Whisky loses ground in booze battle

Press, Volume CXVI, Issue 34132, 20 April 1976, Page 15

Whisky loses ground in booze battle

(By

CHARLES FOLEY,

of the Observer Foreign News Service)

LOS ANGELES. This country of whisky-topers is fast becoming one of vodka, gin and rum drinkers and the whisky distillers of America and Scotland must look to their ' futures. “White is right—and consequently brown is down,” says one distiller. Although bourbon managed a December surge with Christmas-wrapped gift bottles and decanters, enough of the cheaper white stuff went down the hatch at year-end parties to tip the scales in 1975 and put vodka a few percentage points ahead in total consumption. Thus, for the first time, America’s staple booze plays second fiddle to an outsider which was almost unknown until World War II togetherness with Russia made it popular. Three leading United States whisky distillers have already reported falling profits. They complain that bourbon must be aged for two to four years, while vodka firms can take an order today, make the goods tomorrow and send them on their way next week. Costs of manufacture are not comparable — here again, vodka gets its high at bourbon's expense. ‘ Endangered’ Some fear that the bourbon drinker is an endangered species. Now that the legal drinking age is down to 18 in many states, the “youth bulge” is contributing to a growing demand for “mixed drinks”: gin, vodka, pale rum, with a range of sweet cordials, soft drinks and fruit juices. “If it won’t mix,” store buyers warn, “it won't sell." Tequila. the Mexican “cactus d-ink” which can he mived

with almost anything, first won the West and now is sweeping the country’. Scotch whisky, one of Britain’s fastest-growing foreign exchange earners, climbed from 9.78 per cent of a $7 billion market to 13.2 per cent of a $l2 billion market in 10 giddy years up to 1973. The result of doubling U.S. sales in a decade was to funnel almost half of ail Britain’s Scotch exports down thirsty American throats. Came the recession, on top of the vodka challenge, and the growth curve flattened out. In 1974 it went up only 1 per cent. The first half of 1975 actually showed a decline, but this should be made good by the ending of recession and the year-end splurge. So Scotland is holding its own in total sales, if at some cost in casualties, compromise and changed tactics. American dream No longer can it count on the marketing practices of the sixties when its “premium product’’ became part of the glossy American dream (“Glamour and soda,’’ the image-makers crooned). It is true that the rich are buying more expensive Scotch then ever, up to and including treasures like Chivas Royal Salute for $36 a “fifth,” equivalent to $1.40 an ounce. And at the other end of the scale, a supermarket offers a brand of its own, which is bought in bulk from Scotland, “rectified” (viz. watered i down) and bottled in Los ' Angeles. It’s going great i guns at $6. It is the middle-ground of Scotch, like Johnny Walker Red Label, shipped by the t case and selling at around i $lO a bottle, that shows a , sales growth slowdown. This j will probably go on so long

as the U.S. middle class is harassed by high taxes and inflation. Bottled sales went up in 1974 by only 0.6 per cent. But bulk Scotch took up the slack with a 2 per cent increase. Long-term trend Importers see this change as a long-term trend, with a shift to bulk brands and socalled “private labels’’ used by bulk distributors. The barrelled stuff is cheaper to package and transport and escapes duty on the water content, which is added here by bottlers. But though more drinkers may trade down to bulk brands, Scotch, after all, is Scotch: if more is sold, whatever the form, the dollar flow to Britain will rise and the balance of payments will be increased. Another cheering note is that drinkers are demanding not more for their money but, in a way, less. Until the war, bourbon was always 100 per cent proof, which meant a 50 per cent alcohol content. Greatly daring, Old Crow dropped to 86 (alcohol content 43 per cent) and sales, instead of slumping, soared. Discovery! If drinkers noticed the difference, they approved of it. Most Scotch today is sold at 80 proof and profits from the public’s preference for “lighter” spirits of a lower alcoholic content. Facing today’s stec, ly rising costs, . Old Crow has again taken the lead in reducing the proof of the domestic product from 86 to 80 — to avoid red ink, add water. Now there is talk of bringing the general proof of spirits down to 70 — only t-wice the strength of a dry Martini — without, of course, any lowering of the price. Much duty would be saved by this further “rectification.” Until the U.S. tax authorities make up for it with higher taxes. —- O.F.N.S. Copyright.