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Johnnie Walker : brand profile

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Johnnie Walker is the world's best-selling whisky, and the #3 premium spirit overall by volumes. However its high price makes it the top-seller globally by revenues, worth an estimated $5.2bn at retail in 2015, according to Impact Databank. That's almost 50% more than second-placed Smirnoff vodka. Its greatest strength is an extensive worldwide profile, unmatched by any of its competitors. Sold in more than 200 countries, Johnnie Walker doesn't lead the whisky sector in any of the key spirits markets, but is a major player in all of them. It is especially strong in Asia, an important whisky market, where it is Diageo's biggest brand.

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Competitors

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Analysis

Johnnie Walker is the second-biggest brand by volumes in Diageo's portfolio behind Smirnoff, but the leader by far in value. For 2015, Impact Databank estimated volumes of 17.6m cases, falling for the second consecutive year. Yet it remains almost three times the size by volume of closest global volume rival Ballantine's. Johnnie Walker's premium price makes it not just Diageo's but the world's #1 spirits brand by value, worth an estimated $5.2bn at retail in 2015, according to Impact Databank. That's considerably more than second-placed spirit Smirnoff. Its greatest strength is an extensive worldwide profile, unmatched by any of its competitors. Sold in more than 200 countries, Johnnie Walker doesn't lead the whisky sector in any of the key spirits markets, but is a major player in all of them. It is especially strong in Asia, an important whisky market, where it is Diageo's biggest brand. The brand's top market overall is the US, followed by the global duty free travel sector. Greece, the Middle East and Thailand are also important territories.

The best-known version of the brand is Johnnie Walker Red Label, a blend of up to 35 single malt and grain whiskies, accounting for around 60% of total volumes. Pricing is around $25 per bottle. Deluxe blend Black Label, a combination of more than 40 specially selected malts, accounts for most of the rest at $35 per bottle, and the portfolio is rounded out with a number of more specialized products, many of them only available through duty free retail outlets. These include Double Black (around $35), creamy Gold Label ($80), highest quality super-premium Blue Label (priced at $225 per bottle or more), Pure Malt Green Label, premium Johnnie Walker Swing (packaged in an unusual rounded bottle) and Johnnie Walker Premier (Asian duty free only). High-end products such as Blue Label have done especially well in wealthy markets such as New York or Asia since 2005. A new ultra-premium variant, John Walker & Sons Odyssey, launched exclusively in Asia in 2012 prior to a global rollout in 2013. Another high-end variant is Johnnie Walker Platinum, launched in 2013, and positioned between Black and Blue at around $110 per bottle.

The group also produces various special editions, made from even rarer malts. The 150th Anniversary Blue Label King George V "edition" launched in 2006 sells for as much as $500 a bottle. The most valuable edition to-date is the Blue Label 1805 edition, of which just 200 bottles were issues in 2005 to celebrate the double centenary of the birth of the first John Walker. A bottle was sold at auction towards the end of 2008 for $38,000. In 2015 the brand introduced a number of limited edition Johnnie Walker Select Casks in the US. Johnnie Walker Island Green was launched in 2016 for a travel retail limited edition blending malts from four separate regions of Scotland. Johnnie Walker Blender's batch was introduced in the US later the same year, as an umbrella for super-premium limited edition blends.

In some territories (notably Australia and other Asia Pacific markets), the group also markets ready-to-drink single-serve spin-off brands, including pre-mixed Johnnie Walker & Cola and Johnnie Walker & Dry. Johnnie Walker One, developed by the whisky's Thai distributors, has also proved popular and has been rolled out in other markets, including Brazil.

The brand has a long-established association with golf. It sponsors the annual Johnnie Walker Championship in Scotland and the Ryder Cup contest between Europe and the US. From 1990 onwards it was the sponsor and organiser of the Johnnie Walker Classic, the Asia Pacific region's most prestigious golf event. However, that pan-Asia arrangement was cancelled in 2009 and the brand plans instead to sponsor local events in Australia and South Korea.

In an unusual development, Diageo agreed a deal in 2005 with Italian menswear designer Gruppo Franco Ziche to launch a range of upmarket golfing and other sportswear under the Johnnie Walker brand, as well as bags, leather accessories and ties. In 2006, the brand became a lead sponsor of the Vodafone McLaren Mercedes Formula 1 racing team.

Background

Born in 1805, John Walker established a distillery in the back room of his grocery store in Kilmarnock in around 1850, in order to produce whisky for sale in jugs. The business prospered and was eventually taken over by his son Alexander. However the shop was badly damaged by flooding in the early 1850s, and Alexander persuaded his father to abandon grocery retail and begin wholesaling whisky to other retailers. Alexander had apprenticed for a tea merchant, where he learned the art of blending, and he used that experience to create the family's first blend in 1867, known as Old Highland Whisky. From 1870 it was sold in characteristic square bottles, a style later borrowed by Jack Daniel's. After Alexander Walker's death in 1889, his own sons George and Alexander II took over the business. George handled sales and marketing in London, establishing offices around the world, while Alexander set about learning the mysteries of the blending process, quickly becoming a master of the art.

To keep track with demand, Alexander also increased production by acquiring several rivals in Scotland, including in 1893 the Cardow Distillery in Speyside, which became the cornerstone of all the company's blends, as well as its new headquarters. In 1909, in honour of their grandfather, the brothers renamed Old Highland as Johnnie Walker Black Label, while also introducing a new, lighter blend, aimed at whisky-and-soda drinkers. This was named Johnnie Walker Red Label. To promote these two products, the company adopted its the logo of the "striding man", in fact a portrait of their grandfather commissioned from noted commercial artist Tom Browne. The brand was enormously successful, exported worldwide through what was by now a substantial global network reaching 120 countries. The recognition factor was heightened by the company's production of large numbers of promotional items including branded ashtrays, trays and water jugs to promote the whisky at point of sale. In 1920, Alexander Walker was knighted for his services to industry.

Five years later, John Walker & Sons joined forces with Dewar's and Buchanan's to form The Distillers Company. Ironically, despite its worldwide profile, Johnnie Walker was less valuable to Distillers than its other brands. Haig, for example, was the leading whisky in Britain, while Buchanan's Black & White was more popular in North America. Over the following years Distillers expanded its presence further, and also acquired businesses in chemicals, manufacturing and other sectors. In the late 1950s it made a disastrous move into pharmaceuticals, distributing pregnancy drug Thalidomide in the UK. This was later withdrawn when it was found to cause tragic deformities in children. (Distillers and its successor companies contributed a substantial lump sum each year for the next 50 years to a trust fund in aid of victims of the drug. In 2005, Diageo settled its outstanding commitments with a final contribution of to the fund of £149m). Gradually, however, Johnnie Walker grew in stature, overtaking its sister whisky brands.

During the 1970s sales doubled, and it had become Distillers' biggest brand by the end of that decade. However in 1977, following Britain's entry into what was then the EEC, the company took the highly controversial decision to withdraw Red Label from the British market. This followed pressure from EEC regulators to change a system whereby continental wholesalers were charged more for supplies than their British counterparts. Rather than cut prices in the UK, Red Label was withdrawn altogether in that market until 1983. (In the process it lost its position as the country's #2 whisky). Shortly afterwards Distillers acquired Somerset Importers, the company with exclusive distribution rights in the US.

That year, Distillers was also at the centre of a brutal takeover battle between Guinness and Argyll Group. The business was ultimately captured by Guinness, a deal later overshadowed by financial scandal (see Guinness profile for more). Over the following years Johnnie Walker remained the leading brand in an expanding portfolio of spirits formed by the merger of Distillers with Guinness's Bell's division, and then with the spirits portfolio of Grand Metropolitan to form Diageo. In 1999, Diageo launched "Keep Walking", the first ever global marketing campaign for Johnnie Walker, created by Bartle Bogle Hegarty.

Last full revision 17th August 2016

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