Whisky wars for Christmas

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The Independent Online
SCOTCH whisky producers are set to become embroiled in a round of heavy price-cutting over Christmas to protect their market share amid declining sales.

Last Christmas saw bigger than normal price discounts by Guinness, maker of Bell's, and Allied-Lyons, distiller of Teacher's. Nearly pounds 1 was cut from a bottle of Scotch, taking prices below pounds 10.

Observations yesterday by Invergordon Distillers, when it annnounced its interim results, highlighted the growing pressures on producers of standard blends.

Overall whisky sales in Britain have been severly depressed by the recession. Standard blends have also been hit by retailing polarisation, with consumers opting either for premium brands or 'value-for-money' own- label products.

Pressure has also come from the burgeoning take-home market, which accounts for more than 30 per cent of whisky sales compared with less than 5 per cent in 1980. The swing has resulted in consumers shopping around for the best value.

The British market, the second biggest in the world with a 15 per cent share, experienced a 6 per cent fall in sales in the first four months of this year. And indications are that the whole of 1992 will be down by 9 per cent.

Geoffrey Whittaker, a director of Invergordon, which specialises in making own-label brands for supermarket groups like Tesco and Safeway, said: 'The pincer movement on standard blends is continuing. They are shedding volume.

'It's all to do with retailers, and market confidence in quality. Our market share is growing at the expense of standard blends.'

Invergordon, which could face a fresh takeover bid in November from its 41 per cent shareholder, Whyte & Mackay, lifted pre-tax profits by 11.5 per cent to pounds 14.6m for the first six months of 1992. The interim dividend rose by 12 per cent to 2.8p.

Analysts agreed with Invergordon's observations and none of them ruled out the possibility of a price war. Many standard blends are retailing for between pounds 10.19 and pounds 10.50 a bottle, but Bell's, the market leader, carries a recommended selling price of pounds 11.49.

Guinness, which is due to report results this month, declined to comment on its own trading experiences or the general state of the British market.

However, Campbell Evans, at the Scotch Whisky Association, said: 'Most of this year has been poor, and there could be a lot of fighting over Christmas.'

Additionally, Charles Shaw, marketing director at Whyte & Mackay, said it was reasonable to assume big price cuts at Christmas, which 'won't be any easier than last year.'