Five Things I have Learned This Week #7

1 — Blended Malts are about to grow bigger. In 2005, family owned spirits giant Grants launched Monkey Shoulder, an affordable blended malt made from their three Speyside single malts — Glenfiddich, Balvenie and Kininvie. The brand smouldered away in the background until 2012 when they took it the US. By 2014, its popularity was so high they experienced shortages. Its marketing was always about mixing — creating cocktails and having fun. The marketing team had a custom cement mixer made up in Monkey Shoulder orange and toured it around festivals. The brand has been phenomenally successful.

Hidden away in the bowels of Diageo’s latest annual report was a tiny line item noting it had acquired the remaining 70% shareholding in Copper Dog it didn’t already own. Copper Dog is a blended malt, made from a blend of Diageo whiskies, launched by the famous Craigellachie Hotel in 2016.

Both brands are priced around the same (ï¿¡27ish), are made from inhouse malts and named after quirky bits of distilling history. Monkey Shoulder was an ailment malting house workers developed after toiling away turning malt with shovels all day. A Copper Dog was a piece of tubing with a copper penny glued to one end and a cork in the other worn on the inside trouser leg, into which sharp stillmen would siphon off whisky for private consumption.

Considering the success of Monkey Shoulder, I expect to see Copper Dog being pushed very hard in the near future.

2 — Whilst I can be fantastically rude about corporate innovation teams and will happily explain at length why large companies are mostly rubbish at new product development, it's worth noting that Grants invented two absolutely blockbuster products in the space of six years. And in the process, takes much of the credit for two massive trends. Alongside Monkey Shoulder and its creation of whisky as a cocktail ingredient and mixing spirit (and now the world’s best selling whisky brand), Grants is behind the gin boom.

Hendrik’s Gin was created in Grants’ R&D department in 1999 and its marketing campaign of using cucumber slices as a garnish ensured everyone in the pub knew what you were drinking. Launched as a premium gin at a time when, of the three ingredients of a G&T (gin, tonic and garnish), there was only ever debate about the last one (lime for those in the know, lemon for those stuck in the past — the gin was mostly irrelevant and the tonic was only an issue if it wasn’t Schweppes), Hendriks made gin a talking point again. It allowed people to differentiate themselves with their gin choice and garnish and had a fun Victoriana image back when that was still fresh. It’s inconceivable that today’s premium gin category would exist in its current form without it.

3 — As a piece of canny marketing, the instruction that the consumer demand a slice of cucumber in their G&T is a stroke of genius. Thanks to this campaign, back in the mid-noughties a cucumber in your drink indicated you knew what you were doing, boosting sales further as people spot the cool new fashion. But the genius lies elsewhere. Though not hugely expensive, cucumbers do go off quickly and are just another fresh ingredient for the bar to stock. But that’s not the customer’s problem, nor Grants’ problem. It’s the bar’s problem.

The king of making the bar do all your marketing work, though, is Magners. Launched internationally in 1999 in one pint bottles, the owners (C&C Group of Ireland) told its drinkers to demand a pint of ice to go with their bottle. If you’ve filled your pint glass with ice, you can’t empty the bottle into it, meaning the bottle follows you to your table. The bar is now filled with miniature adverts for Magners. And the bar pays for the ice.

4–One of our European importers asked to pay us early. Negative interest rates in the eurozone mean European businesses are desperate to pay their bills on time to reduce the steady erosion of their cash balances. I was only too happy to oblige, though 5 minutes after receiving the not-insubstantial sum into our account, I was sent an email from our bank informing me that euro balances over €70K incur a 0.5% interest charge. (Wait — you mean it applies to me too?!) I immediately paid a bunch of bills to get the balance down.

It struck me that if British companies were also charged a similar rate on balances over a certain sum (€70K is low, I’d go with ￡250K), they’d be much happier to pay bills on time, if not early. This would immediately unlock working capital for small companies who tend to both hold smaller balances of cash and are forever being messed about by large companies whose CFO has decreed that “if you want to work with us, we pay on 90 days and only then once you’ve sent a billion emails to our shared services centre in Milton Keynes, all of which are ignored because you haven’t used the correct format of asking for your bill to be paid, and the centre is criminally understaffed”.

5 — When asking if the (expensive) airflow systems we’re designing for our stills floor were strictly necessary, I was told “no, from health and safety and building control standpoints, they are not strictly necessary, but the last distillery that didn’t put them in saw the temperature hit 45 degrees one summer’s day and the stillman fainted”. We’re a lot further south than them, so we’re putting in the airflow.

https://paddy-fletcher.medium.com/five-things-i-have-learned-this-week-7-cb6b9452f479