Tuesday, 13 November 2007

Tullamore Dew

It would make a good quiz question in Ireland: what is the most popular Irish whiskey, globally, after Jameson? Not many would guess the right answer: Tullamore Dew.

It's a very familiar brand in Ireland and there is an abiding cultural memory of the slogan that was once printed on every bottle and in advertising - Give Every Man His Dew.

But these days the whiskey is just not promoted in Ireland. Nor is it widely available in bars; I have looked for it for some months now, unsuccessfully. It's many years since I've tried it, and that was abroad.

So who is buying it? Well, Tullamore Dew is the number one Irish whiskey in Germany, Sweden, Denmark and the Czech Republic. It is the number one whiskey (Irish or Scotch) in Bulgaria and Latvia. C&C, the brand owners, are looking to the new whiskey markets of countries like Ukraine and Russia for continued growth. It's also widely stocked in Duty Free shops.

We've all seen the super cool Jameson ads which don't allude in any way to the product's Irish origins. Want to see how Tullamore Dew is promoted? Thanks to YouTube you can. The marketing manager of C&C conceded in a newspaper article recently that the imagery "might not be entirely applicable" in the Irish market. Hmm, I'm sensing thatched roofs and donkeys laden with turf.

Actually it's not that bad at all. The tag line is Rough Country, Smooth Whiskey.

The story of Tullamore Dew is a fascinating one and it really illustrates the forces that shaped the whiskey industry in Ireland. It goes back to the founding of a distillery in Tullamore, Co. Offaly, in 1829 but I'm going to jump over the first hundred years here and take up the story in the twentieth century.

Like other Irish distilleries, Tullamore suffered hugely from events in the first half of the 1900s: Prohibition in the US, a trade war with the UK after Irish independence, global recession in the 1930s and World War II.

Rather smartly, Tullamore sensed changing preferences in its export markets and introduced the first blended Irish whiskey in 1947. It was too late to save the distillery however and production ceased in the 1950s. They continued to sell the Tullamore Dew whiskey until stocks ran out. The valuable brand was sold to John Power and Son, one of the great Dublin distillers, in 1964.

Only a couple of years later, Powers merged with Jameson and Cork Distillers to form United Distillers of Ireland. This subsequently became Irish Distillers and moved all whiskey production to a new distillery in Midleton, Co. Cork, shutting down all of the original distilleries.

After acquiring full control of Bushmills, Co. Antrim, in 1978, Irish Distillers had a 100% monopoly on Irish whiskey production (this lasted until 1987 and the founding of the independent Cooley distillery)

Tullamore Dew was now one of several major brands made at the facility in Midleton.

In 1988, Allied Lyons and Grand Metropolitan, two British drinks companies, made a joint takeover bid for Irish Distillers. Irish Distillers rejected the bid and invited a counter-offer by French giant, Pernod-Ricard. A bitter battle ensued that went all the way to the Irish Supreme Court. In the end Pernod-Ricard triumphed.

Irish Distillers remains part of the Pernod-Ricard stable today. But Tullamore Dew is now owned by C&C. How did that happen?

Allied Lyons remained interested in the Irish whiskey market and, through its Irish subsidiary, soft drinks company C&C, looked into various options. They seriously considered starting a new distillery from scratch. They also considered buying Cooley. Ultimately, however, they were not willing to put the necessary time into maturing new stocks of whiskey or in building a strong brand from the ground up.

So, after a few years had elapsed and the heat of battle had died down, Allied Lyons approached Pernod-Ricard and proposed a straight swap. In December 1993, this was agreed. Allied Lyons gave Pernod-Ricard Royal Canadian Whiskey and a few million pounds. Pernod-Ricard gave C&C the Tullamore Dew brand and a long-term contract agreeing to continue its manufacture at the Irish Distillers plant in Midleton.

At the time, C&C planned to target the US, British and Irish markets. As mentioned above, however, this is not how it turned out. They also anticipated the introduction of single malt and "deluxe" whiskeys with the Tullamore label but that didn't happen either.

The business story doesn't end there. In 1999, C&C gained independence from Allied Domecq (as Allied Lyons became after a merger) in a management buyout, taking Tullamore Dew with it. In a nice twist, Pernod-Ricard subsequently acquired Allied Domecq in 2005, though of course they did not recover Tullamore Dew.

And that brings us to today. Via all of these machinations, one of the strongest Irish whiskey brands escaped from Irish Distillers' grasp and remains independent. And yet, confusingly, it is still made by Irish Distillers.

Although Tullamore Dew is a success story for C&C, they have been flogging off chunks of their business for some years now to focus their efforts on cider. This strategy was vindicated in 2006 when cider sales took off in the UK. A bad summer in 2007 and stiffer competition from Bulmers cider in Britain reversed some of those gains, however.

The Sunday Business Post speculated some time back that the UK Bulmers brand might come on the market as its owner, Scottish & Newcastle, fends off a takeover attempt. C&C would have to consider snapping it up, thus restoring its position in the UK cider market.

To do that, it would need funds. Could Tullamore Dew be in play once again?

Buying an established whiskey brand would be an excellent way to start a new distillery. Production could be gradually transferred to the new distillery and then the brand extended in order to introduce new, premium whiskeys. Cooley's great difficulty has always been establishing its own brands without the might of a multinational drinks company behind them. The buyer of Tullamore Dew would start from a very strong market position.

Tullamore Dew would be a great catch for Cooley itself. It would also be very fitting since Cooley bought some of the assets of the defunct Tullamore distillery and, indeed, has recently begun to distil whiskey in one of its old pot stills, now installed at Kilbeggan.

I doubt Cooley could afford Tullamore Dew, however. The most logical buyer would be Irish Distillers with its deep pockets and involvement in the manufacture of Tullamore Dew. We'll see.