How Johnnie Walker Conquered The World

Straight Up

BY AFSHIN MOLAVI

Mexico is rising. You can see it in the country's swelling exports, the net-zero migration to the United States, the excitement of international bond investors, a recent credit upgrade from Standard & Poor's, a newly confident middle class, and a per capita GDP that has doubled since 2000. Not to mention a young, dynamic, handsome new president. In case you missed all these signs, though, you can also see Mexico's surge forward in a Scotch whisky ad.

The television spot says nothing about the product but everything about the country's long march from poverty toward prosperity. In the advertisement, thousands of Mexicans, men and women, young and old, are bound by chains to a massive boulder. They trudge forward up a dusty mountain, faces contorted and blackened, eyes downcast. The boulder pulls them back. A buzzard circles above. They push forward again, straining and wincing, and then -- with a crunch -- the boulder slides back downhill, throwing them to the ground.


But not so fast. One by one, they stand up and unchain themselves. Unburdened, they walk with gritted smiles and purpose up the dusty talus slope, leaving the boulder behind. Cue the soaring music. Cue the blue-sky vistas. Cue the tag line: "Keep Walking Mexico."


It's a brilliant ad, and you'd be forgiven for not immediately realizing it's for Scottish booze. (Frankly, the Sisyphean strivers look like they'd prefer water.) The only hint is the familiar Johnnie Walker logo, the stylized "Striding Man," accompanying the tag line. The metaphor of national achievement is clear, but the ad doesn't just tell the story of Mexico today. It also highlights Johnnie Walker's aggressive push into emerging markets and the rush by multinational consumer-products companies to catch the middle-class tsunami that is transforming the world.


The Brookings Institution's Homi Kharas estimates that the global middle class will hit 4.9 billion people by 2030, growing by 3 billion from today -- and they'll spend $56 trillion a year, up from $21 trillion today. Virtually all that growth will come from emerging economies. That's a lot of people walking upward -- and a lot of potential Johnnie Walker drinkers.


That's why executives from Starbucks to McDonald's to Coca-Cola see their future in the global middle class, and that's why Johnnie Walker's parent company, the booze behemoth Diageo, is pushing into liquor stores from Chile to China. Paul Walsh, a Diageo board member and former CEO, said in a statement about 2012 business results that the firm's "expanding reach to emerging middle class consumers in faster growing markets was the key driver of our volume growth." And Johnnie Walker, the world's No. 1-selling Scotch whisky, has been a crucial part of that growth. Today, four bottles of Johnnie Walker are consumed every second, with some 120 million bottles sold annually in 200 countries. Five of Johnnie Walker's top seven global markets are in the emerging world: Brazil, Mexico, Thailand, China, and a region the company calls "Global Travel Asia and Middle East."

From a small town in the Scottish Lowlands, the Striding Man has come a long way -- and he's still walking.

ASK ANYONE who travels in emerging markets or developing economies, and chances are they've been offered Johnnie Walker. These are just some of the places I've seen it poured: at a Beijing gathering of techies, a four-day wedding in Jaipur, countless bars in Dubai, a Nile cruise in Egypt, the home of an Arab diplomat in Bangkok, private homes in Tehran, a middle-class Istanbul house, and diplomatic parties in Riyadh.

Journalists who spent time in Baghdad during the Iraq war marveled at the easy availability of Johnnie Walker Black Label, even when food staples were scarce. The late writer Christopher Hitchens -- who fondly referred to the drink as "Mr. Walker's amber restorative" -- accurately noted that Black Label was "the favorite drink of the Iraqi Baath Party." In Saddam Hussein's era, a smuggler could make a good living taking crates across the border for thirsty Iranians. On a trip from Tehran to Iran's Kurdish regions on the Iran-Iraq border in the late 1990s, I stopped at the small city of Mahabad. A local smuggler peered into the car window, saw a group of city slickers from the capital, and asked simply in his Persian accent: "Johnnie Valker?" He, of course, offered us "very good price, my friend."


It's uncanny, the ubiquity of the striding Scot and his blended whisky (no "e" for the Scottish kind). It's everywhere, particularly among the upper end of the middle classes that the world's corporations are chasing. In Thailand, businessmen place a bottle of Black Label on the table before a closing negotiation. In Japan, bottles have become an essential part of the ritualized gift-giving culture. In India, one of Bollywood's most famous comedians even took the name Johnny Walker. It's such a status symbol in Asia that Johnnie Walker knockoffs aren't hard to find. You probably wouldn't want to serve guests the counterfeit liquor, but the bottle looks good on the mantle.

And in Africa, the newest gold mine of emerging markets, Diageo is cultivating a fresh generation of whisky drinkers. In downtown Nairobi, a 20-story billboard of the Striding Man towers alongside a skyscraper. African musicians and athletes have been named "brand ambassadors," and premium magazines are running a series of print ads that say simply: "Step Up." As in, step up to a better life, step up to the middle class, step up from that stale beer to a higher state of being: Become a whisky drinker. The print advertisement hawks Red Label, the brand's cheapest distillation (a favorite of Winston Churchill, with soda) and the presumptive first step in Johnnie Walker's color-coded upward journey through Black, Green, and Gold labels toward that nirvana of prestige: Blue Label.

The campaign seems to be working. Johnnie Walker sales are up 38 percent in East Africa and 33 percent in South Africa, and Diageo is doubling down, investing $368 million to expand operations in Nigeria, Africa's biggest market.


It's a classic strategy: reach the growing middle classes by selling them not just a product, but a lifestyle, an aspiration. Starbucks CEO Howard Schultz often talks about selling an experience; coffee is an afterthought. The message from Diageo is similar: Keep Walking, you emerging middle classes; keep rising, and oh, by the way, treat yourself to a little Johnnie Walker while you're at it.

SO HOW did a little whisky company from a little country become the global brand of upward mobility? Or, to repurpose a question once posed by Scottish judge Lord Cockburn, no fan of his countrymen's favored drink: "Whisky no doubt is a devil; but why has this devil so many worshippers?"


In 1819, a young John Walker, the son of a local farmer, opened a small general store on King Street in Kilmarnock, a town in Ayrshire, Scotland. A general grocer, Walker also sold wines and spirits, including his own blended whiskies. The author Robert Bruce Lockhart noted that Walker's "capital was tiny and his business small and purely local," but he "had his full share of Ayrshire grit and thrift." For the first 30 years, his business was steady but unremarkable and "gave no indication of the fortune that was to come," Lockhart wrote in his 1951 book Scotch: The Whisky of Scotland in Fact and Story. In 1852, a devastating flood nearly ruined Walker. He lost everything and had no insurance.

But that "Ayrshire grit and thrift" kicked in, and he methodically rebuilt his business, gradually bringing his son, Alexander, into the trade. This would prove to be a turning point. Although the bottle carries his father's name, Alexander Walker -- whom Lockhart described as "a man of immense energy, vision, and ability" -- took the elixir global. When he joined the business, whisky produced only a fraction of the company's revenue. By the time Alexander died four decades later, handing Walker's Old Highland Whisky to his two sons, it was one of the world's largest purveyors of Scotch whisky, and a global brand was born: Johnnie Walker.


Alexander Walker actively engaged in the Adventure Merchant Business, a guild of sorts that tied together Scottish manufacturers and shipowners -- all of whom benefited from their membership in an empire on which the sun never set. The terms of the company's arrangement were fairly simple: The shippers would take goods with them on their journeys around the world, sell them, take a commission, and remit the remaining profits to the firms. Walker's whisky thus bobbed along the  British Empire's trading routes for decades.


But Walker understood that to truly make his mark, he needed to conquer a market much closer to home: London. In 1880, he opened offices in the city and became his company's first brand ambassador. As Lockhart noted, "he understood the art of personal advertisement," riding around town on a specially built open carriage known as a phaeton, a mode of transport favored by royals and the superrich. Drawn by "two superb ponies," the conveyance "attracted the desired attention and increased the still-more-desired sales."


Walker is also credited with the unique square-shaped bottle and its distinctive sticker, angled at precisely 24 degrees. The square shape allowed more bottles to fit on a shelf, and the logo's angle helped catch the eye. (Later, in Prohibition-era America, the square-shaped bottle proved ideal for smuggling: It fit perfectly inside a hollowed-out loaf of bread.) Walker died in 1889, but the steady hands of two Walker kinsmen and a young Ayrshire native of great ability, James Stevenson, guided his growing enterprise over the next half-century.


In 1908, the owners reached out to a leading artist of the era, Tom Browne, to help them design a poster. Over lunch, with just a few sharp strokes of his pen, Browne sketched what would become one of the world's most recognizable advertising icons. "The Striding Man was critical," whiskey historian Kevin Kosar told me, because it differentiated Walker from other scotch purveyors, which tended to play on Scotland's traditions of bearded men in kilts playing bagpipes, an image that lacked universality. "The Striding Man looked English, not Scottish. He carries a monocle, so he is literate. He carries a walking stick and wears a top hat. He is a dandy," Kosar explains. No rough Scot blowing funereal horns; here was a gentleman on the move.


By the early 20th century, the firm had it all: a growing business, a winning icon, new markets. Then came World War I, and business slowed worldwide. By 1925, John Walker & Sons found itself forced to enter a whisky cartel known as the Distillers Company. "After the war, there was a strong incentive for the big companies to lean on each other for strength," says Kosar. "Grain had been requisitioned, markets shut down. It seemed like a good idea to partner up to weather the storm."


World War II brought another storm, but its aftermath produced a historic march of growth in the West and rising fortunes elsewhere. Johnnie Walker made a big push into the U.S. market, advertising in gentlemen's magazines and targeting the successful, aspirational male. But the company also went after newly opened overseas markets. Japan, where men soon developed a copious thirst for Black Label, proved to be an early post-World War II success. Back in the States, Johnnie Walker started appearing on the silver screen in movies from Blade Runner to Raiders of the Lost Ark, making it not just a drink but a cultural icon.

In 1986, the Distillers Company was bought by the Irish brewery Guinness, which merged 11 years later with Grand Metropolitan to create Diageo. Listed on the London and New York stock exchanges, Diageo is now the world's largest spirits group by revenue, with bold-faced brands including not just Johnnie Walker but Smirnoff vodka, Captain Morgan rum, and Tanqueray gin. Diageo is an alcohol colossus that already generates nearly 40 percent of its sales from emerging markets, and that fraction is set to rise to 50 percent by 2015.

TODAY, DIAGEO is walking toward India and the acquisition of United Spirits, the country's largest alcoholic drinks firm, with 60 percent of the market. In July, it acquired a 25 percent stake in the company, and it aims to own more than half. Indians consume more whiskey than any other country in the world, and the distribution network Diageo would get with the purchase of United Spirits is akin to a raw materials producer gaining access to internal rail networks or shipping ports. Diageo has also acquired Brazil's Ypioca, the third-largest producer of cachaca, the popular sugar-cane-based spirit that adds the kick to caipirinhas from Sao Paulo to San Diego. It also recently had its eyes on Mexico's Jose Cuervo, the world's top-selling tequila-maker.


China is the big prize, though. There alone the middle class has grown to some 350 million people. According to consulting firm Ernst & Young, by 2030 China could see 1 billion people in the middle class -- some 70 percent of its projected population. And they'll be toasting to their success: The market research company Euromonitor International predicts that China alone will contribute 50 percent of the volume growth of the spirits industry in coming years. China is already the world's largest spirits market, followed by Russia and then India, though the South Asian giant will move into the second spot this year, according to industry estimates.


But will Chinese start quaffing scotch? On a per capita basis, whiskey consumption is still relatively low, with baijiu, a heady clear-colored liquor distilled from sorghum, still the preferred blend. But Johnnie Walker is striding ahead. In 2011, Diageo acquired a controlling stake in Sichuan-based Shui Jing Fang, a maker of baijiu, and the company has actively been courting young, urban professional Chinese -- "chuppies" -- with the familiar "Keep Walking" ad campaign. Since 2011, two "Johnnie Walker Houses" have opened, in Shanghai and Beijing, offering tours that mix a dab of Scottish heritage, a dash of whisky education, and a jigger of clubby exclusivity. On sale, of course, is the full array of Johnnie Walker blends, including exclusive limited-run editions of the super-high-end King George V Blue Label, which can run north of $600 per bottle.


Admittedly, Johnnie Walker and Diageo have made a few mistakes as well. A recent ad campaign for Blue Label, featuring a computer-generated Bruce Lee spouting inanities about the good life in a Hong Kong penthouse, drew ire from devoted fans of the martial artist, who was a teetotaler. The company's big investment in Turkey in 2011 -- the $2.1 billion purchase of Mey Icki, a major raki distiller -- came as the Turkish economy started to cool and the government clamped down on alcohol ads. What's more, the World Health Organization is issuing warnings about rising alcoholism in Africa -- Diageo's next big growth market.


Meanwhile, some scotch devotees argue that Johnnie Walker has forgotten its roots. Clearly, it's not soaked in nostalgia for ye olde Scotland. Today, Johnnie Walker is part of a massive conglomerate that has more than 25,000 employees and production centers in Australia, Cameroon, Canada, Ghana, Ireland, Jamaica, Kenya, Nigeria, Uganda, the United States, and the United Kingdom (including Scotland). In late 2012, Diageo bulldozed the last production plant in Kilmarnock, the birthplace of Walker's Old Highland Whisky.


As Kosar and I spoke about the future of Johnnie Walker, he sent me two images. The first was the original Striding Man design, Tom Browne's big advertising hit. The second was today's logo. I saw the difference right away: The Striding Man has had a face-lift, literally. His face no longer exists. He has become a silhouette, a colorless everyman. He could be anyone -- and you could be him.

source: foreignpolicy.com