Review of the year 2009, the decade 2000-09 and the Perspectives for 2010 (final)
Part 1 (review of 2009) / Part 2 (review of the decade)
2008 has been the year of expansion in the whisky industry, expansion of production, distilleries started to work 7 days a week instead of 5 days, but 2009 has been also a year of contrast, with closures and consolidations. In 2009, I attended several whisky fairs (Limburg Whisky Fair, Whiskyschiff Lucerne and Zürich, Autumn Speyside Whisky Festival, a Bruichladdich, Adelphi and Manager's Choice tasting in Basel and finally a Blackadder tasting close to Lausanne), wrote the first interviews conducted with Frank McHardy and Andrew Gray, added a few "distillery in profiles", as well as a fair number of old and new books, and the continuously published tasting notes now exceeding more than 600 entries. The frequentation of the website has continued to increase, with approximately 70000 visitors a month. Starting mid September, my provider removed the web traffic statistics from my account, with only the information on data transfer left, indicating an increase of 50% since last September (10,000 visitors a month at the end of 2009?).
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Compared to last year, what has changed for the whisky industry?
The price of fossil energy (gas and oil), the main sources of energy for the whisky industry, were considerably lower than in 2008 and remained low throughout 2009.
The prices in 2008 were very high, resulting in an abundant production in 2009. In consequence, the prices paid at the end of 2009 have been very low, with the price of malted barley plummeting down to about £150/t (as compared to £350 in 2008!).
2009 started badly, with the theft of stills and other equipment at Rosebank. There was some plans to revive the distillery, but without the stills, Rosebank is very likely to remain silent forever.
Roseile, the largest distillery of Diageo opened, and the extension of Glenmorangie and The Glenlivet were completed. At Glendronach, the distillery was modernized and it is now back into full production.
At the same time, Balvenie and Glenfiddich reduced their production. The Edrington group plans to mothball Tamdhu in 2010, CL financial, the mother company of Burnt Stewart (Bunnhabhain, Deanston, and Tobermory) is experiencing major financial difficulties and the consequences for their Scottish distilleries are unclear.
On Islay, the distillery of Port Charlotte is on standby (i.e., work not started). Bruichladdich finally received all the authorization, but does not have anymore the money to build the new distillery.
At Huntly, Duncan Taylor has some issues with the authorizations, but work has been initiated.
Whyte & Mackay announced last autumn some plans of restructuration, which would result in the loss of 100 to 150 jobs. Diageo decided to close its historical plant at Kilmarnock as well as the grain distillery of Port Dundas. This would mean an extra loss of 900 jobs, but this should be compensated by the expansion of the plant in Fife (400 jobs should be created).
Concerning the whisky itself, the first whiskies of Kilchoman (Islay) and St-George's (England) were bottled.
As of December 2009, according to the Scotch Whisky Association (SWA), shipments of Scotch whisky grew by 1.5% compared to 2008, but in terms of value (in £), sales went down of 3.5%.
A new set of Scotch whisky regulations came into force in November 2009, recognizing Campbeltown as a whisky region (just forget about "islands"), and the vatted malts must now be labeled as blended malt (to protect the consumer from the confusion between single malts and vatted malts). Positive point, the "Carhu" pure malt is a story from the past that cannot be repeated (but will increase the collectable value of the Cardhu Pure Malt ?) with the new regulation regarding the use of the name of the distilleries.
Well, with the price of the oil, gas, and barley going doing, one might hope that the prices of whisky would decrease. But as you may be aware, when the cost of goods are going up, the price at the cashier also goes up, but when the cost of production is going down, the price of the final product will remain the same.
In any case, if you were looking for special single malts at over £2000, there has been plenty of offers this year, from the border of the Lowlands, to the Speyside, Highlands or Islands, the choice was large. I won't talk too much about these malts, since you can't taste them everywhere.
Last year, I wrote "when will we see 10 year old single malts selling for £100? ". The answer is "We just had to wait until 2009". The new Ardbeg Single Cask distilled in 1998 is selling now at the distillery shop for £180. It should be noted that Duncan Taylor, was selling a few months ago a 15 YO from that distillery £100. You had to be quick if you wanted a bottle, because even at £100, the Duncan Taylor bottling sold out within a few weeks.
£180 for a 10 YO is expensive? Maybe you should have a look at Diageo. In their first set of Manager's choice, the 9 year old Oban was sold for only £350.
Fortunately, there are some people like Raymond Armstrong at Bladnoch who are fighting against these hefty prices and selling excellent whiskies at correct prices. Whiskies that you can afford to drink.
Plenty of new bottlings were released in 2009, not only with supernova ppm of phenols, but also with a supernova price. While reading blogs and forums, one can read that a lot of whisky enthusiasts are getting exasperated by these "price: no limits". Is this going to stop soon?
There are a fair number of collectors, and as written by Serge Valentin on www.maltmaniacs.com , " the number of collectors is increasing, it's also the case that the heavily specialised collectors who will buy just anything bearing their favourite brand's name, as long as these collectors are ready to pay anything regardless of the content, this will not stop." And I perfectly agree with him, this is not going to stop, only to slow down.
Of note, just after some tasting notes were released for the excellent Karuizawa 1967, bottles sold out within a few days and the next week, bottles got sold on ebay for more than 2x the initial price. Unfortunately, there are a lot of speculators on whisky, as this was observed for instance with the Kilchoman Inaugural released. Over 8,000 bottles sold out within a few a days and quickly resold on auctions for twice the initial price. Easy money!
Unfortunately, this is difficult to avoid and I would prefer to see that the money goes to the distiller to make the best products possible than that it fills the pockets of the speculators.
As mentioned above, prices have generally gone up, but some independent bottlers, such as Douglas Laing, have sold a fair number of products at a lower price than last year for comparable products. I did not really understand the pricing policy of Diageo regarding their Manager's choice, but we have to acknowledge that they have kept the prices of their Special Releases at the same level as previous years and without this control on bottlings such as the Port Ellen, prices of Port Ellen would probably be significantly more expensive.
Yes, I wrote a lot about whisky prices, but what about quality?
I am personally pleased to see a trend in a reduction of the number of "finishes", and from a quality point of view, the year 2009 was very good. A lot of good single malts have been produced, not only from Scotland but also from Japan, and I haven't tasted any bad whisky. A fair amount of whiskies released this year had been matured in first fill bourbon. This is a strategy developed by several companies in order to increase the quality (and to reduce variability). With that, the products are maturing faster, but at the same time, the oaky flavours are quite pronounced and giving a "modern" structure. Thus, tending to homogenise the products more than before.
Quite a few generalist book (e.g., MacLean's Whiskypedia) have been released, as well as some reprints of old books by Ian Buxton and his Classic Expression (Truths about whisky, as well as the book from J. A. Nettleton manufacture of whisky and plain spirit), and the first book on whisky and philosophy by F. Allhoff and M.P. Adams. One should not forget the beaufitul photographs of Ian Macilwain and his bottled history.
For this coming year, a few books will retain my attention, Glenglassaugh and The enduring legacy of Dewars by Ian Buxton and A century of Whisky by Gawin D. Smith
A short summary:
The prices of goods and energy for the whisky producers have significantly decreased in 2009 and the prices should remain stable for 2010. In terms of whisky sales, volumes have slightly increased, but sales decreased. As written by the SWA, the Scotch Whisky industry has been resilient to the crisis. But with the prices of some malts reaching supernova prices, the whisky consumer might be tempter to change his/her habits. In addition, the pound was low compared to other currencies, such as the euro. If not, the situation might have been quite different.
To attract new consumers, I suppose that more advertisements destined for women will be made. For the BRIC countries, we haven't seen a huge increase in whisky consummation and some companies have slowed down their production in 2009. They will be careful in 2010. Some additional regulations have been put into application and this should help to preserve the jobs in Scotland, but maybe not in the rural areas. There has been a rumour in the USA that casks would be re-used more than once. If this would be confirmed, it will have a major impact on the Scotch whisky industry, which is increasingly dependent on the supply of first fill American oak casks.
Regardless of what will happen in 2010, there will still be whisky!
Part 2 is still to come, enjoy your dram in the meanwhile !
Patrick B. 10 Jan 2010, revised 16 Jan 2010©Whisky-news.com