Review of the year 2008 and the Perspectives for 2009
2008 has been a busy year for the whisky industry as well as www.whisky-news.com. In 2008, I attended to a record number of whisky events (Feisl Ile, Autumn Speyside Whisky Festival, Limburg Whisky Fair, Whisky-Schiff, Whisky-ship, Whisky in the Church, and Whisky-live Paris), increased the number of articles/reports, tasting notes and a few additional “distillery in focus”. All this, combined with the growing interest in whisky, resulted in an increase of visitors in 2008 of about 20-30% (6000 visitors/month) compared to 2007. Whisky-news is still advertisement free, but your support would be much appreciated.
One year ago, the concerns I mentioned for 2008 were: the following ones: barley supply, growth of the whisky demand, increase in whisky prices, and opening of new distilleries.
The crops of 2008 were satisfactory and all distilleries were supplied with enough barley to meet the requirements. However, the prices were historically high, with the tonne costing over £350 (vs. 250-270 last year). The perspectives for 2009 are quite good and prices should remain stable and hopefully decrease.
2008 has been a record year. Figures for the year 2008 have not yet been released, but undoubtedly, the production was superior to 2007, with most Diageo distilleries working now 7 days a week, a trend followed by the other distilleries. Some distilleries have been expanded (e.g., Balvenie) in 2008 and new distilleries extensions (e.g., The Glenlivet) are planned or ongoing for 2009. Production of 2009 will higher than in 2008, unless sales of whiskies would not meet the expectations. The stills of the Roseile distillery have been installed late 2008 and the first spirit should run out of the stills this year. Amongst the good news, Glenglassaugh was purchased by the Scaent holding and was officially reopened on November 24th, 200 after several years of silence and new bottlings have just been released. Good luck to the new owners. Not so far from there, Glendronach was purchased by the owner of the BenRiach distillery. Knowing the enthusiasm of Billy Walker, I am confident that Glendronach will have a bright future.
On the other hand, Port Charlotte and Huntly distilleries are progressing rather slowly and will probably not be operational before 2010. Suprisingly, mid 2008, Springbank distillers announced a stop in their production due to the high cost of the oil and barley. With the prices of oil going down end of 2008, Springbank resumed their operation last winter.
2009 will be a busy year for the whisky industry. Not only in Scotland, but also in the USA, most distilleries will be working at full capacity this year. New distilleries are been created in 2008 worldwide and the trend will not stop, with the first Russian whisky (Praskoveya) to be made soon.
At the start of 2008, the prices of oil rocketed before plummeting six months later, coincidently with the financial crisis. In spite of all this financial turmoil, sales of whiskies performed very well in 2008, with all listed companies announcing significant benefits at the end of the year. Prices of old blends have gone up, as well for single malts. Not only old single malts have gone up in prices, but also the young ones. In spite of its price (£79), all the bottles of the 5 YO octomore got sold out before the whisky was released. Ardbeg, with its Supernova priced at £65 a bottle, is following this trend. If so, how long will we have to wait to see 10 YO single malts at £100+ on the shelves? Speculation is not affected by these adverse financial conditions, with old whiskies reaching record values. The old Islay single malts (e.g., Ardbeg, Bowmore and Laphroaig) distilled in the 1960-1970s have often reached high prices at auction (£500 was not an uncommon figure) in the past, as well as some famous distilleries from other regions, such as Macallan, Glenfarclas or Highland Park. Nowdays, whiskies from lesser know distilleries such as St-Magdalene (Linlithgown), Balblair, Old Pulteney or Jura have significantly increased in prices. Same is true for the old blends in auctions. Before, the old blends from the 1960-70 such as Haig, White Horse, Chivas, Cutty Stark or Black & White could be found in the £70/ 70 euros range. Other the last months, finding such bottles for less than £/€80-90 is becoming more challenging.
Concerning whisky prices, although the sterling pound (£) has lost about 20-30% compared to the Euro. However, the prices in the shops in the euro zone have not decreased, even for bottles (e.g., from independent bottlers) purchased during this time. When will the European consumer benefit from this favourable exchange rate? The retailers should be careful, otherwise the customers will order more frequently directly from UK whenever possible.
In all the whisky media, one can read that the demand in the BRIC (Brazil, Russia, India and China) region is growing fast and stocks of old matured whiskies diminishing at the same rate. This does not stop the companies of investing massively in advertisements. If the stocks would be really that low, should the companies not reduce their advertisement campaigns? It should be reminded that the volumes of whiskies absorbed in these countries, in proportion to the global consumption, is still quite low. To me, this sounds, this is also a good reason to justify an increase in prices and stop delivering malts to the independent bottlers.
During the Whisky Live in Paris, I had the opportunity of tasting excellent whiskies. Retrospectively, when I looked at the price of the individual bottles tasted over that week-end, the proportion of bottles worth over €400 was almost shocking. Who is going to be able to afford such bottles? The strategy of many groups is to get out of the supermarket and to distribute their products only in specialists shops to promote an image of luxury. Will we see some “Nespresso”-like shops for whisky? In the book “Goodness nose”, Richard Patterson wrote that selling whisky to supermarket was a major growth factor for the whisky sales. Is the Industry not moving backwards and cutting his loyal average whisky drinker? If prices will continue to rise, whisky enthusiast will probably drink less and might be tempted to move to other alcohols such as Vodka, Rum, or Tequila?
2008 has been an excellent year for the whisky literature, with a record number of publications, amongst them, the first book on Japanese Whiskies by Ulf Buxrud, the eagerly awaited “reprint of “Truths about Whisky” by the Classic Expression team, the excellent “ Whisky Encyclopedia” (in German) by Peter Hofmann. With “Goodness nose”, Richard Patterson finally breaks the wall of silence about whisky blending. Finally, one of the last “secret garden” of the whisky industry is partially revealed. I can only applause this demarche and the wish of some members of the industry to be more open about the trade. Hopefully, this trend will continue. We are living in a world of communication and the whisky should not miss this train. A few DVDs were made over the last few years, will new ones be made? I hope so!
What will be the impact of the financial crisis on the whisky trade? Will the consumer change its habits? Will the growth in sales continue and the BRIC countries will meet their expectations? 2009 will be a most interesting year, for all challenges and of unknowns?
In any case, we will have the opportunity to taste the Glendronach and Glenglassaugh produced by their new owners, in addition to all the new other products. Bruichladdich has been innovative (“progressive”) as always and pushed the design of the whisky bottles into the future with their new X4 and Octomore. What is coming next?
P.Brossard © 06 February 2009