Memoire Online - Is there a move away from wine to whisky in the european market?

It is interesting to have a look at worldwide alcohol consumption on the health side. The World Health Organisation (WHO) publishes regular reports on this topic. According to the WHO, 48% of the world adult population has never consumed any alcohol. But what about the rest?

The drinker's geography commonly claims a wide prevalence of alcohol consumption in Western countries and Russia, while temperance is demonstrated by African countries, Arabian region and South East Asia.

The more a country is developed, the more its alcohol consumption is high. On the contrary, developing countries show lower consumptions.

Let's have a look at this map representing the alcohol consumption per capita (considering only 15+ people) in each country, the repartition is slightly different: if a wide part of the population of the developing countries, like India and Africa, is indeed abstinent from alcohol, the part of their population who drinks alcohol grow up the consumption volume of these countries.

If 48% of the world adult population has never consumed any alcohol, the consumption per capita is underestimated.

Regarding the type of alcohol consumed, more than a half of the alcohol consumed in the world is part of the spirit family, followed by beer (34.8%) and wine (8%).

The American continent (AMR) consumes more beer vs spirits, while this proportion is reversed in Pacific countries (WPR). The same trend, even majored, is assessed in South East Asia (SEAR). Middle East countries (EMR), the spirits consumption is similar to the wine one. According to WHO reports, Canadian people drink more than American or Australian people. Alcohol consumption is low in Maghreb, but more important in Sub-Saharian Africa, South Africa and Namibia.

The WHO is working to prevent potential health issues linked to an excessive alcohol consumption (see advertising hereunder):

The WHO has also published the ranking of the alcohol consumption in European countries (2005 data, Cf. appendix n°1).

The alcohol consumption is really variable depending on the countries: Russian and their neighbors drink more than all the other countries. Portugal is also clustered in the heavy drinkers with more than 14.5 liters per capita, followed by Ireland and France and UK. Italy differentiate itself with a significantly lower consumption (10.7 liters per capita). Let's have a look at what is happening on the wine production side. We can indeed make a parallel with the European consumption tendency. As we said previously, the Old World continues to lose ground against the New World.

When we take a look to the following chart, it perfectly illustrates this growing trend.

Europe is still leading this ranking, with Italy, France and Spain but something is happening with New World countries. United States, Argentina, Chile, etc. are progressively rising. When we actually compare their wine production with their wine consumption, it is interesting to notice that it is increasing as well:

- China, South America as well as South Africa's wine consumption is slowly (sometimes

quite rapidly) but surely increasing, even though China's production remained quite stable. Contrary to clichés, Russians are not the biggest alcoholic beverage drinkers. The country that will know the strongest consumption is China, with more than 1.5 litre of pure alcohol per year and per capita till 2025. Even if Europe will remain the thirstiest region of the globe.

Furthermore, China is not only becoming one of the top winemakers in terms of production but also one of the top consuming countries. Indeed, it is in the top 10 of the main wine producing countries (9^th position), right behind South Africa but in front of Germany.

Well, mainly Millennials (it generally applies to people who reached adulthood around the 21^st century). The «Y Generation» that grew up in a growing electronics-filled, online and social-networked environment has a strong interest in wine but not just wine...

Millennials are playing a fundamental role in wine as well as spirits consumption. While previous generation young people were mainly consuming beer, millennials are abandoning

most commercial and popular beers (from macro-brews like Anheuser-Busch with Budweiser, Leffe, Stella Artois, Hoegaarden and so on) and are switching towards craft beers, wine and spirits.

A survey in 2015 found that more than 24% of interrogated people wanted to decrease their beer consumption versus 8% for those who are planning on increasing it. This trend is particularly noticeable amongst the young. According to MorganStanley, millennials are losing interest in macro-brews, are less interested than their elders and tend to prefer wine and spirits. This interest for beer is fading: In 2013, 33% of millennials surveyed said that beer was their favourite alcoholic beverage and in 2015, only 27,4% cited so.

On the other hand, in France for example (which is part of the Old Continent), young people do not have that much interest in wine, it is actually the opposite. According to FranceAgriMer, wine consumption depends on the age and the generation: The more a person gets older, the more he/she consumes wine. In the eighties, more than 70% of French people over 15 years old were wine consumers from the 20-24 years old age bracket. In 2015, people who reach this rate are from 45-49 years old.

Individuals who are sixty to seventy grew up with wine at pretty much all meals, it is part of their cultural heritage. The «Middle Generation», which basically represents people in their forties of fifties, perceives wine as an infrequent treat. They counterbalance this weakened consumption by spending more money on wine (more qualitative, drink less but better).

The «Y Generation», millennials, do not take interest in wine before their late twenties.

The number of regular drinkers is getting lower and lower while the occasional drinkers are growing and the non-consumers remain pretty stable for both genres when we hit the nineties. Numbers of non-consumers doubled between 1980 and 1990. We observe this change for all three categories during these ten years except for regular consumers who are lessening. This drop in consumption is mirrored in other countries of the Old World.

In Ireland, women have more interest in drinking wine compared to men (61% volume share versus 39%). Also, 35 to 44 years old people tend to drink more wine than millennials (25% for women, 21% for men versus 5% for male and 10% for female - TGI Data).

Wine market share (in volume) rose from 2005 to 2015 (19,9% versus 27,7%), spirits market share increased as well in 2015, not by much however (18,7% in 2015, 18,5% in 2005).

Generally speaking, wine consumption is in decline in Europe except for minor rises in certain countries like United Kingdom and Ireland. The French, Italian as well as German markets are projected for waning over the next four years. Still, there is a «less but better consumption» mantra growing in many countries. Wine is more and more seen as an elitist drink rather than a standard alcoholic beverage.

As regards to whisky, we can observe some trends in terms of consumption in many countries. For instance, here is a graph showing France's alcohol consumption over the years:

As we can see, there is a noticeable decrease in wine consumption whereas whisky consumption has remained stable (along with beer).

What are the different tendencies? What happened during the last five years (or more)?

During the last five years, Irish whiskey has been taking off, rocketing especially in the US in terms of sales: Although it represents quite a long time (between 2002 and 2014), whiskey sales have been gigantically rising from 538%!

The demand for top of the range, limited-edition, exclusive, innovative and rare whiskies is also soaring both in the Old and the New World and it involves Bourbon, Scotch as well as Japanese whiskies. «A more sophisticated and demanding consumer is emerging» (The Future of Irish Whiskey p.7) because he/she is more and more knowledgeable, even sometimes passionate and complex about their whisky choices. People want something unique, something not available in every supermarket.

We have seen Japanese whisky exploding for the last ten years, and it is really defying Scotch's domination. Indeed, Nippon's whisky started to draw interest quite late mainly due to Suntory's marketing but is now part of the greatest whiskies in the world by notably winning several awards. Whiskies are also very popular for their nice cocktails. The Whisky Sour, the Manhattan, the Godfather, the Rob Roy, so many names that make us want to try them all (with moderation). It exists new formats for making cocktails, and not just made with Bourbon or Rye, but with Irish whiskey, Canadian whiskies, Japanese whiskies too (to drink during a meal with a refreshing highball) and even Scotch!

In other words, people are looking for innovation (new types of oak, casks, ageing processes...), they want to try new and more types of whisky, from other places. It is a very intricate market. This complex market is also draining the stock of old vintage whiskies (usually single malt Scotch) which makes distilleries release more and more No Age Statement whiskies (NAS). It gives them the opportunity to have whisky at disposal without having to wait several years. Additionally, according to the IWSR, by 2020, whisky will push the global spirits consumption to 3,2 billion cases. Whisk(e)y should also overtake on vodka and «become the second-largest spirits category», right behind national spirits. Global consumption should grow to 467,5 million cases. Where will the growth come from? Mainly from Asia with China and India surpassing any other markets. Furthermore, there will be a rise not only in North-American markets, Africa and Middle-East but also in duty-free markets.

First thing first, let's talk about how whisky is made. There are certain variations according to the type of whisky: Scotch, Bourbon, Irish whiskey. But we will talk about the production process of the most spread whisky: Single Malt. The first step in whisky making is malting. Barley is steeped in water, subject to several humidification and oxygenation phases which allow the embryo to «leave» its dormancy stage. Barley is then spread out on malting floors in 30 to 50 cm layers to germinate and it is frequently turned. During this process, enzymes are stimulated, it transforms starch into a whitish flour from which sugar will be extracted when mashing takes place. After 6 (up to 7 days) days of germination, the barley now named `green malt', goes for kilning (in other words, drying). Malt houses are equipped with ovens for peat fire that will add the smoke flavour (it is not compulsory; some distilleries won't use peat) but also with burners which insufflate warm air. Green malt is dried, cleared out of impurities and germination is stopped.

The second step in whisky making is mashing. The dried malt is ground, it is called `grist' at this point, and mixed with hot water in a vat (mash tun). There are three stages in adding the water (which becomes hotter and hotter), allowing the starch to be converted into sugar. The obtained liquid, quite sweet, is called `wort'. The quality as well as the flavour of the water plays a key role in the whisky character, it will vary according to the country and the region (in Scotland for instance with the Lowlands, Speyside etc.).

Now comes the third step: The wort is chilled to 20°C (which is the temperature from which yeast will start to operate) and pumped into fermentation tanks, `washbacks', where yeast is added. It feeds on the sugar which transforms into alcohol and carbon dioxide. The liquid, now called `wash' (lots of names) starts bubbling. Sugar needs forty to sixty hours to be completely transformed into alcohol, the liquid obtained is a malt beer or distiller's beer with 6 to 8% alcohol by volume.

The fourth step is the distillation in pot stills. The number of distillations, the size, the pot still shape, the distillation speed, the heating process but also the swan's neck inclination will influence the character of the whisky. The wash is warmed up to the point where alcohol turns into vapour. It passes in the Swan's neck into a worm condenser which is immersed in running cooling water in order to transform the vapour into a liquid. For Scotch, there is a double distillation: the wash is first distilled in wash stills to detach the alcohol from the water, yeast and remains called `pot ale' (solids that will be saved for cow feeding). What you get from the wash still are `low wines' (about 20 to 25% vol.) that are sent to the spirit still for the second distillation. This process is repeated until you get the `high wines' (which are about 68% vol.) and they are filled into oak casks of different sizes and types. Some of them might have contained Bourbon before, Sherry or even wine for example. The cask will of course have an influence on the whisky. All the distillates pass by the spirit safe which allows the stillman to control and judge the different liquids obtained.

Unlike wine production, whisky production is not as influenced by climatic hazards (except for barley agriculture but other than that, the whole production is usually made indoors). According to the OIV, wine production in 2016 should reach 259,5 million hectolitres versus 274 million in 2015 which represents a 5% drop, falling to its lowest level since 2012. This is mainly due to global warming, variously affecting harvests around the world: France's ones fell from 12% (spring hail and frost), the Champagne region from 30%, Italy decreased from only 2%, South Africa, Chile and Argentina respectively 19%, 21% and 35%.

- Scotland: It is the main country producing whisky and also the most well-known. With 1.5 billion bottles every year, we understand why. It represents two third of the world's production. The Lowlands, the peninsula Campbeltown, the Speyside (about half of the distilleries in the country are established there), the Highlands (it comprises the north of Scotland, including the islands) and finally Islay, form the five regions of Scotland producing whisky and they all have their specificity. Scotland produces Single Malts but also Blends.

- The United States and Canada: North America produces Bourbon (mainly made out of corn) with very specific elaboration methods. The Tennessee whisky differentiate itself from the Bourbon because of the «Lincoln Country Process», a filtration through three layers of maple charcoal. We can of course mention Jack Daniel's as an example. Canada produces approximately 21 million cases of whisky. The US, produces about 37 million cases of whiskey. According to the Distilled Spirits Council of the United States, the country exported 235 million whiskey bottles last year. France is no exception, with 8 million litres sold in hyper/supermarkets in 2015, it represents a 12% growth and these sales has been overtaking Scotch's ones for the third year now. This success is explained by their «rounder» aromatic profile, the cocktail trend and it is not going to stop anytime soon. Important groups like Jim Beam, Brown-Forman invested in order to increase their production capacity. Besides, the number of microdistilleries and of smaller actors keeps growing. However, American whiskeys still have to prove themselves. According to Thierry Benitah, La Maison du Whisky CEO, there is usually not more than five or six American whiskey references in wine shops but on the other hand, Bourbons and Ryes benefit from cocktails renewal success and are more and more found in CHR (cafes, bars, hotels, restaurants), especially in independent cocktail bars which are reaching tomorrow's consumers: 25 to 35 years old people.

- Japan: It is the 4^th whisky producer in the world. The country has been producing whisky for almost a century. The Japanese production method is based on the Scottish model therefore their whiskies are either Single Malts or Blends very renowned on the market thanks to the quality of the water, very pure, just like in Scotland. Japan actually took a step ahead in terms of Blend whiskies notably thanks to Hibiki which was awarded several times best Blend in the world (for the 21 and 30 years old).

- Ireland: The country produces about 7 million cases of whiskey and it keeps on growing. Irish whiskey goes through three rounds of distillation before being bottled. There is a use of both malted but also non-malted barley. The aromatic profile of whiskey is usually smooth, light, floral and fruity style. It is also naturally non-peaty although peat is omnipresent in the country. As we said earlier, Irish whiskey has been through ups and downs but especially ups these past few years: Last year, 70 million litres have been sold (a 12% increase compared to last year), Irish whiskey is the category with the most important progression. In France (again), hyper/supermarkets sales are carried by brands such as Jameson, Paddy or Tullamore Dew, with approximately 3 million litres sold in 2015 (V&S news). Irish whiskey's shelves are becoming more and more enriched in wine shops.

Why so much enthusiasm for these whiskeys? Their aromatic profile is quite distinct, easier to drink because fruitier and more refined. This market is not yet mature so there definitely is a good potential for the next years.

The 24^th of May of 1976 will forever be a cursed date for Bordeaux wine producers. On that day, a blind tasting put an end to their historical and famous Crus Classés supremacy because Californian wines went straight on to the first place, not Bordeaux. This was the Judgment of Paris. The 18^th of April of 2008 feels pretty much the same for Scotch producers.

London International Spirits Challenge, April 18th of 2008, after a 200 samples blind tasting, a plethora of experts awarded the Yoichi 20 years old as the best single malt in the world and the Hibiki 30 years old as the best blend in the world. Two whiskies made in Japan, something to give shiver to Scotch producers. This is what I would propose to call the `Judgment of London'.

Outside Scotland, press blame the distilleries to savour their success and this consecration didn't surprise whisky amateurs. They have been discovering this Japanes

beverage for the last couple of years. Japanese whisky is not only successful in

for single malt, their sales double every single year: 30,000 bottles in 2006, 70,000 in 2007 and it rocketed to 800,000 bottles in 2014. With barely 10,000

whiskies (those that you wouldn't dare mixing with Coke and those which price is higher than 25€), it currently represents about one twelfth of France's

At first, it does seem a bit like David and Goliath, Scotland being the mighty warrior with more than 110 distilleries, an old tradition and a great awareness all around the world to such an extent that whisky and Scotch could be synonyms. In comparison, Japan is still small: about ten distilleries with quite a young experience in whisky making. Japanese discovered whiskies in 1853 when the American commander Matthew Perry - who ran the war fleet which aim was to force Japan to open up its barriers for trade - distributed some cases in order to facilitate negotiations. Nippon's first attempt to reproduce whisky was a failure (they tried to distil it

with rice, corn or millet instead of barley). It was only in 1918 and only then, when Masataka Taketsuru, a graduated chemist working for an eau-de-vie producer in Osaka, left to Scotland to discover the secrets of Scotch making. After 2 years of internships in Speyside distilleries, he came back to Japan in 1920, his mission accomplished and with his Scottish wife, Rita. The former company he worked in went bankrupt but he was hired by Shinjirô Torii, Suntory's founder. He built the first whisky distillery `Kotobukiya' (later renamed Suntory) in Yamazaki, in Kyoto suburbs. Under his wife influence, Taketsuru partnered with other shareholders to create Nikka (named Dai Nippon Kaju before), he established the Yoichi distillery in Hokkaido, the northern island (he chose Hokkaido because it reminded him of Scotland climate and terrain).

Nowadays, Suntory and Nikka are the main Japanese whisky makers. The first one sells his single malts under the Yamazaki label but also Hakushu, another distillery. The second one sells its bottles under Yoichi and Miyagikyo brands, the two distilleries names. There are many whisky varieties just like Scotch, with peaty characters, malty etc. For top of the range whiskies, `single casks' are much less expensive than Scottish single casks, which became quite unaffordable. As to Japanese blends, many are commercialised under Nikka or Suntory and their blending (going up to 30 malts, the youngest giving the age to the bottle) integrate some Scotch. Nikka acquired Ben Nevis, the oldest Highlands distillery, Suntory got Bowmore, Auchentoshan and Glen Garioch, 3 renowned whiskies.

How did Japanese manage to surpass Scottish masters? It is kind of like Toyota's approach, which allowed the company to become the world's first automobile manufacturer: to pay an important attention to the quality and to have a consistent follow-up of customers' expectations. Ulf Buxrud, just as famous in the world of whisky as Robert Parker in the world of wine, highlights the fact that Nippon's desire of perfection pushed them to take into account the yeast biochemistry allowing barley fermentation and to create new low-boiling distillation techniques. For certain whiskies, they even modify the American whiskey filtration technique by using bamboo wood coal and not maple tree in order to obtain a lighter and silkier texture. Finally, regarding the ageing, Nikka and Suntory use - besides traditional European or American barrels which contained Sherry or Bourbon - Japanese oak barrels, a very aromatic wood that gives an exceptional character to the whisky.

On the marketing part, Nippon's whisky benefited since the fifty's from specialised bar created at that time, some of them belonging to Suntory or Nikka. The `Cask Bar' in Tokyo (Roppongi neighbourhood) or the `Nemoto' in Sapporo, Hokkaidô for instance have a nice «Carte des Whiskies» with 2.500 different bottles (mainly Scotch). These efforts in terms of quality,

creativity by making more and more sophisticated whiskies didn't push Suntory nor Nikka to develop an export strategy, their attitude being really modest. Can you imagine their surprise when European journalists came to Japan in order to discover its distilleries, were simply astonished by the quality of whiskies. It has been conveyed to amateurs through the famous «Whisky Magazine», to whisky blogs like Malt Maniacs and incited Japanese to do even better. At the beginning of 2000, Nikka asked Thierry Bénitah, head of La Maison du Whisky (who was already distributing Nikka and Suntory's products in France), to become its agent for Europe. In 2004, the worldwide success of Sofia Coppola's movie «Lost in Translation», where we saw Bill Murray shooting an advertising in Tokyo for Suntory Hibiki had the effect of a launching campaign. It pushed Suntory to proudly «Japanised» its label, Roman letters now appearing in small characters.

Japan had a whisky boom especially during the seventies and eighties, even Sake distilleries were changed to produce whisky in order to meet the demand, the Japanese and especially the world's thirst. In other words, Japanese whisky's future is bright.

Besides the rise of American and Irish whiskeys, the development of New World whiskies shakes up the market. Should we mention the success of Japanese whiskies again? According to IWSR, in 2015, Nikka From The Barrell, one of Nikka's best sellers had an audacious growth with a 50.7% increase. Today, despite a more expensive price positioning, Nippon's whisky brands are growing (new brands are appearing like Yamakura, Okayama for instance).

Now, in the same area, should we consider India as a main actor? Since the country sold 120 million bottles of their `whisky', it does deserve some credits. As we said, what they are calling `whisky' is made notably from molasses and (sometimes) mixed with Scotch. It is not only a huge consumer (9^th biggest drinkers in the world, 1.24 litres per capita - Source Bonial) but also an important producer. Indeed, it also produces whisky that meets European regulation standards: Amrut which has been awarded several times, Paul John and both are focusing on the premium whisky market and selling their products on the European market and the US market.

Remaining in Asia, and close to India, there is another whisky producer: Taiwan. With the Kavalan distillery and the more recent Omar distillery, these two deserve a special mention as well. Kavalan is particularly getting noticed, gaining popularity thanks to several awards. In 2016, the Kavalan Solist Amontillado won the award of the best single cask single malt of the

world (World Whisky Awards). The warm weather in the country affects the maturity of the whisky. It indeed matures more quickly however the Angels' Share is also more important. The Angels' share happens when the whisky ages in barrels, where 2 to 3% of the liquid evaporates every year (it is actually taken into account in distilleries' stocks). Taiwanese's Angels' Share goes up to 15% per year. Furthermore, the country in the 20^th biggest whisky drinker in the world (0.63 litres per capita).

Back to the Old World now, France is also finding its place in the world of whisky. Whisky consumption depends on the region (even if the country is the world most important whisky drinker) and French distilleries production capacity are quite modest for now. According to Philippe Jugé, founder of the «Fédération du whisky de France», 700,000 bottles of French whiskies were sold last year. Indeed, from consumer, France also became a whisky producer in the eighties. Benefiting from a certain know-how in spirits production, the country of wine couldn't miss the opportunity to differentiate itself in whisky production as well.

In the beginning of the eighties, the Breton distillery Warenghem was producing liquors (crème de cassis, Elixir d'Armorique), until it decided to go on the more promising whisky market. The first French whisky distillation occurred in 1983 for a release on the market in 1987. Nowadays, Armorik (the name of the whisky) sells about 250.000 bottles per year mainly in Bretagne but it is getting remarked in France and around the world. In 2013, Armorik Double Maturation was awarded as the best European single malt for the World Whiskies Awards (WWA). Alsatian as well as Breton whiskies even got their own Protected Geographical Indication (PGI, IGP in French, Indication Géographique Protégée).

France now produces approximately 700.000 bottles of whisky per year. Why did France waited so long before producing whisky? Since the country was already distilling other spirits like Cognac, Armagnac, Calvados, even Rum, it is quite intricate. France currently has around 40 malt distilleries which also pushed the creation of the French version of the Scotch Whisky Association, the «Fédération du whisky de France». According to Philippe Jugé, France is a wine country and distilleries are usually in wine regions and even fruit regions. French know-how leant towards these eaux-de-vie. With phylloxera destroying Cognac and pretty much all wine regions in the 19^th century, when Scottish were ready to invade markets with their blends, French consumers started consuming whisky.

Later on, Anglo-Saxons pulled it off in both World Wars, Hollywood golden age was embellishing whisky's image and some French companies already invested in some Scotch distilleries (like Pernod Ricard which owns 14 of them), all these factors were not really contributing to France's whisky production development. Furthermore, distillers didn't have

the tools required to make whisky. For instance, French distilleries alembics or pot-stills are smaller because more adapted to other spirits but it made distillers think about other ways to make whisky instead of just copying Scotch. Last but not least, and it might sound very strange but one of the reason why France waited so long to make whisky is because of... An Icelander volcano. France was indeed producing whisky, some old papers back in the 18^th century proved that a «grain eaux-de-vie aged in barrel» (the definition of whisky) was produced and consumed. However, a volcanic eruption in Iceland had dramatic consequences. Laki, a volcanic fissure erupted for nine months until February 1784, causing lava to pour out of the system, creating an ash cloud filled with toxic and therefore lethal elements («poisonous hydrofluoric acid and sulfur dioxide compounds», Wikipedia), which caused Iceland to loose half of its livestock (mainly sheep), causing famine and killing about a quarter of the population. But it didn't stop there and the volcanic cloud, pushed by winds reached Europe in a couple of days. Some consequences were even observed in North America and Asia. It indeed blocked sun rays, causing a very harsh and difficult winter. It even generated a climatic disorder: polar summer, violent thunderstorms, etc. France's harvests didn't survive these weather changes which caused famine to shake up regions. It seems that around 1789, some kind of prohibition occurred. Barley, grain, was so scarce that distilling was forbidden. Thus, whisky production was lost in time, forgotten and it took 200 years for France to get back on its feet and decide to produce whisky again. According to Nicolas Julhès, head of the «Distillerie de Paris», a French craft whisky distillery, French whiskies will become the greatest whiskies of the world. Why? Because producers usually distil in smaller pot stills (a quality pledge) and above all, the country has the best ageing specialists thanks to Cognac and wine.

As we can see, distilleries are being created all around the world to accommodate local tastes first and potentially other markets.

Sweden is part of the movement with ten new distilleries that started producing whisky since 2013. Sweden whisky has indeed been trending for the past few years thanks to several distilleries. There is the Smögen distillery, the Box distillery which opened in 2010 but is producing whisky at a smaller scale. For instance, its 700 bottles batch was sold out in one day in 2014. Another distillery called Hven is also producing at a small scale but got several awards notably at the International Wine & Spirit Competition since 2013. What really helped Swedish whisky to get noticed is due to Mackmyra Distillery. It is the largest distillery in the country with a production capacity of 1.2 million litres a year. It grew bigger and bigger since 1998, when a group of friends decided to create the first Swedish whisky and distillery. Where does this idea come from? One day, a group of friend (eight to be precise) had an important meeting

during a cold night after a long ski day around a bottle(s?) of single malt(s). One of them wondered why was there no whisky made in Sweden and someone replied that since the water is so pure, barley is also cultivated, climate is fresh and humid, why not trying to make whisky? Which they did.

Mackmyra is well-known for its innovative approach notably with its «Gravity distillery», built in the middle of a forest, near Mackmyra village. The 35 meters high tower is almost a 100% green with organic waste being recycled in biofuel for example and its energy consumption reduced to minimum thanks to the law of gravity. The distilling process runs from the top, where the malt is pumped in, to the bottom and goes through several steps floor by floor, from ricing to grounding, from fermentation vats where water and yeast are added to pot ls, to finally finish its way into the barrels where it will age. Ingredients are wedish, same goes for casks, made in Swedish oak. The Swede distillery didn't ant to copy Scotch whisky, the group of friends wanted to create their own

Swedish recipe. They experimented at least 170 different formulas before getting to the final results and thus what they really wanted. An important community gathered around the project, like friends, relatives, strangers and they participated in elaborating the whisky recipe by tasting different formulas, bringing their know-how, giving advices, suggestions. They also tried different types of yeast, barley, maturation process... Until the distillery found «its» Swedish whisky. Six different single malt cuvées have been

released between 2005 and 2007. These batches were 3 years old, limited editions in order to «test» the market. The enthusiasm was immediate and it kept on growing. The innovation doesn't stop here. Indeed, not only the five maturation warehouses are located in particular sites (old iron mine, maturation storehouses half-buried in the middle of the forest), but the ageing part is also quite original. Small 30 litres barrels are stacking up in the different cellar rooms but why using these smaller casks? In comparison, Bourbon casks can hold up to 180 litres, Hogshead 250 litres etc. The point is, it accelerates the ageing process thanks to a tighter proximity of the alcohol with the wood. In 2008, the «First Edition» was launched, becoming their first regular bottled whisky, and since then, Mackmyra has grown internationally. The company got several awards, notably the Best European Single Malt of the world last year at the World Whiskies Awards.

Swedes are producing whisky but they are also amongst the top whisky drinkers in the world (15^th biggest drinker with 0.86 litres per capita). For instance, Scotch exports increased by 10 million pounds between 2003 and 2013 to 36.4 million pounds according to the Scotch Whisky

Association. They like peaty whiskies but they also enjoy discovering new grounds, like Japanese whisky. With Mackmyra and other distilleries making whiskies, some newcomers opening, Swede whisky's future looks quite promising.

When we talk about whisky production, the first country in your mind is not Italy, however, it can might be the case for wine. But Puni proves us wrong by entering the single malt world. The young distillery (created in 2010) is the only Italian distillery made in the region that locals describe as the «Highland of Italy» is located near Switzerland and Austrian borders, in the Italian Alps where the water is pure. Another whisky producer to add to the list of whiskies of the world, getting bigger and bigger.

We will finish on two other important whisky producers who also happen to be two major rugby nations: Australia and New Zealand. For those who missed the first half-time, whisky remained

marginal for quite a while. Thus we might wonder why British settlers preferred imposing rugby

rules (and cricket) when they settled in the Pacific instead of whisky distillation, although both countries have plenty of pure water, arable lands to sow barley, even peatlands and above all,

English, Irish and Scottish emigrants even brought their pot stills (their know-how too), whisky

still remained quite small compared to other alcoholic beverages. When we know that New Zealand probably applies the most liberal legislation about domestic distillation, we might find

that strange (according to the Custom Act of 1996, domestic distillation is legal, free of

taxation). Both rugby nations got along to play the whisky scrum together. The Food Standards Australia New Zealand Act 1991 gives a rather general definition of a spirit (and therefore

whisky): «Spirit means an alcoholic beverage which contains at least 37% alcohol by volume,

consisting of: a potable alcoholic distillate, including whisky [...] produced by distillation of fermented liquor derived from food sources, so as to have the taste, aroma and other

characteristics generally attributable to that particular spirit; or such a distillate with any of the following added during production: water, sugars, honey, spices.» - Food Standards Code-- Standard 2.7.5.

Kiwi whisky is getting noticed notably by Jim Murray, author of the Whisky Bible. This «Bible» is released every year and just like wines with Robert Parker, he grades whiskies according to the tasting. He gave 95/100 to the Kiwi whisky South Island Single Malt 21 years old. The same whisky got an award at the World Whiskies Award in 2013 as the best aged single malt. Originally, New Zealand whisky was born in the South Island (where it is the coldest), and there are (for now) few distilleries there.

As for Wallaby whisky, even though All Black might win the rugby gam Australia played its whisky cards right. Tasmania is the whisky land of the countr The floating island, south of Melbourne, with its «Scottish» climate and thanks

to many pioneers like Sullivans Cove, Hellyer's Road, Lark who managed to make Aussie whisky recognized worldwide. Volumes are not very important,

whisky is again quite confidential but has a great awareness around the world. For example, Sullivans Cove French Oak Cask has been awarded as the world's best single malt at the 2014 World Whiskies Award, quite impressive. Again, Tasmanian whisky managed to get a good reputation across the ocean thanks to several awards. Australian are also significant whisky drinkers, with 1.3 litres per capita, it is the 4^th biggest whisky drinker in the world (versus 14^th for New Zealand with 0.87 litres per capita).

I had the chance to meet Michael Moss several times. This professor at Northumbria University is a real whisky expert and notably wrote `The Making of Scotch Whisky'. I asked him: - What do you think about new incomers in the whisky industry (countries such as India, Taiwan, France, Sweden etc.)? He answered: - «You need to distinguish between volume producers and craft distillers. Some volume producers, such as Nikka, are excellent. The craft distillers will need to prove themselves, there will be successes and failures. Some may only cater for a local market, but will almost certainly be able to make a living. Across the piece the trick will be to position the product in such a way as to attract sales and build a market, and not to sacrifice quality in a search for volume.»

In order to investigate by a quantitative study, customers' behaviours in terms of wine and whisky consumption, I have defined a list of questions the research question «Is there a move away from wine to whisky in the European market?».

This survey has been posted on social medias, conveyed through emails, and thanks to the snowball effect, this questionnaire got 146 respondents. The first question being about drinking alcohol, 129 of respondents actually answered that they do drink alcohol so those will be taken into account for the rest of the survey.

Overall, we observed that spirits consumption is getting more and more popular, and although whisky consumption is quite low compared to wine, people are tending to drink whisky more than they used to. Furthermore, people are also more likely to drink less wine, but better wine. You will find the questionnaire in the appendix (Cf. appendix n°3) and also some in depth statistics and correlation for the questionnaire in appendix 4 to 6.

Question 2: In an average month, how often would you drink wine (red, white or sparkling), even if it's just one glass? (Answer 0 if you don't drink wine)

Question 2

In an average month, how often would you drink wine (red, white or sparkling), even if it's just one glass? (Answer 0 if you don't

drink wine)

Nb.

Min.

Mean

Max.

Wine (Red, White, Sparkling)

129

9.36

As we can see, on 129 respondents and on average, people are drinking wine (even just one glass) at least nine days in a regular month.

Question 3: In an average month, how often would you drink whisky, even if it's just one glass? (Answer 0 if you don't drink whisky)

Question 3	In an average month, how often would you drink whisky, even if it's just one glass? (Answer 0 if you don't drink whisky)
	Nb.	Min.	Mean	Max.
Whisky	129	0	1.82	30

On the other hand, on average, people are drinking whisky around two days in a normal month.

Question 4: Of all the alcoholic beverage(s) you drink, please indicate what percentage you allocate to all these categories, where the total must equal 100%.

Question 4	Of all the alcoholic beverage(s) you drink, please indicate what percentage you allocate to all these categories, where the total must equal 100%.
Question 4	Nb.	Min.	Mean	Max
Whisky	129	0	4.82	30
Wine and Sparkling wine	129	0	47.51	100
Rum	129	0	8.08	70
Beer	129	0	28.86	95
Other spirits	129	0	10.73	85

This question aims to define the «allocation» percentage between alcohol beverages, in people's consumption: Wine and beer are coming in first with respectively 48% and 29%. 5% is allocated to whisky.

Question 5	How much do you agree with the following statements?
Question 5	Nb.	Min.	Mean	Max.
I drink wine more often than I used to	129	1	4.12	7
I drink whisky more often than I used to	129	1	2.22	7
I drink more spirits (vodka, gin etc.) in general more often than I used to	129	1	2.8	7
I think that all wines are pretty much the same, regardless of what they cost	129	1	2.04	7
I think that all whiskies are pretty much the same, regardless of what they cost	129	1	2.21	7
Are you willing to buy less wine but better quality (assuming that better quality means more expensive)?	129	1	5.02	7

People disagree on the fact that they are drinking more whisky but also about the fact that all wines and whiskies are the same regardless of what they cost. However, they agree about drinking more wine than before. The key learning that comes out of this chart is that people agree on the fact that they are willing to buy less wine but better quality, even if it's more expensive.

Question 6: Of all the wine you drink, please indicate what percentage is Red, White, Sparkling wine or Rosé where the total must equal 100%.

Question 6	Of all the wine you drink, please indicate what percentage is Red, White, Sparkling wine or Rosé where the total must equal 100%.
Question 6	Nb.	Min.	Mean	Max.
Red	129	0	41.61	95
White	129	0	34.33	100
Sparkling wine	129	0	12	80
Rosé	129	0	12.05	50

Question 9	Nb.	%
When do you typically drink wine?	129	%
During lunch	39	30.23%
During dinner	106	82.17%
At social events	122	94.57%
At professional events	59	45.74%
To relax (e.g. after work or whilst watching TV etc.)	68	52.71%

Question 10: Please indicate how often, you buy wine from the following locations:

Question 10	Please indicate how often, you buy wine from the following locations:
Question 10	Nb.	Min.	Mean	Max.
Wine store	129	1	3.74	7
Grocery store, Supermarket	129	1	5.02	7
At the domain, Château etc.	129	1	2.73	7
Online	129	1	1.54	7

On average, people are more frequently buying wine in grocery stores and supermarkets. Specialised wine stores come in second position. Online buying remain quite marginal.

Question 11: When dining at a restaurant, club, bar or attending to an art/dance/theater show, how often do you order wine?

Question 11	When dining at a restaurant, club, bar or attending to an art/dance/theater show, how often do you order wine?
Question 11	Nb.	Min.	Mean	Max.
Restaurant	129	1	5.39	7
Club / Bar	129	1	3.31	7
Wine Bar	129	1	5.32	7
Art / Dance / Theater show	129	1	2.74	7

Question 12: Of all the whisky you drink, please indicate what percentage is Mainstream (found in supermarkets), Specialist (more confidential, found in wine/whisky stores) or Craft (unique, very confidential), where the total must equal 100%.

Question 12	Of all the whisky you drink, please indicate ...
	Nb.	Min.	Mean	Max.
Mainstream whisky	86	0	60.16	100
"Specialist" whisky	86	0	31.78	100
Craft whisky	86	0	8.06	100

Question 15	Nb.	%
When do you typically drink whisky?	129	100%
Before dinner (aperitif)	26	20.16%
At the end of a meal (digestif)	37	28.68%
At social events	54	41.86%
At professional events	11	8.53%
In cocktails	43	33.33%
To relax (e.g. after work or whilst watching TV etc.)	25	19.38%
I don't drink whisky	47	36.43%

People (when they do drink whisky), tend to drink whisky at social events (54%), in cocktails too (43%) and at the end of meal as a digestif, as an after-dinner drink.

Question 16: Please indicate how often, you buy whisky from the following locations:

Question 16	Please indicate how often, you buy whisky from the following locations:
Question 16	Nb.	Min.	Mean	Max.
Wine/Whisky store	129	1	2.78	7
Grocery store, Supermarket	129	1	3.54	7
Online	129	1	1.19	7
At the distillery	129	1	1.54	7

People are more likely to buy whisky in grocery store and supermarkets, just like wine.

Question 17: The statements below include different reasons for drinking whisky. You don't need to answer this question if you don't drink whisky.

Question 17	Nb.	%
The statements below include different reasons for drinking whisk ...	86	%
...for pleasure	66	76.74%
...to celebrate something	35	40.7%
...because I want to be socially accepted	10	11.63%
...to get drunk	34	39.53%

We can conclude that people are drinking whisky for pleasure firstly with 77% and to celebrate something with 35% which is related to drinking whisky during social events.

Question 18	Nb.	%
What is your gender?	129	100%
Male	46	35.66%
Female	83	64.34%

Question 19	How old are you?
	Nb.	Min.	Mean	Max.
Please indicate your age	129	18	29.01	62

Question 7 & 13: According to you, what does a decent bottle of wine & whisky cost? Not for a special occasion but for good drinking.

Wine price average
Total		1665,8 €
Respondents		129
Mean		12,91 €
Whisky price average
Total	3976,85 €
Respondents	129
Mean	30,83 €

	USD mean		EURO mean		AUD mean
Wine	14,03	€	12,67	€	17,58	€
Whisky	31,62	€	30,89	€	32,91	€

For these questions, we converted all foreign currencies in order to get the Euro change. We can observe that the perception for the price of a decent bottle of wine and whisky is quite close according to these charts. The main average price for wine is approximately 13€ and 31€ for whisky. For American and European drinkers, the average prices for a good bottle of wine and whisky are respectively around 13 or 14€ and 31 or 32€.

For a long time, going up to the mid-2000's, the European Union was producing more wine than needed. Back then, producers who couldn't sell their harvest were paid (at least those which were unsold) thanks to governments `emergency distillation' rights, a program where the grape surplus production was converted into industrial ethanol. The EU acknowledged that this practice was killing prices for successful farmers, producers and was perpetuating this production excess. After many years negotiating between producing countries, the EU established the Common Market Organisation (CMO) which slowly got rid of the `emergency distillation' program to end up terminating it by mid-2012. A brand new program was put into place, it consisted in paying European growers to uproot 175,000 hectares of «economically unsustainable and lesser quality vineyards» (The League: Worldwide Supply and Consumption Patterns, the State of Wine Industry 2016). To give an idea, it represents the equivalent of about 87% of planted wine grape land in California. Main producing countries such as Italy, France, Spain, Portugal or Hungary have been major contributors to the CMO.

According to the OIV graph here, we can look at the evolution of worldwide production and consumption on a fifteen year period. We can observe the decline of wine production between 2004 and 2012, followed by a sudden production peak in 2013. On the consumption side, we have an ascendant curve till 2008, followed by a drop in 2009, and then reaching a stability zone for the following 6 years. When the production goes up, the demand doesn't always go along. The two figures actually never cross or meet!

The gap symbolises the production excess, did someone ever wonder where does this surplus go?

This fissure between production and consumption is expanding, but is - a tiny bit - mitigated by the demand for wines to be used for retail and industrial purposes like vinegar, brandy...

Again, it is clear that the gap is not going to tighten any time soon, is it because Europe is overproducing (or overplanting) again? According to the OIV, both demand and supply are balanced, however, a slowing worldwide per capita consumption might make this balance frail, precarious (especially in Europe).

We will see on the following map that wine consumption in Europe has pretty much decreased throughout the years:

There is a noticeable shift in wine consumption in Europe away from important producers but also significant consumers such as Spain, Italy, France towards other countries, mainly from the New World, like Australia, China or the United States (Argentina being the only exception). Nowadays, about 39% of wine is drank outside Europe, this percentage was around 30% in 2000.

As we mentioned earlier, the US became the biggest wine drinker in the world. Since 1998, higher consuming countries like Spain, Italy, France, even Portugal have been experiencing substantial drop in wine consumption per capita and by 2006, Europe producers were making around 150 million cases more than they could sell. Certain European countries are less affected by this trend, notably the UK and Germany who respectively represent 13 and 15% of the total world import volume, which makes them the biggest importing countries and they are followed by the US with 11%.

- Sustainability: Many customers are looking for organic wines, biodynamic wines made without fertiliser or chemical substances, or too much sulphur, made in sustainable practices.

- Geographical Indications (GI) opportunities: It allows certain wines but also products to be identified and originated in a certain country/region/locality where it is made. It can be valuable since your wine can be distinguished amongst many other although the system is quite renowned, even in supermarkets for lesser quality wines.

- Wine fashion: There are some `wine fashions' trends occurring and it seems to hop from one country to another. For instance, if a certain wine is successful in one European country market, the Domaine, Château or company producing it will introduce it in another European country market. A current example of a trend happening now is aromatic wines as well as wine cocktails. Both are pretty trendy in Germany and the UK and both are expected to spread out across other European countries with a «good outdoor culture» in for the next years according to CBI. These `fashionable wine trends' tend to be periodic in Europe meaning that the popularity of certain kinds of wine is varying throughout the years. For instance, sparkling wine is still very fashionable in many European countries while Rosé wine seems to be losing customers' interest in numerous European markets. Full bodied red wines are also losing their momentum whereas elegant wines and more `easy-to-drink' wines seem to come back again. One growing trend are lighter style reds as well low alcohol wines, it is gaining in popularity.

- Changes in retail: Wine categories are shifting because tastes are more and more taken into account as well as drinking moments, becoming a crucial point in wine suppliers marketing strategies. For example, in Netherlands, wines are not sorted by country but according to tastes and occasions in retails. Since customers are paying less attention to wine origin in certain countries, this might help new exporters (from the New World mainly). However, in the UK, retailers actually went back to sorting their wines by country since it is working better with British consumers.

- Packaging innovations: There is a push for innovative packaging other than regular glass bottles. It comes from several factors like quality conservation, price, sustainability etc. The acceptance of new technological innovations in wine packaging (like screw caps for bottles, bag-in-box or BIB) varies from one European country to another. While most Northern as well as Western European countries appear to accept these technologies (more for the high-volume segment though), Eastern European countries look like they have more difficulties

to do so. In pretty much all import markets, customers have been uncertain about going from traditional glass bottles to innovative packaging particularly in both premium and super-premium segments. In spite of that, some alternatives are gradually rising, being more and more accepted by the public. Certain BIB are quite trendy, a good example would be BiboVino in France, a company making BIB with good quality wines.

The premium market is soaked in new innovations notably in packaging with Kuvée for example, an innovative way of drinking your wine. It is basically a smart bottle that enables you to keep your wine for thirty days thanks to a `pick and click' system. You choose a bottle of wine and you click it into the Kuvée bottle (which is the wine dispenser), it also gives you information about the wine, the producer, the country of origin, suggested pairings... The on-trade (Cafes, Hotels, Restaurants) is quite receptive to packaging innovation, especially screw caps.

- Online sales are also becoming more important. In France, one French over three bought wine on the Internet in 2016. According to SOWINE (study made with more than a thousand respondents), although this is quite occasional, generally once a year, 13% of wine purchases were made online in 2016 versus only 10% in 2013. The progression is quite significant since the majority of customers are making their wine purchase in retailers with 78% of purchases (SOWINE), the rest being divided with wine shops (47%) and domain/château (29%) purchases (total does not equal 100% because people can use different channels). To buy wine, French consumers usually go on wine producers' websites but also private sales websites (like Cdiscount). Online wine shops come in third position followed by `Drive Retail' websites. Globally, online sales were about 600% higher in 2015 compared to 2006 which represents 5.4 billion euros (CBI), however they are still quite small especially in Europe. The online market can be interesting again for new entrants like New World wine producers but since buying on the internet is quite occasional, it might not revolutionise or change wine consumption and wine purchases in Europe.

Consumption trends are changing and evolving. In several segments, people are drinking less but better and this is the case for wine and whisky.

Regarding whisky, there is an increasing scarcity of old whiskies. According to Donald MacKenzie, Whisky Brand Ambassador of Dugas, this phenomenon is explained by the whisky industry that got old malts customers used to prices not valued enough compared to the market value. Few years ago, the industry had substantial stocks of old malts resulting from a

decreasing consumption of younger whiskies - blends - in the seventies and eighties, which resulted in these stocks, 30 years later. At the same time, the industry hammered consumers with the motto `the older, the better' which is not necessarily true. The age statement is one of the quality component of a whisky but it is not the only one. The fact remains that regular customers an old whisky will still be better than a young one. Nowadays, distillers and actors of the industry have to train consumers in order to convince them (thanks to tastings) that this statement is not always true. This explains the success of important spirits/whisky exhibitions like the Whisky Live for instance where many kinds of whisky of different ages are exposed and available to taste.

Also, as we said previously, Scotch is not the only whisky in the world anymore. The `battle' with other nations is still on even if Scotland remains the predominant actor with more than a hundred distilleries, thus the country should keep its status for quite a while. Furthermore, most of new actors - except Ireland - are claiming to take their legitimacy from the Scottish history. We could mention (again) Japan for which whisky legacy gets its roots from its time spent in Scotland in the twenties thanks to Masataka Taketsuru, the rightful founder of Nippon's whisky industry. Japanese whisky is seducing because of its amazing quality, an up-to-date packaging, quite modern but very classy and classical. However, volumes are quite poor and are first allocated to the Japanese market.

As to Ireland, after its difficult desert crossing, there definitely is a renewal of Irish whiskey with new distilleries openings which are, once more, able to produce good quality whiskies. Other European countries are also producing beautiful whiskies, in a very original way and customers love it.

According to Donald MacKenzie, a market trend that is actually occurring notably because of a lack of old whiskies, are No Age Statement (NAS) whiskies. Many distilleries are now producing NAS, along with aged whiskies but it will keep on growing. Also, atypical ageing in new types of cask (other than Sherry or Bourbon) attracts customers. There is actually an enormous pressure on certain sectors like Bourbon barrels with the American industry looking for a way to modify some laws, so they don't have to use new oak for Bourbon because the cost is expensive and it gives a flavour that can be too prevalent.

Michael Moss said previously that we needed to distinguish between volume producers and craft distillers. There is actually a craft spirits wave, a trend that is getting bigger and bigger and a study made by Mintel proves it. In 2015, one launch of an alcoholic drink over seven (14%) was labelled as «craft» drinks (in 2012, only 5% were categorised as «craft»). The movement was born in the United States, in the brewery and microbrewery world. The craft

phenomenon is gaining ground and is seizing the spirits market. The demand is increasing thanks to both North-American and European consumers (respectively representing 49% and 42% of craft launch). This tendency is quite small on this important market but craft alcoholic beverages are going through an important expansion conveyed by a significant demand for more authentic, local, interesting, characteristic and less industrial spirit brands. Jonny Forsyth an analyst specialised in drinks at Mintel says that more than half of American consumers (55%) consider that craft brands are of better quality. Europe follows the same path with nearly half of French (55%), German (50%), Italian (53%) and Poland (46%) consumers being more attracted to alcoholic drinks coming from small distilleries rather than coming from big brands. In United Kingdom, 37% of costumers are ready to pay more for getting craft spirits.

But who are these alcohol craft amateurs? The Y Generation plays a key role in the growth of craft spirits. Its «singular» and «creative» spirit attracts and suits to the generation's consumption habits (Jonny Forsyth). Whisky actually remains leader in terms of craft spirits launch with 43% of release on the market in 2015 (a significant rise compared to 2011 with 37%). The whisky category is followed by gin with 23% of craft spirits launch in 2015 (a major increase again, compared to 2011 with only 9%). Gin is much praised by small businesses and start-ups for its production which lasts a couple of days when that of the whisky and other brown alcohol lasts years. In France, the number of microbreweries and microdistilleries is exploding because of the substantial demand, where people are more and more well-informed, stricter but also more keen on aromatised drinks. The design of the packaging as well as the marketing are seizing the opportunity, which gives room to bigger players like Diageo or Pernod Ricard to find their place in this growing market and surf on the trend.

The arrival of small and confidential producers can have a positive impact on the market. They usually attract millennials. However, with higher production costs, less experience in distillation, ageing, blending, we often get expensive whiskies with a quality that doesn't match the price. Whisky is a matter of time, experience, dexterity, maybe more than other spirits.

Population is ageing in Europe. Data from Eurostat shows that the European population is getting older and older. By 2050, almost 30% of the European population is projected to be 65 years and older compared to 2015 with 19%. This is actually leading to an increasing niche in the European wine market and in this niche, customers tend to drink wine less often.

The wine industry is trying to adapt to this trend, notably by producing (thus selling) wine in smaller packages or with innovative packaging that would conserve wine better and for a longer time.

30		28,1

As we said previously, millennials are also to be watched for both wine and whisky markets. They are indeed the young generations of wine and whisky costumers and they are usually more intrepid when it comes to their taste. As regards to wines, they are undoubtedly gaining interest in new producing regions, more affordable prices and especially wines that are produced in a sustainable way (cf. market trends in the previous part). Their impact on the wine industry is growing and according to a British study, millennials picture wine as a `social drink' which means that they buy wine preferably on the on-trade channel that accounts for 29% of wine's volume (Wine Intelligence, 2016). The wine market needs to become more reactive, receptive to millennials' needs which will necessitate a stronger prominence, attention on empirical as well as emotional commitment with costumers in communication. It is important to remain visible on social media since this can be significant as a strategy in order to promote your wine (the feasibility might depend on the European country and its laws regarding alcoholic beverages), generate brand awareness by being diverting, captivating, and enticing at the same time or you will lose (probable) prospects interest and also miss traction. Apart from social media like Facebook, Twitter or YouTube, wine application on smartphones are benefiting from a growing popularity as well with apps like Vivino, Delectable, Wotwine... It helps consumers getting access to information in an easier way, with ratings, reviews, food pairings on wines thanks to bigger and bigger communities.

Concerning whisky, here are several customer trends and behaviours in whisky that will emerge or that will confirm some malted tendencies:

- People will often (but not always, thank goodness) lean towards lower quality whiskies that are overwhelming our retails shelves and that are cheap (usually around 15€ or less). In France for instance, it represents around 90% of whisky sales in 2014. The awards of the best-sellers go to William Peel (17.5 million litres), Label 5 (10 million), Grant's (9 million) and Clan Campbell (8 million) in 2014. According to Le Figaro, in 2015 the top 3 bestsellers were Jack Daniel's, Ballantines and Clan Campbell. As you can see, on one hand, there is no single malt and prices are pretty low (nonetheless, Scotch remains France's favourite whisky even though Jack Daniel's is a Tennessee whiskey). Let's just not forget the American (and not Scottish) proverb that says «There is no bad whiskey. There are only some whiskeys that aren't as good as others.» - Raymond Chandler. On the other hand, prices can also be quite high because of the pressure on single malts stocks which provokes a growth of prices. A 12 years old single malt usually cost around 30 euros, it can go up to 50 euros for a premium bottle and 70 euros and more for older malts.

- The retail market is a major channel for whisky purchases. It tries to adapt and improve their whisky offer. Indeed, supermarkets are striving to propose a more and more important selection of whiskies. As we can see on appendices 7 and 8, important supermarkets chains like Intermarché in France are endeavouring to give advices from their own professionnals with the different types of major aromas in whiskies.

- The premium malts market, `prestige' or `super-premium' is the one that progresses the most with 10% or more according to segments like on-trade for instance and some people are ready to spend huge amount of money for a bottle that they probably won't even open. A bottle of Dalmore Brilliance vintage 1926 got up to a quarter million euros and found an owner. With the growing scarcity of old whiskies, with a need of cash flow, distilleries are producing more and more NAS whiskies. Moreover, although millennials are getting interested in whiskies, they are still persistent with other spirits, especially 18 to 24 years old with the famous Vodka Red Bull mix and are not always going for Dad's drink.

- In less than a year, flavoured whiskies took our glasses by storm. Technically, they don't deserve the term `whisky' since they are flavoured and bottled at 35% alcohol volume instead of a minimum of 40%. You can actually find pretty much everything in the bottle but it is essentially honey flavoured (with Jack Daniel's, Jim Beam, Paddy), spicy flavoured, maple flavoured, vanilla, cherry, apple... Customers love it, and these types of whisky are aimed to target women, youngsters, or to introduce consumers to some `kind of whisky'.

The Scotch Whisky Association and European Union guidelines state that no ingredients can be added to whisky except water and caramel colouring, otherwise it cannot be labelled as `whisky'. The SWA also said that flavoured whisky needs to be differentiated from Scotch and whisky so it has to be labelled as `spirit drink'. What ignited this revolution? Customers' thirst for adventurous and new flavours. People are keen on trying spicier foods, appealing cocktails so flavoured whisky is part of this new wave. Plus, that kind of `spirit drink' are likely to be more straightforward, smoother, easier to drink, making it a good entry point again for those who would like to start drinking spirits. One little exception, an actual naturally flavoured whiskey, an American whiskey to be precise, has been awarded as the World's Best Flavoured Whisky in 2016 at the World Whiskies Awards (the whiskey was the Knob Creek Smoked Maple Whiskey, Kentucky Straight Bourbon, quite a long name). How do customers drink it? Well, either neat after dinner, mixed into cocktails, or as a pre-game drink...

- As we said earlier, the craft wave is getting bigger and bigger. People are succumbing to the small producer label. Malt-maniacs, looking for less traceability are turning towards both young and/or microdistilleries which are (according to them) restoring attention to details, providing excellent raw materials, production methods that are sometimes more vintage: Corsair in the US, Puni in Italy, Glann ar Mor or Eddu in France, Box in Sweden, the list is quite exhaustive. The craft Bourbon phenomenon, `hand-made' Bourbon managed to invade and convince the American market by saying that small is always beautiful, not sure if this is always true.

- Customers will also be unfaithful to Scotch: They will drink less and less Scotch and drink more Japanese, American, or Irish whiskies since the Malt empire dominance is making it rest on its laurels, not really a good time. People will go for the Solist cuvee of the Taiwanese whisky Kavalan, an accelerated aging Indian whisky Amrut or the original maturing of the Mackmyra distillery, but also peaty styled whiskies like Hellyers Road from Tasmania.

- Customers will eventually go for 3.0 whiskies. The number of distilleries and malts being limited, the whisky amateur that as an important curiosity appetite will go for blends from blenders and independent bottlers whose imagination can simply be exuberant and their quality astonishing. For instance, blends from John Glaser of Compass Box, a small independent company specialised in blending that makes beautiful and stunning blends;

Ichiro's Malts blends from Ichiro Akuto; the Exclusive Casks from the Creative Whisky Company... The list goes on forever.

- The cocktail trend is also coming back. In France, especially in Paris with a plethora of whisky bars opening, cocktails are gaining in popularity.

- Remember customers' curiosity we were talking about? This inexorable quest of novelty is making limited editions, small batch, special packaging, duty-free exclusivity bloom, big times. Marketing will sometimes take the upper hand to the detriment of quality.

- We will finish on one noteworthy trend that is actually valid for wine too, Europe drinks less but better. Budget-prices blends are slowly starting to decrease (-3%, which represents 2 million litres less in 2014 according to Slate), Single Malts sales are remaining stable, and premium whiskies sales are on the other hand rocketing.

Generally speaking, European wine consumption is gradually falling with important losses noticed in major consumers and producers. In spite of this decline, quality wines sales have been going up as well as imports.

To my question: - `What are the current trends in whisky consumption?', Michael Moss answered:

- «[...] you only have to look at the duty free offerings, there is a definite shift to premium products, particularly malts with lots of range extensions. I think there is room for more quality blends, such as those offered by Compass Box, partly because malts are not to everyone's taste and we can also expect growing competition from rum now that Cuba has been rehabilitated. Demand for basic blends in the export market will continue, but just like big label wines margins will be tight.»

First of all, this questionnaire gives us a view on a limited consumer sample (129 people) so it cannot be considered as statistically robust. We have indeed to take the results with some precautions.

We can say that we might have a high proportion of Wine lovers, and so, based on this research we also might say that there is not a move away from wine to whisky, at least for the moment. Wine seems more accessible, often more affordable too, lower in alcohol and perhaps less difficult in terms of taste compared to whisky, explaining that the customers interviewed tend

to prefer wine. Also there is a notion of conviviality here as wine is more frequently seen at tables with two, three, four or even more people. We tend to see wine at family lunch/dinner(s) more than a bottle of whisky. Even if it is possible to do a whisky and food pairing, it is not as popular and common as wine pairing.

Whisky is more confidential, and usually consumed and appreciated either at the end of a meal (as a «digestif», where premium whiskies are savoured), or at the aperitif moment (where very often, you get a very cheap bottle of whisky to mix it with soft drinks like Coke and share it with friends). Wine is probably not the first option in these particular consuming occasions.

In the early 2016, the new Department of Health limits on alcohol consumption was acted in the UK. It informed British that previous `safe' limits are no longer so. Indeed, British have been told that they should drink no more than seven glasses of wine per week so they can keep health risks low. This is just an example of a much wider and global trend regarding this raising awareness about potential negative effects associated to alcohol. Customers are indeed being more and more mindful of health issues about alcohol consumption, and this attitude shift about drinking is putting the wine industry under pressure, especially in many developed markets, like the European one. People are encouraged to drink less. The younger generations are probably even more concerned by these health messages, but they show also show a strong interest in new original tastes. The search for new sensations while having a more responsible consumption are the key drivers of younger generations alcohol consumption. This might be a problem for the spirits industry thus, the whisky industry as well. For now, this low alcohol pattern is not well established in all European markets, for the wine industry either, it depends on cultural and legislative differences amongst markets as well. This plays a key role in customer's sensitivity and acceptance about lower alcohol wines.

For instance, Germany which has the highest percentage of low alcohol wine drinkers in 2016 (47%) but this is notably due to the fact that wine styles in Germany are naturally (and usually) low in alcohol. New world countries are more sensitive to this trend with Canada for example which had an important increase with 7 million Canadians buying lower alcohol wine in 2015, versus 5.1 million in 2014.

Over the past few years, lower alcohol wines have been more and more seen but still remain as a niche market despite the growing interest. This number of lower alcohol wines drinkers in France went down so is it really happening everywhere in Europe?

Preferences between higher/lower alcohol wines differ according to traditional differences too. In countries like in the UK or Scandinavian countries, low alcohol wines get lower tax and are thus more popular.

Concerning whisky, many professionals believe that we will get to see more progression and expansion of the NAS sector, even and especially in the premium segment which will give more opportunities to smaller producers or new distilleries to break through when they start a business. According to Matt Chambers and Karen Taylor, co-founders of Whisky for Everyone (a blog), this NAS trend won't be in the entry level products but in the higher priced segment and in both domestic as well as travel retail markets. People are more driven by the taste profile rather than age.

To my question: - `Where is the whisky market going (in the UK, do you have an idea for other European countries)?', Michael Moss answered:

- «Wise heads suggest alcohol consumption will continue to fall, particularly amongst the middle class where margins are higher, so the obvious strategy is to move up market with high quality distinctive products. Compass Box [...] is a good example. We can also expect a number of the craft gin distillers to enter the premium malt market with distinctive premium products. Price competition ate the bottom end will continue, but income will come from exports to developing countries. You can draw comparisons with cigarettes.»

Another element of European economic environment may probably impact the whisky market. Thursday, June 23^rd, the European Union went to sleep with 28 countries, it woke up with 27 in the morning, on Friday, June 24^th. Will Brexit have a consequence on the whisky industry? Europe is Scotland's largest drinks export (Cf. Graph below) and approximately represents no less than 4 billion pounds a year. According to the Scotch Whisky Association (SWA), more than 90% of Scotch is sold but outside the United Kingdom. It also said the European single market was "central to the success of Scotch". The spirit is actually the most important contributor to the country's balance of trade in goods thus without it, the trade deficit of the country would be more significant. Furthermore, about a third of these exports were distributed amongst the EU (3.8 billion pounds for exports, with 1.2 billion pounds for the European market last year).

- The UK will sooner or later lose access to Europe's Free Trade Agreement or FTAs (trades made with countries around the world to reinforce economies, created jobs, it enables business in the European Union to compete and export more effectively to countries outside the EU which also gives better access to many resources), which will result in the loss of tariffs decrease in many countries who ratified the agreement.

- The country will have to negotiate its own trade agreement(s) and/or play by the World Trade Organisation rules.

- Rules on the food and drink sector are usually made at a European level, if these laws are to be changed, then Brexit will be even more difficult and the Scotch industry will need to adapt very quickly (for instance, what if their Geographical Indication was removed? They may lose their protection of the `Scotch whisky' label).

- The Europe membership gave UK distilleries an «easier» access to many markets around the globe, including top exports destinations such as South Africa or South Korea and of course European countries as well.

- The industry could face another major problem: relabelling costs which could represent a 3000£ cost for every product line a distillery exports.

To sum up, if the UK still wants Scotch to be enjoyed worldwide without commercial issues, new trade agreements need to be made rapidly and the government has to clarify the situation as regards to the Brexit transition.

Even if Brexit is acted, there seem to be a hesitation about leaving the EU especially from Scotland. During a visit at the Glenkinchie distillery (owned by Diageo) in May 2016, Liz Truss insisted on the fact that the EU single market is really important because of certain standardised regulations on labelling, certifications, licences or trade agreements that made Scotch exports rocketing. She said: «Europe has a taste for Scotch and the industry will do better if we remain in the EU because whisky producers have [...] easy access to the Single Market of 500 million people». Leaving the EU [...] «could lead to years of negotiations on new trade deals - with no guarantees at the end.». Having said that, there is no apparent benefits to the Scotch industry, it might lead to more paper work, higher tariffs, more difficulties at borders etc.

The fate of Scotch and all the British whisky is at stake and members of the European Union (think of France for instance since it is the world's top whisky drinker) but other countries too could also be affected and having the opportunity to see Scotch whiskies on our shelves might get more complicated and scarce.

To my question: - `Do you think the Brexit will affect the whisky market?' Michael Moss answered: - «Unless the UK is part of the single market, there will be a 10% ad valorem tariff, which will be compounded by export duty on the grain imported from Europe to make it. The UK does not produce enough malting quality barley. Alternative sources are probably already spoken for by domestic brewing and distilling industries, for example in Canada.»

The fate of wine is also at stake here. The UK being the first export market for Champagne for instance, France being the first supplier, it might play to UK's disadvantage (problems with customs rights and so on).

Is there a move away from wine to whisky in the european market?

3. Trends and changes during the last 5 years