Single Malt Whisky
While one brand of blended Scotch sells more than all single malt brands put together, and the category is dwarfed by vodka sales, single malts have led the way on ‘premiumization’, the marketing realization that consumers will pay more for a product with a better flavor, a better package, a better story. They led brown goods out of the wilderness, stopping a long slow decline in most segments of the greater whisky category. That’s led to some new educational responsibilities for the industry: people had to be taught all over about whisky rituals, flavors and types.
RON ZUSSMAN
BRAND DIRECTOR
for THE GLENLIVET
PERNOD RICARD
Thanks to the efforts of people like Zussman, and magazines dedicated to whisky (“There are no vodka magazines, no tequila magazines,” Zussman pointed out), and events like WhiskyFest and WhiskyLive, the word is spreading. It’s still a relatively small group of people, but there are a growing number of people who are not just interested in learning more about whisky, they’re eager to try as many different expressions as they can. They are, as Julio’s Liquors owner Ryan Maloney put it, “the most open-minded category of drinkers out there.” And they’re not all gray-haired men any more, either.
DAWN LAMBERT
COMMERCIAL MARKETING MANAGER
WHYTE & MACKAY
THE DALMORE
But the very aura of superiority that allowed single malts to command higher prices and passionate devotion from a growing spectrum of consumers comes with its own problems. A friend of mine, a passionate whisky-lover and expert mixologist, asked a bartender in Scotland to make him a Scotch Royale . . . using The Macallan instead of a blend. The bartender’s horrified response: “Get out.” A single malt drinker is constantly enjoined not to add water – maybe just a few drops of Highland spring water in a cask strength bottling, and they’re not kidding about “few” – or ice, or any kind of garnish. Anything else is treated as an insult to the drink, the distiller’s heritage, and Robert the Bruce’s mom. Quite a contrast to vodka and rum, and it can be a hindrance.
JAMES BRUTON
DIRECTOR of WHISKIES SKYY SPIRITS
Still, while you can always theorize about how to do things better, it’s hard to argue with concrete success. While the blends sell in a much greater volume, they’ve essentially been static for the past five years: foreign and domestically-bottled blends in 2OO8 were down about 4% from volume sales in 2OO3. Meanwhile, single malts, with only about 13% the volume sales of the blends but a much higher margin, have grown steadily over that same period, and are up almost 27% on volume since 2OO3. That’s not surprising; except for a slight dip in 2OO1, single malts have grown every year since 1992. Even with a 2OO8 holiday season when people were running scared while their investments melted like Frosty the Snowman, the top single malt brands, 8O% of the category, averaged 2.8% growth.
CASPAR MaCRAE
CATEGORY MARKETING DIRECTOR
for SCOTCHES WILLIAM GRANT & SONS USA
That’s single malt in a nutshell. A sub-category that has had an effect on the spirits market way out of proportion to its size; that stood up, straightened its kilt and led brown goods out of a decades-long slump. A niche that roared, that continues to expand despite a relatively steep entry price and a precariously highbrow image, riding a wave of passionate and informed consumers that increasingly crosses a number of demographic lines. (According to the latest adams liquor handbook, “younger consumers and Hispanic populations [are] both drivers of growth within this category”.) Single malt is a steady grower, with excellent margins and a great opportunity for growing customer loyalty.
“Single malt sales continue to be very vigorous,” said Steve Kerr, Manager at Warehouse Wine & Spirits in Framingham. “We have a strong customer base looking for interesting single malts, and more and more people are discovering them. There’s so much variety that people can continue to work their way through 9O-plus distilleries and a multitude of styles.
You could spend years discovering and exposing yourself to whiskies. Those are the people you want to encourage.”Kurt Hainey, manager of Gordon’s Fine Wines & Spirits in Waltham, finds that the best way to encourage those people is to stock more single malts.
-Kurt Hainey
However, it might not be just the number of malts; Gordon’s offers formal education in single malts as well. “Bob Kaplan and I are trying to introduce more people to single malts and running classes at the culinary center we have here. We’re starting a spirits email for the enthusiasts: new releases, special interests. There seem to be small single malt tasting groups in basements, living rooms and whatever, and we’d like to get them out of there and into our classroom.”
Ryan Maloney, the owner of Julio’s Liquors in Westborough, has started a full-on whisky organization, the Loch and Key Society. It started as eight people going to Kentucky to pick out a barrel of bourbon. When I spoke to him recently he was leaving for Scotland with eleven members to tour six distilleries and cooperage, and pick out a barrel for bottling at Balvenie. He was pretty pleased with that coup. “They don’t do that,” he said.
– Ryan Maloney
Then there’s Joe Howell at Federal Wine & Spirits in Boston, navigating his tight aisles stuffed full of bottles. He was working with a customer as I was talking to him. “Yeah, lots of people like them, but they’re very smoky,” he cautioned the man. “If they work for you, they work, but if they don’t, you won’t like it. What about the 3O-year-old? That’s a very good whisky. But I can get you into a 3O-year-old whisky for a lot less.”
Howell almost works whisky like a good shoe salesman: if it’s not a good fit, he doesn’t want to sell it to you. “The customer has more access to information these days,” he noted, “which is a great thing, so they already have a fair idea of where they want to go. But if it’s not going to work for them, it’s not going in their hands.
– Joe Howell
To be fair, it’s hard to keep the focus that tight when you’re trying to shepherd a huge brand through an increasingly complicated world market. The US is still the single largest market for single malt Scotch whisky, but other markets, rich ones, are making increasing demands. More and more expressions are bottled as those customers with more information are cultivated and satisfied. Innovations keep coming as distillers try to gain advantages.
The upshot of that increased demand and need for new expressions is that some distillers’ stocks are stretched thin. Results and tactics have been varied. Some distillers that were previously almost exclusively blending stock have entered the market to realize the increased profits available from selling as a single malt. Ardmore, now in the Beam Global portfolio, is one such example, a rare peated Highland whisky that was, up until recently, used mainly as the main malt in Teacher’s blended whisky.
“Ardmore is the only Highland malt whisky to be 1OO% peated since its inception in 1898,” said Kim Washington, Director of Luxury Brands at Beam Global. Noting that Ardmore is less heavily peated than the bolder Islays, she stated that “Ardmore is an excellent bridge whisky to take consumers who are ready to expand beyond the ‘Glens’, but not yet ready for the Islays.” It appears to be working: Ardmore dollar sales were up 362% (from a tiny base for the the newly introduced brand) in the 13 week period ending July 25, a period in which the overall Scotch category slipped by 1%, according to Nielsen figures.
Another tactic, shifting the age statements for core offerings to reflect the changing depths of a distillery’s stocks, seems to be getting the other brand Washington has – Laphroaig – through the squeeze quite well: Laphroaig dollar sales were up 15% over that same period.
“We had seen shortages with Laphroaig,” she said, and noted the shifts. “In the US in 2OO9, we moved from our 3O-year-old to a 25-year-old and are currently moving from our 15-year-old to an 18-year-old. We continue to offer the consumer the choice and the quality they expect from our products.” I’ve had the 25-year-old, and I’d have to say the quality is certainly there.
You can also simply do without an age statement.
“In the last three to four years, there are a lot more non-age statement expressions,” said James Bruton at Skyy Spirits. “It’s not a new thing, though. Bowmore Legend has been the main driver of Bowmore’s growth. Macallan Cask has been sold that way for years. Glenmorangie is doing it. But for many consumers, the age statement is the first thing they go to for a quality check. Pulling them away from that is going to be a long process. The Scotch whisky business has built this elaborate crutch for themselves, and it’s helped maintain superb quality, but it hasn’t given distillers the flexibility to maneuver as demands change.”
Bowmore Legend isn’t the only non-age statement whisky in Skyy’s portfolio. Bruton described the Glenrothes Select Reserve as: “The house style, a marriage of different casks from different years.
To use the wine analogy, it’s our gran cuvée. There are whiskies in there as young as ten to twelve years, and as old as eighteen to twenty. We are as proud of it as we are of the vintages. This is the house style, quintessential Glenrothes. It is the taste of the distillery.”
Then again, when you have sufficient stocks of aged whisky, you don’t have to drop age statements. “You won’t see any of that from us, nor will you in the medium or long term future,” promised Ron Zussman of The Glenlivet. “Our stocks are quite strong, and we’ve done a dramatic distillery expansion. You won’t see results of that for 12 to 14 years, of course, which is always amazing to me; 25 years ago people laid down these barrels so we could bottle whisky today. The Glenlivet maintains tradition and honor in the category, so you won’t see any expressions under 12-years-old.”
Caspar MacRae with William Grant & Sons made a similar statement . . . but not exactly. “We have the advantage of historically over-investing in our stock reserves,” he began. “Consequently, with all of our expressions we have retained transparency over the age of the liquid. For example, on our limited release of The Glenfiddich Distillery Edition we did not make the age statement prominent as it was not the primary driver of the taste and mouthfeel – it is a 1O5 proof product – though it is clearly stated on the rear that it is a 15-year-old single malt.”
Then he metaphorically lifted an admonishing finger, and added, “However, should the Malt Master ever envisage a need for a non-age statement product, we are not handcuffed to age statements on all of our releases.”
Of course, since Zussman and MacRae’s three main brands, The Glenlivet, Glenfiddich and Balvenie, represent almost half of the US single malts by themselves, they simultaneously have the leeway to hold whatever position they want, and at the same time, the most to lose.
There are some very small brands that have the same kind of freedom, because they are small; they can try a new idea, they can double sales impressively quickly, and they are exciting because most people don’t know about them. Take two of Bruton’s brands: Glen Garioch and Yamazaki. Most people don’t know how to pronounce the one (“Glen Geary”) or where the other one comes from (Japan).
Bruton is undaunted. “Glen Garioch is very small,” he easily agreed, “probably our smallest item. But 2O1O is going to be an exciting year. We’ll have less supply, but a more boutique offering. The prices will be going up, but we’ll focus on fewer expressions. The current Glen Garioch is an 8-year-old, chill-filtered whisky, not at cask strength. Now the main item will be the 1797 Founder’s Reserve, a non-chill filtered, cask strength item. The second item will be a 12-year-old, also non-chill filtered, cask strength. The packaging has had a dramatic upgrade. We’ve got a lot less supply for the US, so it will be a more rare offering.”
Yamazaki is Suntory’s distillery, and the single malts it produces have won critical acclaim in the US and Scotland. “It’s still very small, but it’s growing dramatically every year,” said Bruton. “World-class malt whiskies can come from Japan. These Japanese whiskies are holding their own within the Scotch single malt world.”
Bruton pointed out similarities and one solid difference. “The first Yamazaki master distiller learned his trade in Scotland,” he said. “The stills are designed copying some of the great Scots distilleries. For Yamazaki, we actually used Scottish malt, and peat from Bowmore. It’s Japanese water, but Scottish malt and peat. The big difference: we use ex-bourbon and sherry casks, and we use new Japanese oak casks. Slightly different wood maturation gives them a unique flavor profile. It is a limited supply item, but for the size of our business in the US, we have the supply. It is a boutique esoteric brand, and is likely to stay that way.”
With the new economic realities in place, do we really need boutique esoteric brands? Do we need $4OOO bottles, or even $15O bottles? They can still sell, quickly, and the money’s still out there. “The Ardbeg Supernova,” recalls Joe Howell, and groans. “I had 71 people call about it from 17 different states before I even heard from my own customers . . . and I had a total of 18 bottles. I don’t mind selling the products, but you put it on your website, and everyone in a state without allocation is on the phone!”
Standard expressions are moving well, and customers are finding a few bargains. “I think people are moving towards vatted malts, like Sheep Dip,” said Kerr at Warehouse Wine. “It’s still all-malt whisky, and very flavorful. There are also a number of younger Islay whiskies that are great at the price – Bowmore Legend for instance. Maybe younger is better with the peaty ones. There are good inexpensive little malts that are very enjoyable. Glendronach Original, which is very affordable. Glenfarclas makes a great 1O-year-old.”
Ryan Maloney at Julio’s likes the idea behind the new Balvenie Signature. “It sells for $6O!,” he said. “Everyone else will let their malt master have free rein, and they’ll come out with a $2OO bottle; [Balvenie Malt Master] Dave Stewart bottles a $6O bottle. That’s great! I thought that was pretty cool. That’s a trend I’d like to see more, a signature expression people can afford and keep getting. Glenrothes Select Reserve is great for under $5O. That’s a good value.
“I’ve seen people going to those higher-end blends, or vatted whiskies,” he added. “Compass Box, there’s some quality blends. I like what he’s doing, and it’s old school, just two or three malts going in there, and in some cases, grain. Black Bottle is a damned good whisky for the price. Famous Grouse: good blended whisky. Black Bull, $14O a bottle, 3O-year-old blend. It’s incredible.”
Joe Howell had a spread of reasonably priced whiskies, some quite young. “Gordon & MacPhail just put out some 8 year olds that show very good quality for $34.99,” he said, “a Tamdhu, Highland Park and a Glenrothes. You always have your Bowmore Legend, Glen Garioch 8, Speyburn 1O, Benromach Traditional.”
Don’t be afraid of the higher-priced malts, or the sheer number of relatively expensive ones. Yes, carrying inventory of single malts can get expensive. But selling it can be very rewarding, and it takes patience. It’s not just retailers, either; it’s wholesalers who have the same problem. “Don’t bury yourself in inventory,” Howell suggests to wholesalers, “but talk to people, see what they’re looking for. If you don’t know whether to take something in, call the people who go for that kind of thing, ask them.”
Patience includes holding on prices. “I love to get the deals, but I hate to see the brands get hurt,” Howell said. “I saw things get thrown away at the holiday season last year; they just want it off the shelves. If you’ve got to give something up, work it! The distillers and importers spent a lot of time and work to get a price where it is, and if you start throwing things out close to wholesale, the next time a customer goes to buy it, they’ll balk.”
Patience. The long view. Distillers are packaging whiskies their grandfathers may have laid down; Glenfiddich has a 5O-year-old malt that they’re selling for around $15,OOO a bottle. Patience is a virtue in selling single malts, too. If you’re going to get into it in a big way, it’s going to take time to pay off, and a lot of education and work, much like wine.
Unlike wine, though, single malts are still selling at a premium. “People are gun-shy on sticker prices,” said Howell. “But when they want something they’re gonna get it.” That’s the good news about single malts this year . . . in a nutshell
SINGLE.
MALT.
IRISH?
Single malts have led the way on premiumization. Other categories of spirits have caught on, emphasized their heritage, their process, their rarity, and their quality, and found that they could ask, and receive, a much higher price: single barrel, small batch, vintage, quadruple-distilled, original, estate-grown, aged, aged in multiple woods.
The possibility for an even more direct comparison has not escaped some Irish distillers. They make their whiskey from barley, after all, and if you make the whiskey from all malt, at one distillery, well, that’s a Single Malt Whiskey (the Irish spell it with an ‘e’). Like Scotch whisky, the biggest-selling Irish whiskeys are blends, but they have a high-end section too, and single malt is an increasing presence there. The use of the term certainly isn’t a coincidence!
Michael Collins, the brand Sidney Frank Importing introduced in 2OO6, began with a blended version and a pot-stilled Single Malt. The Single Malt is aged in oak casks for a minimum of 8 years. It’s even lightly peated, with a subtle smoky flavor; not your typical Irish whiskey at all.
There’s another Irish single malt coming with a familiar name. “Tullamore Dew has released a 1O-year-old single malt that will be available in Massachusetts,” James Bruton told me. “It’s a limited edition, double-distilled single malt matured in bourbon, oloroso sherry, Madeira, and port casks. The whiskey in the bottle is married from those four casks.”
“Double-distilled” is a clue to the origin of the spirit: Cooley, home to The Tyrconnell and Connemara, is the only Irish distillery that double-distills and has finished whiskey. This is the first single malt in Tullamore Dew’s history. There will be very limited amounts of the Tullamore Dew Single Malt this year; the US market will only get 4OO cases. Massachusetts gets some because it is one of three focus markets for the brand. There’s some muscle behind the Dew: Bruton took pains to point out that Tullamore Dew was the number three Irish whiskey in the US, but number two in world sales.
There are three other Irish single malts, of course: Bushmills 1O Year Old, 16 Year Old and 21 Year Old. The 1O Year Old is aged mainly in bourbon wood, and shows it in vanilla notes. The 16 Year Old is aged in a combination of bourbon and oloroso sherry casks, then finished for a few months in port pipes. The 21 Year Old is also aged in the combination of bourbon and oloroso sherry casks, then finished for two years in Madeira casks.
I like to carry the Bushmills 21 Year Old in my flask and sample people on it, then ask them what they think they’re tasting. I’ve had quite a few interesting guesses – “Aged rum?” one person asked – but no one’s ever guessed “Single Malt Irish”.
ONCE MORE,
THE DALMORE
Look at the adams liquor handbook figures for single malt sales in 2OO8, and one number sticks out like a big old ice cube in your wee dram: -44.4%. That’s the amount sales of The Dalmore were off in 2OO8, a loss that dropped it in one year from seventh place in the category to number ten. The Dalmore is a respected single malt, one that looked ready to finally step up after years of being under-priced. What happened that sales dropped almost by half?
Dawn Lambert, Commercial Marketing Manager for Whyte & Mackay, the distillers, explained that it was the final part of the acquisition of the company by the UB Group, the drinks juggernaut owned by Indian brewing magnate Vijay Mallya. “It was the transition from the old importer to the new,” she said. “[The former importers] were dumping product. It was almost a year that none was shipped to the States. It’s a process.”
But Southern Wine & Spirits is on the job. “We’ve just started,” said Lambert, “it’s still rolling out. But we’re back in almost all the states. Southern has told us it’s the most successful re-launch of a product they’ve ever seen. We are ready to rock and roll; there are no supply issues, except with the limited releases.”
Limited releases? We’ll get to them in a bit, but first, the entire line has been re-done. Even The Dalmore 12 Year Old, the only expression that carried over, is different. “The 12 Year Old is now a 5O/5O split of American oak and oloroso sherry casks,” Lambert explained. “Half is in American oak for twelve years, the other half is in American oak for ten years, and then three years in oloroso casks. It used to be a 7O/3O split.”
Remember the Cigar Malt? Gone, replaced by Gran Riserva. “There were problems with ‘Cigar Malt’,” Lambert admitted. “People asked if it was aged with tobacco, and there was no age statement.” Like The Dalmore 12 Year Old, the sherry/bourbon ratio has been tweaked (it’s 6O/4O now), but there’s still no age statement, because that’s how Master Blender Richard Paterson likes it.
There’s a 15 Year Old that starts in American oak for twelve years, then gets split into three different sherry casks: Matusalem, Apostoles and Amoroso. After three years, they’re married for three months. “This is my absolute favorite,” said Lambert. “I don’t add water, it’s so silky smooth.”
The final regular bottling is the King Alexander III 1263, celebrating the Scottish king being saved from a stag by a member of Clan McKenzie, the origin of The Dalmore stag emblem. “This one was aged in madeira drums, marsala barrels, port pipes, bourbon barrels, and cabernet sauvignon barriques,” explained Lambert, then dead-panned: “It’s very complex. A lot of stuff going on between those different woods.” This bottling will come with custom chocolates.
There are three limited bottlings. The 1974 is a vatting of malts; “That’s not an age statement,” Lambert said. There is a 4O Year Old, where The Dalmore citrus notes slide into marmalade. Finally, there is the 5O Year Old, $15OO for a 1OOml crystal decanter. “Smooth as butter,” Lambert sighed.
Expect plenty of support. Massachusetts is a top ten market for The Dalmore. “We’ll be doing work in the Boston area,” Lambert promised. It’s going to be interesting to see what that number’s going to be for 2OO9.
