Diageo Banks on Luxury Whisky as Sales Fall and Gen Z Drinks Less

Diageo the British drinks conglomerate behind Johnnie Walker is pivoting towards the rarefied heights of ultra premium Scotch as traditional sales falter and younger generations turn away from alcohol. Despite the companys rich 200 year heritage and leadership in the spirits market recent years have seen Diageo struggle with declining revenues and a change in leadership following investor concerns.

Inside Johnnie Walkers experience centre on Princes Street in Edinburgh a secret vault offers the ultimate in whisky luxury A select few high net worth individuals are invited to collaborate directly with Emma Walker the master blender to create a bespoke blend tailored to their personal tastes and life experiences The price for this unique offering soars to £50000 per bottle making it both a symbol of exclusivity and a bet on the enduring appeal of craftsmanship and legacy

The companys investment strategy now places a significant focus on extraordinary encounters whether it is a £30 flavour tour or the £9500 whisky makers cellar visit Diageo is aiming to attract consumers seeking memorable experiences not just a drink Julie Bramham head of the luxury group at Diageo believes that while the younger generations consume alcohol less frequently their appetite for quality and premiumisation has never been stronger This approach is reflected in collaborations with high profile figures like fashion designer Olivier Rousteing who created a four bottle collection each emulating the essence of a different season Rousteings collection debuted at £16000 per bottle and exemplifies how luxury spirits are now as much art as indulgence

Industry data illustrates the challenge facing traditional drinks firms NHS statistics note that one fifth of adults in England now abstain from alcohol while regular weekly drinking has dropped significantly since 2011 The older demographic remains the loyal customer base but the emerging market lies in younger consumers seeking high end experiences over volume

The luxury push arrives as Diageo grapples with wider issues Debra Crew was ousted as chief executive after share prices plummeted over 40 percent since June 2023 and profit warnings spooked investors Her replacement on an interim basis is Nik Jhangiani as the group searches for a permanent strategy to restore its blue chip credentials

Despite a turbulent market Diageos gamble on luxury Scotch seems calculated to create a trickledown effect across its range using the allure and scarcity of its £50000 bottlings to draw attention to all tiers of its portfolio While only a handful may ever sample these private blends the buzz surrounding them could well offer Diageo a lifeline as the worlds drinking habits evolve