Feb 072017
 

Macallan has just released a new 12 year old, flying in the face of the unrelenting negativity that has plagued the 1825 color-led series.  Bowmore has just released a new age-stated range for Travel Retail.  Neato.  Usually Travel Retail is the launch pad for all sorts of NASty stuff.  Ardbeg hit us with a 21 y.o. last year.  Several ambassadors and distillers who have visited our local whisky club and our parade of festivals have said they will stick with age-statements, barring an oddball here and there.  Refreshing.

Is this maybe a response to the chorus of voices that have rung out from Serge, Ralfy, Tab, myself, Dom and untold others?  I’m honestly not sure.  And far from confident enough to make an assertion like that, but I can say that many of the industry folks with whom I’ve spoken are well aware of consumer opinion and do, in fact, read the blogs and such.

As I’ve said, I think the industry is setting itself up for another crash.  Global markets are not what they were forecast to be (China never delivered on ‘promise’, France seems to be on the wane, North America is moving to rye and bourbon, etc), and the economy – as heavily-reliant on fossil fuels as it is – has been in the tanks for a long time now.  Factor in the uncertainty of NAFTA, Brexit and the over-sized Oompa Loompa with the combover down south and, well…things are shaky.  Whisky makers jumped on the last decade’s rampant demand and resorted with logical (if maybe shortsighted) actions: ramp up!  We’ve already seen some (Diageo) pull back on some planned initiatives.  It looks to be an interesting decade.  If we can keep our skin in the game, that is.

Keep fighting, Jedis.  There will come a time in the not too distant future when things will be better.  I feel it.

 

– C

 Posted by at 10:38 am

  16 Responses to “Return Of The Jedi”

  1. Hi Curt,

    good to see you in writing mode – or mood ? – again. To sum up your three Star Wars themed posts… the padawans are may be in training still but nevertheless they already have access to the Force.
    And so they can move things.

    From where I watch I am ready to believe that “The Whisky Industry” is not very comfortable at the moment. Some members of this global industry probably more so than others if they make bourbon and rye and less so if they make blended Scotch.
    And if they make Scotch it is their own fault mostly because they believed and still do that premiumisation is the key to ever increasing profits. That notion is a cul de sac.

    So I think that news like this
    http://www.just-drinks.com/news/scotch-set-for-strong-global-recovery-but-millennials-turn-away-research_id122349.aspx?

    is whistling in the dark or whistling past the graveyard even. Scotch set for a strong global recovery because some interested parties begin to push it in the party and cocktail scene as an Ersatz for bourbon or rye? Dream on. Scotch is not vodka, not because it lacked attempts to make it that.

    Tomatin has released three AS travel retail offerings as well recently and said, we do because we are proud of our whisky.

    Probably what we see currently is an effect of the ever fuller warehouses in Scotland because not only China never delivered the promised or mis-estimated demand India as well did not turn out as planned for many global players and for Diageo it begins to turn into a nightmare.
    So my fellow padawans live an learn and use your skills. The Force is with us it seems.

    Greetings
    kallaskander

    • Hi there,

      just found this
      http://www.thespiritsbusiness.com/2017/02/american-whiskey-still-has-room-to-grow/

      ““The continued growth of the spirits sector clearly demonstrates that adult consumers’ taste for and interest in premium distilled spirits, across all categories, is trending upward,” said Distilled Spirits Council president and CEO Kraig R. Naasz.”
      I doubt that this is true in general. If it were Scotch would not be in trouble. I also doubt that there is much room for more Bookers Rye at 300.- $ or more.

      See here http://spiritsjournal.klwines.com/klwinescom-spirits-blog/2017/2/3/the-state-of-the-union-2017.html

      Greetings
      kallaskander

    • I don’t see a new golden age of affordability looming, however. What I predict is that there will be a resurgence of age stated offerings, and some of them might be good, but there will be a floor on the price, just like gasoline didn’t go as far down as oil did.

      What I’m hoping is that new standards will be entrenched. If there is a glut, instead of closing distilleries, maybe more quality stuff will be bottled at higher ABV (perhaps a return of a Mac CS with an age on it?), which would decrease supply. But I’m not holding my breath for steals of a deal.

      Maybe I’m half cynic and half dreamer…

    • If you click on the About button on the just drinks site (see kallaskander’s link) and scroll down to the Just Drinks Revenue Sources, you will quickly get an idea of how reliable anything you read on this industry shill site is.

  2. So maybe all the young NAS stuff is actually an attempt to get their recent overproduction out the door—NOW—instead of clogging up their warehouses in the expected glut. There’s a new concept, at least for me.

    • Young, and “bold tasting” is the new “good” and NAS plays into that (indeed, it was pushed for that purpose). The cynical among us might say that it’s pulled standards and, yes, quality/value down, and so the market is now due for a big adjustment as many consumers go elsewhere but – as you point out – by pushing the product out of the warehouse relatively early, NAS is also a supply-chain strategy to ensure that no one is sitting on TOO much stock when the music stops and producers are suddenly scrambling to find a chair (and a way to reverse themselves on the “new” relevance of age).

  3. Hi there,

    not too sure about that.

    Some interesting figures here
    http://www.whiskyinvestdirect.com/investing-in-scotch-whisky-maturation.pdf
    – even if you have to call them an interested party.

    “Because it improves with time spent in a barrel, a process called maturation, there is at any one time a large stock of unsold, unbottled, cask whisky. The current stock level is estimated between 3 and 4 billion litres,
    and to be sufficient to produce approximately 11 billion bottles of Scotch.
    Medium term global consumption growth is estimated by analysts at between 1% and 2% per year. At 2% demand growth there will probably be insufficient stock to meet demand. At 1% demand growth there will
    probably be a modest excess of stock. Then it is likely that a period of reduced production would follow as the major distillers moderated their capacity utilisation.”

    3-4 billion litres of Scotch. If you look at it in a linear way the demand growth expectations may be true – or not.
    But in a crash ending the current boom linear developments go out the window no matter how much whisky you have it will be too much.
    In that sense NAS is not a feasible way to go about things because the young stuff used for that is replaced at once with new produced new make. When the music stops suddenly everybody will have made too much.

    Greetings
    kallaskander

    • It might also largely depend on what a “crash” would look like and what drives it – declining quality and/or greedy overpricing; both are currently present and but both are also industry adjustable (the latter more quickly than the former). From an industry point of view, NAS was probably the best way to make hay while the sun shines on a huge crop of whisky neophytes who will still argue up and down with you that age not mattering to them is the equivalent of age not mattering to whisky (and it helps that their frame of reference has largely been restricted by mostly pricing them out some of the older stuff that would demonstrate the difference).

      That said, it’s very true that the ramping up around NAS (“hey, if age doesn’t matter, just keep the stills running!”) isn’t the perfect answer to any major market fluctuation by any means – and it wouldn’t be the answer to anything such as was seen in the late ’60’s and early ’70’s, when white spirits became all the rage, the glamour dropped out of scotch, and the decline of blends resulted in the mass marketing of single malts. The real “innovation” card of scotch – the creation of single malts – has already been played so, if scotch ever gets dropped en masse like that AGAIN, it’s unlikely the industry’s current head shed would pull things out of the ditch – and it’s troubling that they’re as entrenched as they are.

      Sláinte!

  4. lol well the eastern Canada Edrington Ambassador fresh from his indoctrination has admitted that Macallan 12 double cask came back after a few years absence because they were able to build up stock for it. And some sort of bullshit struggle about aiming to have Macallan options under 100$

    In other news, Highland park 15 and 21 are discontinued
    (Highland park 25 is now 780$CAN in the US, which is a 300%~ increase in 2 years)

    https://www.youtube.com/watch?v=q3DkgYtBN90

    • Hi there,

      then you were lucky.

      HP 15 and 21 vanished from Europe two years ago.

      And Macallan does no longer play a significant role in Germany – and probably elsewhere as well in Europe – because of the colour codes series.

      Greetings
      kallaskander

      • It’s an interesting question as to why that is. Was it only the degraded value of the 1824 Series (quality offered for price), or was the silly substitution of colour for age just more than Macallan customers would rationally swallow (as if time in cask DIDN’T contribute to the all-important bottle hues)?

        Would sales of the series have done better if Macallan had just trotted out some old Gaelic names for some local Speyside trout streams instead? After all, other producers do VERY well – and are somehow very respected for – talking about old geographical features instead of current product information.

        Sláinte!

        • They went into the 1824 series because they could sell macallan 25 for 500% the previous price and sell cheap whisky at the old prices. This is simple market calculus.

          They experimented with this with the 1824 travel series 3 years prior to the gold/amber/sienna/ruby combo which replaced all age statement whiskies under 21yr.

          Your average single malt drinker has no idea what good malt is, so they dont care, this is certainly the reason why anyone would put up with the glemorangie 10 and it’s NAS variations for 250% of the price, the alienation of our crowd is made up by rich people who are still buying macallan 18 at 300$ and macallan 25 at 1600$ (so you can alienate up to 80% of your audience and still break even on income, and yet low sales volume allow for conservation for future nefarious purposes… like a Macallan 40 revival that went for 15,000$)

          • I think we’re mostly agreed on what currently drives the market, but the question I found interesting – particularly in the context of the above – is why the 1824 Series has been a failure in Germany if people are really so easily fooled. If it’s really the case, the 1824 Series would seem to be tailor made for the “don’t know, don’t care” crowd.

            I’d certainly agree however that, even from pricing alone, whisky IS becoming more separated by class as time goes on; there’s the product/information/reasoning that’s intended for the high-end customer/collector and then there’s the “flexibility/running out of numbers”- driven products for everyone else, with the assumption and assent on the part of our “experts” that the products (and reasoning) are “good enough” for the punters.

            Sláinte!

      • Kallaskander

        Highland park 21 is up 220% in the last 12 months in Canada. In Toronto it is up 350%. The prices in UK has remained stable until the last month, it as increased 15%.

        With official word of this discontinuation dating to December 2016 we would assume UK prices will increase accordingly. US prices have skyrocketed for both HP21 and HP25

        Highland park 30 can still be found for 750$CAD/445GBP so it’s still a bargain.

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