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Issue 77 - The price is right?

Whisky Magazine Issue 77
January 2009

 

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The price is right?

The price of a malt whisky has to cover a wide range of costs,many of which are variable and unpredictable. Ian Wisniewski tries to add them all up

Savouring the character of a malt whisky can be a complete experience in itself, although the price inevitably provides a context.However, the retail price reflects numerous factors, including the cost of distilling and aging, glassware, labels, distribution, excise duty and vat, not to mention the retailer's profit margin.As many of these costs are also variable, doing the sums is hardly a straightforward formula, with the price of malted barley, gas, electricity, casks, glassware and distribution, for example,having risen significantly.

And while the industry is used to accommodating some ups and downs from year to year, it's currently a case of dealing with a cumulative, on-going effect.

“Every year we face a different challenge but normally the following year you can sort it out.However, it's not often you get two years one after the other when you've got huge cost increases.We've never seen such high costs for two consecutive years,”says Douglas Cruickshank of Chivas Brothers.

One key factor is the price of malted barley, up from around £90 a tonne in 2006 to £200 a tonne in 2007.Distilling malted barley also highlights the price of oil, in order to run the boiler for example, which heats water to the required temperature for mashing,and produces steam to heat the stills.

“The production process in general uses a lot of oil so it's a big cost, and there was a substantial rise during the past 12 to 18 months.

Fortunately the price is coming down by quite a bi...

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