What’s the most Scottish thing you can think of? Outside of tartan, bagpipes and that one Mel Gibson movie, there’s a good chance that single malt whiskeys are going to be high on the list.
Names like Glenmorangie, Ardbeg, Talisker, Laphroaig, and Lagavulin are redolent with images of big proudly bearded Scotsmen making fantastic whisky in the heather-dotted highlands.
It might surprise you then to learn that none of those distilleries are owned by Scottish companies. In fact, around 68% of the Scotch whisky market share, or around 75% of the physical distilleries, are owned by just five multinational corporations.
The question is, what impact do these drinks conglomerates have on the industry and is it a net positive one?
Who Are the Major Players?
As we mentioned there are four major conglomerates that make up the vast majority of the Scotch whisky market, and we’ve listed them in order of market share:
Diageo - 38% of the market share
A British multinational headquartered in London, Diageo was only unseated as the world’s largest distiller as recently as 2017, when it was overtaken by the Chinese baijiu giant, Kweichow Moutai. Produced by a merger between The Guinness Brewery and Grand Metropolitan in 1997, Diageo has had a hand in everything from Burger King to non-alcoholic spirits brand Seedlip, although they’re most reconizible property is almost certainly the Johnnie Walker blends. Diageo is currently responsible for around 33% of all whisky production based in Scotland and owns some of the best regarded distilleries in the country, including Talisker, Lagavulin and Mortlach.
Pernod Ricard - 20% of the market share
French owned Pernod Ricard has been responsible for the production of the pastis apéritifs Pernod Anise and Ricard Pastis since 1975. However, having acquired much of Seagram’s distilled beverages division during a selloff in the 2000s, they now have a significant stake in the single malt and blended whisky market. Pernod Ricard owns distilleries and brands like Aberlour, Jameson, Ballantine’s, Longmorn, and Glenlivet, as well as all the Chivas Regal distilleries.
William Grant and Sons - 8% of the market share
The only Scottish company on this list, William Grant and Sons were founded in 1887 and are still a family owned enterprise. The company has the benefit of being the first to establish a dedicated single-malt whisky distillery, Glenfiddich, which continues to be the best selling single-malt whisky in the world. Since the establishment of Glenfiddich, William Grant and Sons has branched out into the production of vodka, gin, and American whiskey and has also opened other dirtelleries such as Balvenie, Girvan, Kininvie and Ailsa Bay. Outside of single malt whisky, William Grant and Sons has a foothold in the blended whisky market with Grant’s and Monkey Shoulder.
Bacardi - 6% of the market share
Hot on the heels of William Grant and Sons is the rum giant Bacardi. Obviously more famous for their rums, Bacardi bought into the Scotch whisky market by purchasing Dewar’s and Royal Brackla and from Diageo for around $2 billion. Bacardi now owns a range of distilleries, including Aberfeldy, Glen Deveron, and Craigellachie.
Edrington Beam Suntory - 6% of the market share
The third largest maker of distilled beverages in the world, Edrington Beam Suntory started out as Suntory Holdings Limited in Japan in 1899. Original owner Shinjirō Torii started off selling imported fortified wine before building the country’s first first malt whisky distillery, the Yamazaki Distillery. In 2014, Suntory acquired Beam Inc for around $16 billion. In addition to owning a large number of American whiskey and bourbon brands, Edrington Beam Suntory also owns some of the best regarded single malt whisky distilleries, including Bowmore, Laphroaig. Ardmore, Glen Garioch, and Auchentoshan.
While the five conglomerates above own the vast majority of whisky market, there are other large conglomerates that have established footholds in the industry. Brown Forman, owners of the Jack Daniels and Woodford Reserve whiskeys have acquired the Ben Riach, Glen Dronach and Glenglassaugh distilleries. Moet Hennessy Louis Vuitton (yes, that Louis Vuitton) actually owns two of the best known single malt Scotch distilleries in Glenmorangie and Ardbeg. However, between them, these two companies only own a total of 1% of the market.
Are Drinks Conglomerates Good for the Whisky Industry?
The production of Scottish single malt whisky has always created an image of family run tradition around the entire industry.
However, as with most marketing efforts, the reality is a little more complex.
While the expertise and skills required to create fantastic single malt whisky is undoubtedly paramount to the success of the industry, so is the capital required to invest in the building of new distilleries, job creation and boosting the nascent whisky tourism industry.
That investment capital is something that large drinks conglomerates and multinational companies can provide in spades.
That is, of course, not to say that such companies are without their drawbacks. Poor corporate behavior is something we’ve come to expect from large multinationals and the whisky industry is no exception.
Diageo’s closure of the Johnnie Walker bottling facility in Kilmarnock and its insultingly low increase on the basic rate of pay while the company recorded record profits and paid its COE £11.7 million a year, drew widespread criticism, strike action from workers across Scotland, and unfavorable comparisons to the worst excesses of the banking industry.
Whisky traditionalists have also decried the homogenisation of the industry as stripping away the individual personality of, and differences between, the various distilleries.
What cannot be denied, however, is the beneficial effect the money pouring into the Scottish single malt whisky has produced.
The current boom in global popularity of Scottish single malt whisky can be traced, in no small part, back to the cost saving economies of scale, capital investment and marketing power of the drinks conglomerates, making them, for the moment, a net positive.