Report. Review of 2007 and perspectives for 2008

Whisky-news.com, review of 2007 and perspectives for 2008

Over the last 12 months, the traffic on this website has increased of several times to reach a monthly audience of 5000-6000 visitors, suggesting that the content of this website is satisfying the curiosity of the whisky enthusiasts and reflects the increased popularity and awareness in single malt whiskies. Last year, the number of tasting notes reached 200, several reports from whisky events throughout Europe were published (Islay, Zurich, Lucerne, Paris, and Speyside), new distillery profiles added, as well as plenty of other information.

Whisky-news.com remains fiercely independent and will continue to provide you with news, reports and more tasting notes in 2008! Do not forget to watch the “literature” space, since a few new books have found their place on my bookshelf and will be commented soon, including the excellent book of van Gills & Offringa “The Legend of Laphroaig”

I wish you all the best for 2008 and stay tuned on whisky-news.com!

Patrick

The year 2007 and perspectives for 2008:

Barley:

In 2006, the barley crops were bad and in 2007 the situation had not improved. As a consequence, the price of green barley was over £200/tonne and by the end of 2007 it was close to £300! And this is only for green barley, since the malted barley was sold for over £400 end of 2007.
In addition to poor crops, the quality of the barley was rather poor and the yield (litres of pure alcohol per tonne) suffered, so more barley was needed to produce the same amount of whisky as two years ago. Hopefully, the sun will shine in 2008 and the barley will grow in abundance!

Whisky production and distilleries:

In spite of the problems with barley, the distilleries were supplied with enough barley to maintain the same levels of production as in 2006 and even, for most of them, to produce more whisky than that! Not only has the production increased, but a new malt distillery was built in the Givran complex in Ayrshire by William Grant & Sons and the spirit ran for the first time in September of 2007 (see Speyside report). Diageo has started the construction of their largest malt distillery in Roseile, Morayshire and is increasing the size of its Cameronbridge grain distillery, so that over 100 mio LPA (litres of pure alcohol) will be produced after the renovation (see Speyside report). The first cut of the new Port Charlotte distillery at Port Charlotte by Bruichladdich distillery was done during the Feis Ile 2007 festival (see report), and Duncan Taylor received at the end of last year the authorization to build a new distillery at Huntly. Recently, discussions for Glenglassaugh have been ongoing with Russian investors, so Glenglassaugh might become the first Scotch distillery owned by Russians. Other silent distilleries, such as Braeval (Braes of Glenlivet) might restart production in 2008, and will follow the lead of Tamnavulin, which re-opened in July 2007. Let’s wait and see, which ghosts will be brought to life, but do not get your hopes up that distilleries such as Brora will re-start production. Unfortunately.
More and more whisky is produced every year, so we can only hope that the demand will continue to grow over the next 10 years. If not, then we might face a new whisky loch, with the same consequences as in the early 1980s, when over 20 distilleries were closed and/or demolished. One positive aspect of this growth is that companies are investing more money in their distilleries than in the past. This is particularly visible in the distilleries of Inverhouse (e.g., Knockdhu, Balmenach) and I can only encourage and hope that other companies will do the same.

Go East! China, Russia, India & Co.

Figures for 2007 have not yet been published, but by reading the financial reports of the major players in the whisky industry, we can already say that more whisky was sold in 2007 than ever before and for over £2 bio. The major drivers of this growth are Eastern countries, mainly Eastern Europe (Russi included), China and South-East Asia. The Indian market is increasing, but the taxes remain very high, in order to protect the local industry. The take over of Whyte and Mackay by Mallay has unfortunately not changed the situation in India. These new customers are interested in single malts, but even more by Premium and Ultra-premium blends, with as a consequence, to reduce drastically the stocks of old single malt whiskies.

Innovations ?

2006 was rich in innovation, with a strong trend for young whiskies and “finish”. In 2007, we still had plenty of young whiskies, but the youngest whiskies were slightly older, than in 2006 since the companies which launched this trend (e.g., Arran, Bruichladdich, Ardbeg) have now more matured stocks, and the very young whiskies were sold in order to have cash flowing in. Finish whiskies are still popular, but I have the impression that this number is progressively stabilizing. Will see and wait if this feeling is confirmed or not in 2008. For me, the major change in 2007 was in marketing, with several companies having repackaged their products. Highland Park has completed the packaging of its whole range, Chivas has very elegantly repacked its Longmorn (and significantly increased the price at the same time), Bowmore has now more “Posh” bottles, Glenmorangie is now more Glamour, with the bottles carrying exotic name, just to cite a few examples.
In regards to independent bottlers, the Old Malt Cask range of Douglas Laing has a new stylish label on a now transparent bottle, Duncan Taylor launched their NC2 range, Compass box produced some vatted grain whiskies, and Single Malts of Scotland expanded considerably its range of products, including some very old whiskies (30-40 YO).
Whyte & Mackay has repackaged its brands Dalmore and Isle of Jura, Inverhouse with Balblair, etc. Amongst the official bottling, the first Ardmore OB has now been released.

Internet, Ebay and Collectors

With the interest for single malt whiskies increasing and more enthusiasts wishing to taste old whiskies, internet is the perfect tool to find long departed whisky bottles. Not only do you have access to whisky retailers selling rarities, but also web-based auctioneers, with the most famous being Ebay. Prices for old bottles has continuously increased, since the demand is higher and offers decreasing. Systems such as a Ebay allows anyone to sell everything using the internet platform, and unfortunately not only genuine articles. Fake Macallan bottles have been circulating over the last years, but the amount of fake whisky bottles has, however, significantly increased other the last two years. A war against Whisky fakes has been initiated and since the beginning, whisky-news.com has been supporting the initiative (http://www.whiskyfun.com/war.html) of Serge Valentin. An article in French was recently published about this topic on www.whisky-news.com. With bottles selling for over £300, fakers can quickly earn money, without major risks, since most of these bottles will probably spend their life on a shelf and never be drunk. It should also be mentioned, that the quality of the fakes is at times very impressive. To fight against these fakers, please do not sell empty bottles over internet, so that the bottle cannot be recycled (refilled). Do not hesitate to do some research, asking for information about the bottle, or additional photos from the seller, before placing a bid or purchasing a bottle, in order to avoid deceptions. During the last years, the Scotch Whisky Association is fighting counterfeit products in South-America and South-East Asia, mainly for blends (e.g., Johnnie Walker) and I think that they should start to do something to protect their Premium Single malts too.

Prices

Last year, I mentioned that the prices for single malts would probably increase of app. 30% at the end of 2006-beginning 2007. So, what happened? Well, it seems that the prices for the standard bottling remained very stable (to be confirmed in the Retail Price report 2008 to be released in about 2 months on this website), but for the (super) Premium bottling and 25+ YO whiskies, prices have exploded, with for instance the new Dalmore 1973 Single Cask sold for €599 (in 2006 for the 1974: €198), a Laphroaig sherry 1980 for £500, Ardbeg released a double-barrel set for £10,000, Bowmore a new Black Bowmore for £2200, which are not destined anymore to whisky enthusiasts but for the rich clients who are interested more in the exclusivity of the product than in the liquid itself. Unfortunately, not only the OB have increased in price, but also independent bottlers, with for example Duncan Taylor selling a 40 YO Springbank for £750, Douglas Laing with a Brora 1976 for over £350 or Signatory with a 1966 Lochside for €470. Well, with the stocks of old whiskies getting depleted to supply the demand for old blends, the prices of the old whiskies will continue to increase. A direct consequence of the growth in blend, is that the independent bottlers are having increasing difficulties in purchasing casks from the distilleries, not only old one, but also recent ones. With the production increasing, the demand for casks is increasing and prices in parallel.

With the price of the barley increasing, yield decreasing, empty casks more expensive, shortage of old whiskies, price of petrol increasing, does it sound good? Not really, since it will have a negative impact on the price of your whisky bottle. Is it a justification for pricing the bottle to £158 the new Glenmorangie 25 YO (the 25 YO Malaga wood was previously sold for £110) or the Bowmore 25YO from £135 (2006) to £175 (with the new bottle shape)? No, since in a bottle of a 10 YO whisky, the whisky is worth less than £2, so even if the price of the raw material doubles, you should not be expected to pay more than £1-2 extra on your bottle. The factors mentioned are a very good excuse from the companies to justify their extra margin (benefits) and the increasing costs in marketing (with the marketing guys selling some aged Bowmore with a large tumbler with ice). Please, don't forget to read the excellent article of Dave Broom on this subject here.

Japan
Japan is not only a good consumer of Scotch single malts and an important importer of bulk Scotch whisky, they are also producing some excellent whiskies and the interest in Japanese whiskies is increasing in Europe. With the high prices of scotch whiskies, whisky enthusiasts are also pushed to try new things, and trying products from less known distilleries than Macallan, Ardbeg or Bowmore. Enthusiasts are thus looking for some alternative solutions in Scotland or abroad, in particular in the direction to Japan. Last year, I tasted quite a few Japanese whiskies, and I was positively surprised. Most of the products were of excellent quality and reasonably priced. Japanese whiskies will not replace Scotch whisky, but they have the potential to compete with the Scottish ones. Whisky is now being produced in many countries all over the world so let us wait and see what will appear on the market in the near future.

Perspectives for 2008

Well, with the increasing demand and interest in blended and single malt whiskies, prices of whisky will probably increase and new super premium whiskies will be launched (what about with Diamonds?). Distillers will be very busy and will probably push their distilleries to the maximum capacities, independent bottlers will have more problems to re-supply their stocks and new distilleries will be opened in 2008, with some silent distilleries brought back to life. 2008 will be a very interesting year and I am longing to taste the new products awaiting us!

Slainthe!

Patrick