Whisky battle ends as Cardhu brand agrees to makeover

A dispute that threatened to tear Scotland's whisky industry apart amid accusations that the world's largest drinks company was misleading the public and damaging the integrity of one of the country's best brands has been averted by a last-minute compromise.

The Scotch Whisky Association (SWA) brokered an agreement yesterday between the drinks manufacturer Diageo and rival distillers over the way it has turned its Cardhu single malt into a blend of other Speyside whiskies.

An alliance of traditional distillers had complained for weeks that Diageo had altered the whisky but only changed one word on the labelling, replacing "single malt" with "pure malt".

Cardhu, the best-selling whisky in Spain, has been unable to keep up with demand from its mainland European patrons and Diageo had hoped its "innovation" of using a mixture of malts from other distilleries would replenish stocks and satisfy customers.

Although not sold in Britain, rival distillers claimed that, by changing the ingredients and calling it a "pure malt" but retaining the distinctive bottle shape and colour packaging, the company was misleading customers and undermining single malts, which traditionally come from only one distillery and are among the most expensive in the world.

William Grant and Sons, which makes Glenfiddich single malt, wrote to every member of the Scottish Parliament criticising the move as an attack on the reputation of the industry .

Together with Allied Domecq, Edrington Group and Glenmorangie, the distillers called upon Diageo to withdraw the modified product or revert to its single-malt traditions. Failure to do so, they warned, would result in legal action claiming damage to their own brands caused by a loss of consumer confidence, and appeals to the European Union competition authorities and Office of Fair Trading to intervene.

Tony Hunt, the group managing director for the distillers William Grant, said: "I think it is a crisis for the entire Scotch whisky industry because we have built a very successful single malt category because of the reputation of single malt for authenticity and integrity.

"If we lose that reputation, this category will lose value in the future globally." Scottish politicians become involved, with the SNP leader John Swinney calling for Holyrood's Enterprise and Lifelong Learning Committee to study what should be the definitions of single malt, vatted malt, and blends.

But, yesterday at the offices of the Scotch Whisky Association in Edinburgh, Diageo agreed to make significant changes to the packaging of the product that will draw consumers' attention to the changes, even though it will retain the name Cardhu.

The label will change from brown to green and the shape of the bottle will be altered, though the words "pure malt" will stay. Additional promotional activity in the new year will explain to consumers the nature of the new product.

The company said it would also work with the SWA council to set definitions of industry terms such as "single malt", "vatted malt" and "blend".

Gavin Hewitt, the chief executive of the Scotch Whisky Association, said he hoped the "sniping and criticism" surrounding the issue would end as the "adverse publicity was harming the industry".

"It is important to recognise there has been a sea change in where Diageo stands," said Mr Hewitt. "They have recognised there were dangers where they were going, particularly the issue of trying to suggest to consumers it was the same product.

"That was a contentious issue and they have responded in good spirit." A spokesman for Diageo said it was "very pleased" that a deal had been reached over Cardhu.

SO WHAT'S THE DIFFERENCE?

SINGLE MALT

Widely regarded as the whisky of the connoisseur, a single malt is the product of one distillery sold under the name of that manufacturer, giving rise to Laphroaig or Glenffidich.

Single malts are valued for their cleaner, more distinctive flavours, allowing producers to charge an average of £20 to £25 a bottle, double that of a blend. Aged single malts, from 12 years up, command higher prices. Single malts account for only 20 per cent of Britain's £2bn annual exports.

BLENDED MALT

MAKING UP the most of all Scotch sold at home and abroad, blends can consist of anything from 15 to 50 different single whiskies from different distilleries.

They are selected by a blender working to a formula kept secret by each producer and designed to give a distinctive and consistent flavour. Once "married", the blend is returned to the vat for several months before bottling. The resulting brands, from Bells to J&B, earn £1.6bn a year in exports.