Snobbery, Sales & Single Malt Scotch
Whisky writers may be about to get things right, thanks only to changing tastes...
FOR MANY YEARS there has been an extraordinary disconnect between what is written about Scotch whisky and what is actually drunk, writes Tom Bruce-Gardyne for WhiskyInvestDirect.
We whisky writers love to talk about single malts. But it's blended Scotch which still dominates the market.
That may slowly be changing. In which case, the tried and tested formula to any glossy guide book on Scotch whisky (and I know, having written two of them) may come good:
First set the spirit in its historic context. Then explain the production process and explore where the flavours come from. Finally, profile each of the distilleries themselves in turn.
You won't miss any key issues, except for the biggest category of whisky sales worldwide. Because almost every word is written from the perspective of single malts, whereas in the real world, blended Scotch accounts for nine out of ten bottles drunk.
The gap is narrowing, however. In the space of a generation the proportion of Scotch sold as single malt has trebled, albeit from a low base. While the volume figures are still very much skewed to blends, malts now account for 24% of all Scotch exports by value.
Last year, according to the Scotch Whisky Association, shipments were worth £916.4m, a couple of million pounds more than in 2014. By contrast total exports slipped 2.4% to £3.85 billion as per the 2015 HMRC data first compiled and crunched here by WhiskyInvestDirect in February.
The reason whisky writers love to talk up malts is that there's more to say, and there's probably a degree of snobbery too. The incentive for the trade is even greater given the margins involved.
In the UK, once you have stripped off VAT sales tax and duty, a bottle of top-seller Famous Grouse priced at £14 will leave just £3.61 to cover the whisky, packaging and transport, and to share between the retailer and its owner, the Edrington Group. The starting price for the firm's flagship malt, The Macallan Gold, is around £38.95 – leaving £23.57 after tax.
The famous Speyside malt aspires to be "the ultimate luxury spirits brand" to quote Macallan's creative director, Ken Grier, and it is being given a suitably lavish upgrade. The firm has hired Richard Roger's new architectural partnership to design a stunning, new £100 million distillery with a capacity of 16 million litres of pure alcohol (LPA). Not to be outdone, the Glenlivet distillery, home to the world's top-selling single malt, is being expanded to a whopping 23m LPA. Suffice to say, both have come a long way from their roots as couthy, wee farm distilleries.
The surge in single malts has been most evident in the States, Scotch whisky's biggest export market. According to the Distilled Spirits Council of the US, volumes are up by a staggering 181.7% since 2002, versus a 10.6% fall in blended Scotch. By value malts now account for over 45% of all the Scotch whisky shipped to America and, with sales up 13% last year, they will soon be worth more than blends you would imagine.
To suggest this might ever be true globally sounds fanciful, as though you've been reading far too many whisky books. "I'm convinced that blended Scotch will remain the predominant product within the overall Scotch category," says Diageo's Dr.Nick Morgan. "Whether malts gain a higher value share, blends will remain the bread and butter of our business."
With giants like Johnnie Walker he obviously has a point. But when it comes to many of the big standard blends, life is nothing like as easy as it was. Wherever you look, from Dewar's and J&B to Bells and Cutty Sark, the market looks to be hottest for single malts instead.
But then, I am a whisky writer!
Award-winning drinks columnist and author Tom Bruce-Gardyne began his career in the wine trade, managing exports for a major Sicilian producer. Now freelance for 20 years, Tom has been a weekly columnist for The Herald and his books include The Scotch Whisky Book and the new Scotch Whisky Treasures.
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