The Business side of things

There haven’t been a lot of news-worthy items for me to comment on
lately, so I’ll take this lull to talk about the importance of the
Scotch whisky industry to the United Kingdom’s bottom line. We’ll also
take a quick look at the growth (and shrinkage in the industry) over the past few
years.
This data is courtesy of the Scotch Whisky Association, which
produces an informational pamphlet each year called Scotch At A Glance.

Interesting statistics

  • Scotch whisky accounts for more than 20% of United Kingdom food and drink exports.
  • 10% of Scottish agriculture jobs rely on the industry.
  • 1 in 50 Scottish jobs rely on the industry.
  • There are approximately 18.5 millions casks of whisky currently maturing in warehouses.
  • 88.4 million cases were sold worldwide in 2004.
  • Laid end to end they would stretch 16,807 miles – or three times the distance between Edinburgh and Shanghai.
  • 9,800 employed in the Scotch Whisky industry.
  • Greeks drink more scotch whisky per person than in any other country.
  • More Scotch is sold in France in a month than Cognac is sold in a year.

Sales and the Bottom Line

  • Exports generated £2.24 billion for the UK balance of trade.
  • European Union sales (excluding the UK) of £900m.
  • Exports earned £71 every second.
  • EU (excluding UK) sales were worth £28.50 per second.
  • Scotch Whisky is one of the UK’s top five export earners.
  • 30 bottles were sold overseas each second.
  • Exports were worth £228,077 per employee.
  • £800 million contributed to the Exchequer in taxes.
  • Tax to the UK Treasury from Scotch Whisky companies amounted to £81,574 for each employee.

Consumption_1

Chart of consumption in the top ten export markets from 2000-2004

It’s interesting to note that although the consumption in France is the highest, the actual dollar value to the industry is third. Apparently there are favorable trade terms between the UK and France, which lower the price on each bottle to the point that the US is the highest dollar market for Scotch whisky; Spain is second, and France is third.

Annualvolume_1

Annual volume of whisky distilled 1994-2003

Exports_1

Volume & value of exports from 1995-2004

What's old is new again

A brief history lesson

Distillation may have been discovered in Syria and used in the making of ladies’ eye shadow, called al-kohl.

Arak, a clear, colorless distilled spirit, made from grapes and anise, followed the discovery. Arak was, in essence, distilled wine. The art of making "burnt wine" spread, along with the Islamic faith, across the Middle East and Mediterranean.

One popular theory holds that Christian Crusaders learned the art of distillation and returned to Britain. Early Christian monks traveled, bringing Catholicism and the secret of distillation to the British isles – where barley replaced grapes.

Arak (from Arabic "araq" meaning "sweat") is still consumed in the Middle East and is closely related to the Greek Ouzo and to the French Pastis. It is served with meals or as an aperitif, and mixed with water, which makes it opaque (as with other anise-flavored liqueurs).

In 1703, in A Description of the Western Islands of Scotland Martin Martin (yup, that was his name) describes "Trestarig," a long forgotten whisky from the Hebrides Islands, a chain of islands 30 miles off the North West coast of Scotland, approximately 120 miles in length:

"The air is temperately cold and moist, and for the corrective, the natives use a dose of Trestarig," which is described as aquavitae three times distilled – as opposed to the standard double distillation of most scotch whisky.

Interestingly, Trestarig is pronounced "trace-arak," and "treas" is Gaelic for "triple."

Another theory contends that the Vikings were the responsible party. It is known that they voyaged to Turkey and the Black Sea via the large rivers of central Europe and may have brought the knowledge of triple-distilled Arak to the Hebrides before the Christians.

That’s interesting and all, but so what…

Well, this all brings us to Bruichladdich’s announcement today of a new distillation of Trestarig – the first triple-distilled spirit in the Western Isles for many centuries. Currently only the lowland distillery Auchentoshan, produces a triple-distilled scotch whisky.

According to innovative Master Distiller Jim McEwan:

This is without doubt the very best new spirit I have ever tasted, coming into spirit at 88% alcohol after a 7 hour spirit run – the longest I have ever witnessed. The elusive "middle cut" was made between 86% to 81.5%. This is a rock show of a malt.

CEO Mark Reynier adds:

We like to do things differently at Bruichladdich – and if it means going back in time for inspiration, so be it.

Bruichladdich has distilled and casked 12,000 liters of Trestarig, at 84.5% alcohol by volume.

I asked Mark how long they plan to age the Trestarig, what the price would be, and would we get some here in North America. His response:

Don’t know how long or how much, but would expect a fair proportion to make it to the states.

So it will be at least three years before this will be ready for sale. But you heard it here first.

The SWA Responds

Dear Kevin,

Many thanks for your comments on the new Code of Practice.

I am also pleased to see that the consultation on the definitions and labeling proposals has prompted debate on your site.   As you say, the consultation runs until the end of August and we welcome all contributions.   While much of the focus so far has been on the choice of the term ‘Blended Malt Scotch Whisky’, the proposals are wide ranging and cover a number of areas.

Briefly, these are:

  • It would be compulsory to use the appropriate category description, e.g. ‘Single Malt Scotch Whisky’, as the sales description on every Scotch Whisky.   The description would have to appear prominently on labels to ensure that it is clear to consumers what the product is.
  • Added protection is being proposed for traditional regional names, namely Highland, Lowland, Speyside, Campbeltown and Islay.
  • The description ‘pure malt’, in that combination, would be prohibited.
  • A distillery name should not be used on any Scotch Whisky which has not been wholly distilled in the named distillery.
  • A proposal to stop Single Malt Scotch Whiskies being sold under labels which mislead as to where the Single Malt was distilled.

As a package, the objective is to introduce clear and consistent rules to prevent consumer confusion or deception, as well as to give added protection to Scotch Whisky from illegal traders

Best regards,

David Williamson
Public Affairs Manager
The Scotch Whisky Association

—————————————————————————-

Thank you, David.

A side note: Notice that David makes no mention of "The Islands" as a region. I don’t consider the Islands to be a region, so I’m glad to see this.

There are no similar characteristics to point to amongst them (aside from being surrounded by water) either by taste, style or geography. In my book they are Highland whiskies.

While we are talking opinions- I don’t consider Campbeltown to be a distinct region (anymore). Whilst once a thriving whisky production area, two distilleries does not a region make.

How to play nice with others

As you may know, the SWA (Scotch Whisky Association)  has taken a lot of crap lately over the proposed "blended malt whisky" nomenclature.

I don’t want people to think that all they do is come up with controversial naming conventions.
They actually do a lot of good.

One of the good things they’ve done recently is to release a Code of Practice for the industry regarding what are acceptable practices for whisky industry marketing and promotion.

It’s likely you haven’t read the Code – the SWA doesn’t make it easy to
find (no direct link off their web site), but I have, and I’m such a nice guy, if
you stick with me, you’ll find the link a little further on.

I’ll summarize below: (Please read this with a Cecil B. DeMille God voice for full effect)

  1. Thou shalt promote Responsible Consumption
  2. Thou shalt not encourage Underage Drinking
  3. Thou shalt not use Alcoholic Content as a selling point
  4. Drinking and Driving: Bad
  5. Scotch whisky doth not granteth prowess of a sexual nature nor status of a social nature.
  6. Scotch whisky shalt not be used to promote claims of well health
  7. Thou shalt not be naughty in thy promotion of tastings, thy use of Internet, nor in thine sponsorships.

(End of God voice)

This is serious stuff, so now I’ll give a serious synopsis of each one:

Responsible Consumption
Pretty obvious – No one should be promoting reckless use of scotch.
We
all know scotch is not really a binge drinker’s beverage. But one of the side effects of promoting scotch to new drinkers is that some of them may not be interested in savoring a dram. This guideline asks that marketers not promote binge drinking, anti-social behavior, or immoderate consumption.
Check.

Discourage Underage Drinking
Also obvious. Don’t promote to kids, don’t promote in places or situations that are primarily for kids. If celebrities are used to promote the product, they should not be celebrities who primarily appeal to the underaged. Scotch should not be associated with "rites of passage" to adulthood. Brand Logos and names should be avoided on clothes, games, toys, and other items aim at the underaged.
Got it.

Alcohol Content
Alcohol content should be clearly communicated on packaging.  However, undue emphasis on the alcohol content should not be used as a basis to appeal to consumers. Marketing cask strengths responsibly will not violate the code.
Fine by me.

Drinking and Driving

Bad.
Knew that.

Sexual and Social Success
Depicting people in a "romantic" setting and use of attractive and/or affluent people to promote the product is acceptable. But no promotion should suggest that affluence, attractiveness, or gettin’ jiggy can be found in a good bottle of scotch.
Don’t I know it.

Alcohol and Health
Despite the recent findings that moderate consumption of alcohol may be beneficial to one’s health, companies should be careful about making health-related claims.
That’s right, friends. Not a health tonic.

Tastings
Don’t promote or reward excessive consumption. Don’t promote whisky to be consumed in a shot or shooter based fashion.
No tastings during spring break.

Websites
Websites should prominently show a responsible drinking message. Companies should use an age verification gate-keeper. Websites should not include games and other activities that suggest misuse of alcohol. No ring-tones, games or downloads should be offered which might appeal to the underaged.
I hate the age verification thing. So pointless.

Sponsorships
Companies should not sponsor an event where the under-aged account for more than 25% of the participants. Merchandise bearing the company’s brand name or logo should not be aimed at the underaged. It is fine to sponsor activities that may be dangerous after consumption of alcohol, as long as companies do not promote or suggest that alcohol consumption is appropriate while undertaking these activities.
Scotch is better after skiing.

The long and short
This is a good thing. Listen, I’m certainly no prude, but I’m not a big fan of using sex to sell liquor.
I’m behind the code 100%, especially if it prevents scotch being advertised like every other adult beverage:

Rum:
Bacardi04

 

Vodka:Skyy_1

Beer:15226
I doubt there is anyone who can not get behind this Code of Conduct. Good work, SWA.

Now let’s just get the blended malt thing straight!

As promised: Code of Practice

John Glaser's Position

I asked John Glaser, head guy over at Compass Box Whisky, his position. I had posted a short quote attributed to him from another article, but I wanted to get it from the horse’s mouth.

Here’s John’s opinion — un-adulterated and un-edited — directly from John.

——————————————————————————————

Kevin,

Regarding the SWA proposal for definitions, I’m in favour of all the definition proposals except that for vatted malts (their proposal to call them blended malt Scotch whisky) and vatted grains.  My feeling is if the SWA does not like "vatted malt" (I think it’s fine) and feels change must take place, they should simply go with "single cask single malt", "single malt" and "malt whisky", the latter referring to vatted malts.   This is analogous to the AOC wine definitions in much of the world, that many people are already familiar with (i.e., Bordeaux-St Julian, Bordeaux-Medoc, Bordeaux, from the most specific to the least specific).

My overarching concern in all of this is that consumers around the world find Scotch whisky easier to understand and more approachable.  This is why I label our blend, "Asyla" as "Grain & Malt" [on the first line] "Blended Scotch Whisky" [on the second line].  I want people to understand that this product contains two different types of whisky and therefore they should expect something specific, in this case, a lighter whisky due to the use of grain whisky.  (I also put short descriptors of the style of each of our whiskies on the front label, too, to help further.)

A lot of people ask me why I make "Asyla".  Selling high end blends (of grain and malt) today is like pushing water up hill.  Our sales are predominantly of our vatted malts.  But I make "Asyla" because, when made with very high quality ingredients and with care, I simply love this style of whisky.  I drink a lot of whisky before dinner, and to me, this style of whisky (light, soft, sweet) is perfect for this time.  (I usually drink it out of a wine glass, with a big splash of water!)

To sum, one of the main things I want Compass Box to do over time is to help people understand Scotch whisky more easily.  So I try to be as open as I can be about our products.  Some people say I’m too open, that I give away too much information, but I do it because I want people to know what to expect when they buy a Compass Box whisky, and I also do it because I know people like yourself and the people who take part in your blog are interested in the details.  Knowledge is power!

Rock on.

J

——————————–
John Glaser
Compass Box Delicious Whisky Ltd

———————————————————————————

Thanks John.

Well there you have it. While I don’t have an issue with "Blended Malt Whisky" my livelihood doesn’t rise and fall on nomenclature, arbitrary or otherwise.

I think the bottom line is that the SWA needs to put some money behind communication – making it VERY clear what each designation means, whatever designations they choose.

A rose by any other name…

Before we start, some background…

About two years or so ago the Diageo folks in charge of the Cardhu distillery were faced with a big problem.  Cardhu Single Malt was popular in Spain.

Very Popular.

Too popular.

The whisky was selling so well in Spain that stocks of Cardhu were quickly being depleted. This would not have been such a big problem if Cardhu were not also a major ingredient in Johnnie Walker.

What to do, what to do?

Well, the Diageo folks looked at the bottom line – Johnnie Walker worldwide is more important than Cardhu in Spain. And besides, the Spanish didn’t seem to make much of distinction between a single malt and a blend. But they were brand loyal.

Diageo came up with a brilliant (so they thought) plan. Keep the packaging the same, but the whisky inside would be changed to a vatted malt –a whisky comprised of a mix of single malts from different Diageo distilleries. The only clue that Cardhu had changed was a single, minor alteration. The label would now say “Pure Malt” where it had once said “Single Malt.”

Now, keep in mind that the term “Pure Malt” was not new. It was an existing, though thoroughly confusing term for a blend of single malts from different distilleries.

However, it had never been applied to a former single malt.

Suffice it to say that this little change set off a firestorm among single malt distillers and malt blenders. It resulted in several things: at first, a change in the label color packaging from the original red & gold to green (while retaining the pure malt designation and original bottle shape).

Then in Spring 2004 an apology from Diageo, then the departure of some Diageo executives, and a return to Cardhu as a single malt. This Pure Malt fiasco started in 2003 and ended in 2004 (though on a recent trip [April 2005] to Spain, I acquired a red labeled Cardhu Pure Malt…go figure)

But the ripples continue…

The SWA (Scotch Whisky Association) decided that they had to clarify the situation so never again would the term “Pure Malt” be used.

After a year plus of investigation, negotiation and various other –ations, they recently announced that the proper term for a whisky which consists of single malts from different distilleries would be “Blended Malt.” They’ve announced that dissenting opinions would be welcome until this month (August) when a final decision shall be made.

Let’s get down to brass tacks…

There are several terms in play. Let’s look at them objectively:

VATTED MALT

There are those purists who feel that the term “Vatted malt” should be used.

Pros:

This is the term that has been used for years, and those familiar with scotch whisky know that “vatted malt” means a blend of single malts.

Cons:

All whiskies (aside from single cask) are vatted before bottling.

More than that – The term simply sucks. We are trying to minimize confusion among and attract new drinkers – who wants to drink something from a “vat?”

BLENDED MALT

The Scotch Whisky Association wants to use  "Blended Malt":

Pros:

It’s accurate. The products in question are comprised of a mixture of single malts. In my book, that’s a "Blend."

Cons:

Companies producing vatted whiskies feel that this term demeans the blended malts in question and may cause confusion among new drinkers through an unwanted association with “Blended Scotch whisky” the term used when describing a whisky which is created by combining single malt whisky(ies) with grain whisky.

MALT SCOTCH WHISKY

An alternate term, pushed by some of the vatters is "malt Scotch whisky.”

John Glaser (Compass Box Whisky) was quoted as saying:

“Blends are perceived by many consumers to be inferior products. The potential damage of using the word blend is far greater than sticking with vatted malt or simply using malt Scotch whisky.”

Pros:

None. While I cannot argue with John’s logic, I think this term only benefits producers of vatted whiskies.

Cons:

The term is simply too generic and too easily confused with Single malt scotch whisky and for that reason is just unacceptable.

Small Isle of Skye based distillery Pràban Na Linne is relaunching its Poit Dhubh unchilfiltered malt range as the far hipper PD and had planned to use the designation “malt Scotch whisky.” Douglas Smith, Commercial Director of the distillery, contends that his whisky will seriously be harmed by being forced to label as blended:

“We’re currently selling PD at the same price point as some single malts. If we start sticking ‘blended malt’ on the labels, the danger is that customers who are unfamiliar with the brand and the definitions might assume it’s an inferior product and opt for the ‘safer bet’ of a single malt.”

Are you talking about the same people who pay $60 for the apparently inferior blended Johnnie Walker Green?

And as far as being "unfamiliar with your brand?" Tough titties. That’s what a marketing department is for.

OTHER CONFUSIONS

In a previous article I took issue with Monkey Shoulder’s self-designated “Triple Malt”

Why? Because of consumers’ “more is better” mind set.  A Double Stuf Oreo MUST be better than a regular OREO!

If we allow the "Double" or "Triple" malt designation, just think about some smart marketer’s next move: they’ll start telling unknowing consumers:

"Why have a single malt, when you can have a Quad Malt. That’s right, four malts in one bottle – Four malts are better than one."

If you were waiting for me to come up with some fantastic term that no one has thought of, I hate to disappoint. There’s a better term out there somewhere. But I don’t know what it is.

What's in it? (JMR)

Dave "Robbo" Robertson of Jon, Mark & Robbo’s Easy Drinking Whisky Company let me know what is in the mix for their line of whiskies:

The Smooth Sweeter One

  • 70% Single Irish Malt Whisky from Cooley’s Distillery
    Matured in first
    fill bourbon barrels
  • 30% Scotch Single Malt Whisky from Bunnahabhain Distillery
    Matured in
    (hard to find) American oak fino sherry casks

The Rich Spicy One

  • Tamdhu Spanish Oak Sherry Butts 50%
  • Tamdhu American oak bourbon dump
    hogsheads 10%
  • Highland Park Spanish Oak Mature Butts 10%
  • Glenrothes
    Spanish Oak Sherry Butts 20%
  • Bunnahabhain American oak sherry puncheons
    10%

The Smoky Peaty One

  • Caol Ila 5% refill casks – ex American oak bourbon barrels
  • Laphroaig 12%
    refill casks – ex American oak bourbon barrels
  • Bunnahabhain 17% American oak
    sherry
  • Bunnahabhain 9% refill casks – ex American oak bourbon
    barrels
  • Highland Park 26% Spanish Oak Sherry butts
  • Highland Park 14%
    American oak hogsheads
  • Ledaig 9% refill casks – ex American oak bourbon
    barrels
  • Bowmore 8% refill casks – ex American oak bourbon barrels

If you get a chance to try it, let me know!

Thanks Dave.

As I said, the pedigree of these guys leads me to believe that this stuff is probably quite good. Can’t wait to try it.

That Funky Monkey

Cool packaging, funky names, targeting the martini bar crowd. These are the basic elements to success when aiming for that lucrative 20something – 35ish lounge bar crowd.

And William Grant & Sons, has dipped their toes into the market with the oddly named Monkey Shoulder.

“With the launch of Monkey Shoulder in the UK, we are looking to demystify malt whisky and offer new consumers an accessible, great tasting malt that retains authenticity whilst breaking the more traditional malt mold. The feedback so far from the trade has been very positive and we hope consumers will be as upbeat about the product.”

This is an interesting product (which I have not tried yet – for reasons we’ll discuss below) that is a vatted single malt made with the product of three different Grant & Sons distilleries: Glenfiddich, Balvenie, and Kininvie. You’ve likely never had Kininvie – it’s a single malt produced at a distillery built by Grant’s in 1990, with only a still house using wash produced up the road at Balvenie – however, no Kininvie labeled product has ever been released.

There’s no age statement, and Grant is calling it "Triple Malt" which while technically accurate, is a confusing designation – as it somehow sounds like it is superior to single malt.

I hear that the bulk of the content is 6 year old Kininvie, though why they didn’t simply release Kininvie by itself is anyone’s guess. MY GUESS – in the last 15 years, the distillery hasn’t produced the product that was expected, so the next best thing is to vat it with tried and true malts and market it for the bar crowd. Not a bad move.

The name? Monkey Shoulder is the name of a repetitive stress injury that was once common amongst distillery workers whose job it was to turn the barley on the malting floors. Since so few distillers malt continue to malt their own barley, the injury is mostly a thing of the past.

But it makes a damn cool name.

As I said, I have not tried this one, mostly because it is not available in the US, and my sources tell me they haven’t heard about a US release date from their suppliers. So if you want to try it, you’ll have to go to London. (Monkey Shoulder was only released this past April, and my last trip to London was in March. But as you all know, ScotchBlog is NOT about judging whisky and tasting notes, so that’s neither here nor there.)

From what I hear, this is an unassuming whisky – an easy drinker. When you check out the website, you’ll see that Grant has gone heavy on pushing MS as a cocktail ingredient.

It’s currently available bottled or at one of London’s trendy bars, including: Apartment 195, Dusk, Lab Bar, Salvatore at Fifty, and The Whitehouse. If anyone gets a chance to try the stuff, let me know what you think.

What I like about this one: Great website, Great name, Great packaging, Full disclosure by Grant & Sons that this is a new product and not a new company. Great Marketing tag-line: Not the original whisky, more original than that

What I don’t like about this one: Confusing "Triple Malt" designation.

Monkey Shoulder web site
Ms