The global view
While it can’t be disputed that my crystal balls are in need of a good buffing I have peered long and hard into their milky gloom and discerned the following: the convergence of two recent trends within single malt – ever-younger bottlings and ever more expensive ‘luxury’ items. This will reach its apotheosis with the release of a 3 Years Old Dalmore in a five litre Swarovski crystal decanter for£1,000,000. Its name, once again the result of a quick skim through A Child’s Guide to Greek is, finally, appropriate – Hubris.
Elsewhere: LVMH and Diageo will continue their flirtatious waltzing; two independent bottlers will become distillers; more micro distilleries will open in the UK; the peat boom will start to slow; distillers will hand over the making of their whiskies to bloggers (who, after all, know best); bourbon will be the whiskey category to watch; Japanese dis-tillers will concentrate on only a few key export markets, the result of lack of availability of mature stock. Some of these will come true.
It’s stock which is the main issue in Scotch as well. Is there sufficient whisky to maintain cur-rent levels of growth at the 12 Years Old age statement until the effect of increased capacity comes on stream? Will we see greater activity behind ‘standard’ brands as blending firms try to take the heat off their evaporating assets?
With regard to that extra capacity – what quality of wood is it being filled into? Will supply and demand see a further hike in barrel prices? Will new coopering techniques be needed to surmount these issues?
All of these are predicated on there being a continuing positive outlook for blended whisky glob-ally. Distillers however need to be prepared for the very real potential of a second global financial crisis and the distinct possibility that the US, UK and the remain-ing major European economies will be following Japan’s deflationary model. Some of the more bearish economic forecasters are even warning of China’s economy overheating as well. Sobering stuff. It’ll be a testing year behind the scenes.
The future is blended. Rumours of the demise of blended whisky have been greatly exaggerated and Diageo took the opportunity of the media opening of the Roseisle distillery to spell it out in big letters. Truth be told, though, the evidence was already there. The common view for some years has been that single malts have been growing at the expense of blends. But that trend may have stalled, and blended Scotch still easily accounts for well in excess of 90 per cent of Scotch sales. In actual fact single malt sales are rising and the volume of blended whisky is falling, but the value of blends is rising, indicating that people are trading up and drink-ing less but better. This in turn may reflect a pattern in some emerging markets not to go from imported spirits to Scottish blends and on to single malts but to go from standard Scottish blends to premium Scottish blends instead.
Such a trend would be encouraged by drinks giants Diageo and Pernod Ricard because as they battle for global market share they face far fewer limitations from their blended whisky port-folios than they do from their malt whisky ones.
But single malts have a bright future. All of which provides the medium sized whisky companies with a golden opportunity because even with their consider-able resources the big boys sim-ply can’t carpet every market place with single malt. Edrington, Beam Global, Whyte & Mackay, Morrison Bowmore, Inver House and most recently have spent the last couple of years sprucing up their portfolios; now expect them to vigorously compete for new drinkers with new expressions, innovation and progressive marketing initiatives.
We’ve never had it so good.
Scotch whisky is in good shape as we start 2011. It is in danger of being fashionable, it’s attracting more attention now than at any time in recent memory, and it is benefitting from the general trend towards drinking less but better and towards products with heritage and provenance. But Scotch isn’t having it all its own way. The progress made by Irish whiskey in 2010 will continue, with new players, new expressions and more robust support by Irish Distillers for Redbreast and Powers. As we’ve seen, American whiskey is performing well, and Japanese whisky will benefit from another clutch of awards on the one hand, and proper brand support from Suntory on the other. With Lark securing a United Kingdom distribution deal at last and with Mackmyra appearing on at least some British streets, and with St George’s firmly established alongside Penderyn we’re set for even more choice.
We’ve already seen a huge proliferation of whisky fan websites, this year we will see more and more wannabe whisky retailers trying to flex their muscles on the web. As the aspirations of the new consumers grow, so will the ambitions of those who would serve them.
I also suspect that we might see some of the more rubbish whisky websites die off and the stronger websites begin to collaborate more in 2011. It would be great to see the democratisation of whisky achieve something worthwhile, and by that I don’t mean every distillery manager having a Twitter account. It’s time for the disparate groups of whisky nerds around the world to club together behind a common cause: The Campaign for Real Whisky.
This official movement / pressure group sprang up at the end of November on one of the main whisky forums. I fervently hope it will be huge. It’s a movement towards uncaramelised, unchillfiltered whisky and clearer labelling on single malts which have been coloured and chillfiltered. I think with the right momentum enough noise might be made to really make the producers sit up and take notice.
Distillers to commis-sion special limited releases, tailor made, according to the preferences of their Twitter fans. In a bid to tap into the all powerful voice that is Twitter, distillers will offer multiple choices of cask type, age and finish to their followers, with the resulting bottling born from the majority vote. Basically ‘whisky by cyber committee’. Cue instant internet melt-down and the birth of the ‘online queue’ at the distillery shop.
We will see the ‘Battle Royale’ to release the ‘Official Will ‘n Kate Wedding Whisky’ will commence, with the big distillers taking no prisoners. Expect highly limited bottlings of exceptional vintages, with a price tag fit for a prince, no doubt in a crystal decanter, wrapped in ermine, with a plum in each one. The extra premium ‘gift box set’ will feature bunting and DIY wed-ding party accessories made by Kate Middleton’s parents’ shop and Charles n’ Camilla ‘fun masks’. Unsuccessful distillers will cut their losses and plump for a consolation ‘Prince Harry Tribute Blend’, with the strapline ‘it’s a great session whisky’....
(At this point, Ridley was dragged kicking and screaming to the Tower, his fate unknown...)
Scotch and investments
Gavin D. Smith
NAS (Non-age statement) Scotch whisky expressions will become even more widespread, as growing numbers of consumers come to accept that age is not necessarily a guarantee of quality.
For distillers, offering such ‘multi-vintages,’ often containing quite large proportions of youthful spirit, gives greater flexibility and helps to combat inventory gaps and general shortages of older whiskies. However, they must resist the temptation to over-price these bottlings and ensure the integrity of all the component spirit.
The ‘arms race’ between dis-tillers to come up with ‘the most expensive Scotch whisky in the world’ will continue. Its relevance to consumers is limited, but it does guarantee the producers in question valuable publicity, particularly outside the specialist media. How long before the first million pounds Scotch?!
The rulebook on the ultra-premium Scotch whisky category will continue to be rewritten in 2011 after the appearance of six-figure whiskies, namely The Dalmore Trinitas and The Macallan Cire Perdue, both 64 Years Old. This clutch of de luxe whiskies serve the brand like a supercar, generating frenzied media attention, turning heads and igniting desire in the bellies of those who already know they’ll never own one but gravitate towards the brand to buy something mid-range with a bit of oomph. Gordon & MacPhail must be kicking them-selves as the Mortlach 70 Years Old already looks undervalued.
On the collecting side, auction houses specialising in whisky sales will be busier than ever as more people look to trade collectable bottles for profit, shrewdly source whisky curios below retail prices or to seek out cracking drams from whisky history. I’d like to see the auction houses follow Christie’s lead and distinguish themselves from online trading websites by offering online whisky bidding through real-time HD video streaming across all platforms, develop apps for bidding then couple this with quality customer service offering storage and international shipping. Hong Kong and New York sales should grow, and Christie’s and Sotheby’s should consider developing regular dedicated whisky sales.
From the US
With the explosion of the cocktail renaissance and more and more craft cocktail bars set to open in even more markets around the country this year, 2011 will see increased demands on the already strained rye whiskey supply. (Perhaps recently launched Canadian whiskeys will come in handy?)
With a growing number of bourbon producers introducing experimental products, they will get even more avant garde and have to work out how to properly market their new whiskies as the shelves grow more crowded and the amount of web chatter runs the risk of mis-information. This year will determine whether white whiskies become a fixture or disappear like the eight-track. Also, as more craft distilleries open around the country, they will continue to demonstrate the limits of boutique and locally sourced whiskey.
Charles K. Cowdery
The challenge will be to distinguish between long term trends and short term fads as marketers bestride categories and test the limits of whiskey as a concept. In 2011 we may find out if flavoured whiskeys are here to stay. Interest in cock-tails continues to drive the entire spirits category as the Prohibition era becomes nearly as iconic as the Wild West. Whiskey cocktails are becoming singularly important. The emerging micro distillery movement, which is beginning to offer up whiskeys, will continue to grow in relevance.
The travel retail sector
Travel-retail’s love affair with exclusive and often exceedingly expensive single malts will continue to grow, especially in Europe where specialist malt whisky shops and in-store areas are becoming the norm at larger airports. Smaller, independent whisky suppliers will find it expensive to gain shelf space as the costs of doing business in travel-retail continue to rise. Super and ultra-premium Scotch blends will continue to rule the roost in Asia, India and the Americas. Yamazaki, one of the surprise hits in travel-retail in 2010, will continue to pick up air-port listings in 2011.
The resurrection of Ireland
Sales of Irish whiskey’s star performer, Jameson, recently hit three million cases. Emboldened by this success I am expecting exciting things from Irish Distillers Group in 2011. Their unique selling point is pot still whiskey. This is a key component of Jameson and Powers blends and seen unblended as Redbreast. They have been laying down stocks of this style and in 2011 Irish whiskey enthusiasts will finally see what they have been long craving for, more releases of single pot still.
Bushmills has also been laying down stocks of single malt and expanding its maturation facilities. Although this sleeping giant is certainly stirring under Diageo, I don’t expect to see any major developments just yet. On the other hand Cooley have gotten the Kilbeggan Distillery fully back to life with each stage of production now taking place there. This will be a hive of experimentation in 2011 – expect to hear about different mashbills, pot still whiskey and old recipes from the days of John Locke with oats in the mash.
New distilleries may come on stream in 2011. The Dingle Distillery should already be dis-tilling down in County Kerry but the project ran into problems following the economic difficulties in the Irish Republic. However, a new building has been sourced and trial distillations have been taking place at Cooley.
Following Grant’s capture of the Tullamore Dew brand there have been suggestions of a distillery being build at Clonmel. This would probably be needed to expand the brand which is currently made by Irish Distillers. We may hear more about these plans in 2011 but I wouldn’t expect to see much in the way of distillation just yet.
Overall, 2011 promises to be yet another stellar year for whisk(e)ys most vibrant category.
The Canadian view
Davin de Kergemmeaux
Canada will affirm itself in 2011 after years of moaning about its whisky-inferiority complex. Small and niche will be how. Small players will create new markets, while small distilleries will create new products. The majors will collaborate. Concerted effort is still required to build up Canada’s reputation. Watch for consumer education. Independently, they will push/pull their successful brands with even more robust versions that build on their limit-ed connoisseur releases of 2010. New and niche: Think Danfield’s Reserve and Alberta Premium.
The big story over the past couple of years in Japanese whisky has been the highball. Suntory sparked the fad with a phenomenally successful advertising campaign and now everybody else is piling in, with whisky sales rising for the first time in years. I expect my Tokyo cornershop to get several new launches of canned whisky high-balls through 2011. However, knowing Suntory, they are likely to have a major new marketing effort leading consumers away from highballs to some new pasture with fresher grass. My guess is an emphasis on mizuwaris (whisky mixed with water).
Quality single malt will remain the sideshow it is aways doomed to be. Suntory and Nikka will continue to increase their huge medal hauls in international com-petitions. The new Chichibu distillery will be making its early tentative first steps with single malt whisky releases and the Shinshu Distillery in Nagano will be coming back on stream. The diversity of Japanese whisky making increases yearly, but the question for these small makers is whether they can deliver on the expectations heaped on their shoulders. Akashi (White Oak) has recently put out a couple of drinkable single malts, but I don’t expect any major new directions from them. Which leaves Karuizawa distillery, owned by Kirin and Japanese whisky’s great anomaly: wowing Europe with its phenomenal whiskies, courtesy of the UK’s Number One Drinks Company’s excellent imports, and left in mothballs by its owners. Perhaps, just perhaps, somebody at Kirin will see sense and invest a little in a distillery with an international profile.
China’s in hand
The whisky market in China will be worth an estimated US$44.9 million in 2011 according to Datamonitor, the market analysis company. Big brands will continue to dominate the first tier cities Shanghai and Beijing, Shenzhen and Guangzhou, as they are able to pay the heavy listing fees. Greater volumes are likely to head for other less developed cities such as Dongguan, Dalian, Ningbo, Suzhou, Qingdao and Chengdu.
It should be a time for smaller, boutique brands to enter the mar-ket. Four and five star hotels will be the primary channels for single malts along with specialist whisky bars. Independent brands may well start direct-selling to rich individuals.
Supermarkets and hypermarkets will continue to pop up, with Tesco alone planning to open 80 stores by 2016.
One of the continued concerns will be the presence of counterfeit products on the market; whisky just being one of a number of consumables at risk. The other con-cern is that China’s property bubble will burst dampening demand for consumer goods.