By Ian Fraser
Published: The Sunday Times
Date: 12 July 2009
Diageo risks doing long-term harm to its reputation from its decision to axe its Kilmarnock bottling plant and Port Dundas distillery, according one of the UK’s leading whisky analysts.
Alan Gray, of Sutherlands Edinburgh, formerly part of stockbroker Charles Stanley, said: “I feel very strongly that this sort of thing can damage a brand. I don’t think even Diageo people can say, hand on heart, that this won’t. There could be an adverse reaction worldwide, and this could go beyond hurting sales of Johnnie Walker — it could affect Scotch whisky in general.”
He drew parallels with the sudden disappearance of the British motorcycle industry in the 1970s. “How many products does the UK currently produce which everyone, everywhere in the world, knows? Not many, and Scotch is one of them — and within that Johnnie Walker is the biggest brand. You tamper with that at your peril.”
Andrew Morgan, president of Diageo Europe, last week acknowledged that the firm may face a consumer backlash against its decision to restructure. However, he said Diageo believes any backlash against Johnnie Walker is likely to be limited to the Scottish market.
“We have thought very seriously about that but the conclusion is that any potential damage to Johnnie Walker’s reputation is something we can handle,” he said.
Despite Diageo’s decision to push ahead with its restructuring and to sever the historic tie between Johnnie Walker and Kilmarnock, Gray said he believes the decision may yet be overturned.
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