The New World New World Whisky

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.” – ANDY 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 – TOMMIE 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

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