs unlock growth and are committed to developing the world whisky category. Among the brands in our portfolio are three whisky distilleries with global ambitions. “ SINCE SCALING UP WE ARE SEEING THINGS IN PRODUCTION WE WERE NOT USED TO SEEING WHEN WE WERE MUCH SMALLER. THE BENEFIT OF WORKING WITH DISTILL VENTURES IS WE NOW HAVE GOOD FRIENDS WE CAN CALL UP AND ASK FOR HELP. THEY ARE REALLY GOOD AT GIVING ADVICE AND HELPING US, THEY REALLY WANT THE BEST FOR THE BUSINESS.”

– ALEX MUNCH, CMO AND CO-FOUNDER, STAUNING DISTILLERY, DENMARK. STAUNING STAUNING, DENMARK Distill Ventures was born out of a Portfolio brands take advantage of our realisation that there were many visionary deep understanding of how the best drinks Nine friends with a passion for whisky came drinks entrepreneurs with barriers holding brands are built as well as our network of together in 2006 to open a small distillery in them back and little access to resources to experts, giving companies of all sizes the a disused abattoir. In 2015 Diageo invested help them build global brands. We brought support needed to succeed. Our team in a minority stake in the business, allowing together a passion for drinks and a range leverages our expertise to drive businesses the team to build a much larger 900,000lpa of experts to fill the void. We approached forward, whether it’s establishing an online capacity distillery. Stauning is still focused on Diageo as a partner, and in 2013, the sales platform, brand building via social producing whisky using traditional equipment world’s first accelerator for the spirits media, liquid development for non-alcoholic such as floor maltings and fire-heated stills. industry was born. drinks, or unlocking access to control states in North America.

40 CONCLUSION DISTILL VENTURES THE NEW WORLD OF NEW WORLD WHISKY

STARWARD WESTWARD MELBOURNE, AUSTRALIA PORTLAND, OREGON, USA

This Antipodean distillery is a champion This single malt whiskey is influenced heavily of flavour, describing its product as by local culture, climate and people to ‘whisky for a curious, food-obsessed represent a taste of Northwest America. generation’. Locality is important, from Diageo made a minority investment in the the yeast and grain sourced from within Westward brand through Distill Ventures a day’s drive to the red wine barrels used in 2018. As well as financial backing, the to mature the whisky and the wildly varied partnership provided guidance on everything climate. Through Distill Ventures, Diageo from brand positioning to identifying invested in the business in 2014. commercial opportunities.

“ “ ALL OUR CASH WAS IN THE LIQUID; THE EVOLUTION OF GOING FROM WE DIDN’T HAVE ENOUGH TO GROW A PRODUCT TO A BRAND HAS BEEN THE BUSINESS. THE BIGGEST BENEFIT LARGELY AIDED BY INVOLVEMENT FROM OF WORKING WITH DIAGEO AND DV PEOPLE AT DISTILL VENTURES HELPING US IS HAVING THE CASH TO BE ABLE TO TO CREATE A COMPELLING CONSUMER INVEST WITH AN ALIGNED PARTNER STORY. OUR PRODUCT AND IDENTITY ARE THAT REALLY UNDERSTANDS THE STILL THE SAME, BUT WE HAVE BECOME TIMESCALES OF WHISKY.” BETTER STORYTELLERS AS A RESULT.” – T OM MOONEY, FOUNDER AND CEO, – D AVID VITALE, FOUNDER, WESTWARD DISTILLERY, USA. STARWARD WHISKY, AUSTRALIA.

42 43 44 DISTILLVENTURES.COM