Compass Box: John Glaser
The whisky maker whose business could turn out to be the perfect blend
The likely £7.4bn acquisition of drinks giant Allied Domecq by rival Pernod Ricard gives you some idea of what whisky entrepreneur John Glaser is up against. The former employee of another giant of the industry – Diageo – Glaser launched his own premium whisky brand five years ago, yet spent the first two years of its existence alone, experimenting in his kitchen.
And despite Compass Box Delicious Whiskies Ltd being relatively small fry in such a mature and competitive market, he’s confident there’s room to grow. “People ask: ‘Aren’t you afraid someone will rip off your company and walk all over you?’ My answer to that is no. Unlike them we only make small batch whisky blends,” he explains and adds that consolidation only creates more of an opportunity.
Glaser points to the millions the multinationals have spent in the past few years trying to rejuvenate their brands, but says it’s really about what’s in the bottle. “Big companies take the opposite view, but for the discerning customer you can’t change the image without changing the product,” he argues. “A new whisky brand should be more approachable in brand and taste. It can be soft and sweet and rich. After all, there’s a whole generation that has been brought up on Coca- Cola and Californian Chardonnay.”
Creating such a blend is a painstaking process, however, and took years of experimentation to settle on distinctive product lines. It’s equivalent to the wine trade, which Glaser cut his teeth in, where grapes from different vineyards are combined to create new flavours.
There are around 90 whisky distilleries in Scotland. Glaser handpicks casks from 12, including some owned by market behemoths, and typically blends complementary single malts, often using four or five for one product line. Around 75% of casks offered by distilleries are rejected, which gives some idea of how time-consuming such research is and explains why the larger companies are happy for him to toil away.
Another innovation was to create a pure grain-based line, something he says others thought was “utterly mad”, although are now trying. Glaser feels that the resulting whiskies will help change some people’s perceptions of it “tasting like shit” and being an old man’s drink. To further update the image and provide an up-to-date alternative to those consumed by the hard-drinking fraternity, Compass opted for unusual labelling. This was in contrast to the rather staid, traditional images favoured by leading brands, and included the first woman ever to be featured on a whisky bottle. They also carry a personal message from Glaser offering a taste of the company’s roots.
So far, the company has a core range of five products, bearing idiosyncratic names, such as Hedonism, Juveniles and Monster, with more to follow. It’s another ploy now adopted elsewhere, he claims, with renowned malt whisky producer William Grant introducing Monkey Shoulder and peer Glenn Moray naming a line Serendipity. Such touches may not sound much, but in the world of whisky count as maverick-like departures.
One step ahead
Turnover remains relatively modest at £850,000 given the £23 to £42 price tags on each bottle, but it’s all part of Glaser’s careful organic growth programme. Sales of premium whisky are growing around the world, and he is confident consumers are gradually beating a path to Compass’ door. He claims the company is barely scratching the surface of many of the world’s Scotch whisky-drinking markets. Instead, while it sells in Holland, Sweden, Denmark, Spain, Japan, Hong Kong and elsewhere, Glaser’s team is concentrating equally on the US, France and the domestic UK market, countries where demand for Scotch whisky is highest. “We don’t start a new market unless we can service it,” he adds.
Building a website for your business idea is easier than you might think. Our online tool ranks the top website builders that offer free trials.
Because Glaser and his team choose to personally visit, run tasting sessions and educate stockists, which include a select group of restaurants, shops and bars, as well as supermarket chain Waitrose, the brand remains available at only a limited number of distribution points. The company’s wholesalers are also carefully briefed on the outlets that most suit the brand.
It’s an approach that engenders a closer understanding of the company’s customer base, something the multinationals cannot match. “We have one foot in the production camp, and another in the consumer camp,” he says. “Larger companies have marketing, production and distribution ostensibly connected, but in fact entirely disconnected.”
Inevitably the touchy-feely, sincere and carefully targeted strategy constrains Compass’ sales potential, as Glaser readily admits. “We don’t have the ability to grow the business fast through advertising; we prefer organic growth, word-of-mouth, in tandem with PR. Raising awareness is critical. The last thing I want is for our brand to sit on a shelf gathering dust. That sends the wrong message and in the long-term hurts your our brand, leaving it tarnished. I want it to sell and for people to appreciate what we do. The challenge is to keep one step ahead, so that when we get distribution, demand can be generated quickly.”
This has meant turning down lucrative contracts with multiples, something not many ambitious growth companies would do, as gracing the shelves of a Tesco or Sainsbury’s represents ‘making it’ for many product-based companies. “Getting an order from a multiple is almost the easy part,” contends Glaser. “We wouldn’t have been comfortable dealing with Waitrose without getting press in the UK and appearing in its magazines first.” The customer demographic profile was also a significant factor.
Added to his determination to create suitable demand first is another multiple-related obstacle. “Trade is so lopsided to multiples in the UK,” explains Glaser. “It’s harder here than in the US and France where multiples aren’t quite so strong.” He admits that despite being a UK company, albeit one founded by an American, it’s the US market that will drive growth.
He expects turnover to double or more than double for each of the next three years. To illustrate what kind of dent that would make in the market, Glaser points out that top brand Johnnie Walker will sell more than 10 million cases of whisky this year. Compass, on the other hand, will sell around 7,500.
There’s clearly a way to go before the larger players will feel it necessary to react. However, of around 2,000 that receive the company’s e-newsletter, Glaser finds it interesting how many employees of large competitors are among those on the list. “We’re stirring it up in a small way in the industry,” he laughs.
There are also others now entering the nascent market, such as Jon, Mark and Robbo’s Easy Drinking Whisky Company Ltd, which Glaser claims is bringing a Ben & Jerry’s approach to easy-to-drink whisky. Again he’s comfortable with the added competition as it endorses the niche he and his industry-hardened management team are trying to create. How he’d feel if a rival started gaining the plaudits and achieved sales way beyond those of Compass remains to be seen. But for the moment the company has received a considerable amount of coverage in the ‘right’ places, something the Manhattan of wine and whisky magazines, plus national press and men’s lifestyle titles on Glaser’s desk testifies to. “If you look at the amount and type of press we get, we punch well above our weight,” he says. He explains that he’s in the process of filing and logging coverage, but it’s fair to say this could take some time.