Dickel - What's Diageo's Problem?

I have always found the GD 8 and 12 very nice whiskey. Soft and easy to drink they always work well with a cigar. IMO a much better whiskey than JD....

Dickel did not produce for quite a long time from what I have heard, which led to a shortage, which led to a stampede to get what was to be gotten and drove up the demand. Have tasted, not too bad for a whiskey that is not Straight.

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Originally Posted by proof and age

Dickel did not produce for quite a long time from what I have heard, which led to a shortage, which led to a stampede to get what was to be gotten and drove up the demand. Have tasted, not too bad for a whiskey that is not Straight.

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The distillery was shut down from 1999 to 2003, which I wouldn't call "quite a long time", and I really don't think it drove up demand. It was almost ten years before they made the decision to stop shipping the No. 8, and that didn't last two long. And they had enough just to sell Cascade Hollow with two different labels.

(I say that stopped shipping No. 8 rather than ran out, because I think they could have kept bottling it, but not without hurting the No. 12 down the road).

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Originally Posted by craigthom

The distillery was shut down from 1999 to 2003, which I wouldn't call "quite a long time", and I really don't think it drove up demand. It was almost ten years before they made the decision to stop shipping the No. 8, and that didn't last two long. And they had enough just to sell Cascade Hollow with two different labels.

(I say that stopped shipping No. 8 rather than ran out, because I think they could have kept bottling it, but not without hurting the No. 12 down the road).

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I will assume that you are correct on the shut down period, '99-'03, and argue that this is in fact "quite a long time". As production is wound down, less is made, and with aging in play, and the difficulties of resuming production after long lay offs, you are looking at 3-4 years after '03 until there would be any marketable product.

Diageo has been shockingly bad at reading the U.S. market for U.S.-made whiskey. Just about the exact moment Diageo bets on one direction, the market goes the other way. So it was when they pulled the reigns in on Dickel. The ultimate problem there was they had some EPA stuff they had to do before they could reopen the plant, so they had to wait until they decided to put Dickel more or less back into full production before they could justify the expense of the EPA abatement. Then, of course, the market went boom and they were shown to have waited too long. It is correct to say they had to stop bottling No. 8 to protect the supply for the more profitable No. 12 and single barrel. They probably did okay -- a rising tide and all that -- but they probably missed out on some volume and, more importantly, share that they could have had. They're making the same mistake right now with Bulleit, in not biting the bullet and giving Bulleit a real distillery.

Thats Diageo for you. I take it that Dickel had some asbestos isssues that needed abated before it could reopen. S-W has some too. They should spend the money on S-W and crank it back up. It would be mile cheaper than the expansions they have undertaken in Scotland in recent years!

Thomas

You are correct about asbestos being an issue at S-W but I think the problem at Dickel had to do with treatment of the process water they typically return to the environment.

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Originally Posted by cowdery

Dickel kind of takes care of itself and sells where it sells. Investment in trying to sell more hasn't paid off. They've got their customers, who will buy it whether they advertise it or not, but they haven't found anything that will move the needle. Plus the warehouses are full so they can't increase production without building more warehouses. They've told me they are rising with the tide--when American whiskey sales increase overall theirs increase at about the same rate--so they are growing at a managed pace. Because their marketing costs are so low, the brand is small but profitable. There's also the thing of great big Diageo not giving much attention to something so small, especially since it is performing pretty well on the balance sheet. Bulleit, by contrast, is competing for share in a dynamic segment.

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Thanks for the insight, Chuck. Jack Daniel's is one of the world's largest selling spirit and, I believe, sells more whiskey than all other American brands combined. It may be that Diageo also realizes that they are unable to stand Dickel against Jack Daniel's in head-to-head competition and, as you say, are content with Dickel's current market share.

Daniel's is the largest selling whiskey in the world, bigger than any single scotch brand too, and it outsells Dickel by several orders of magnitude, but it only sells a little more than Jim Beam and certainly does not sell more than all other American brands combined.

Diageo is funny. It's like being in a big family. You get attention sometimes when you least expect it. They may just decide to put a push on for Dickel one of these days.

Part of the issue, I think, is supply. They keep making a little more each year and they're selling all they can make, so why spend money to generate demand they can't supply?

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Originally Posted by cowdery

Daniel's is the largest selling whiskey in the world, bigger than any single scotch brand too, and it outsells Dickel by several orders of magnitude, but it only sells a little more than Jim Beam and certainly does not sell more than all other American brands combined. ...

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Chuck, Thanks for information - and for the correction to my impression about Jack Daniel's volume. Shell