How The Impending Whisky “Drought” Is Affecting The Industry

The beginning of 2016 brought with it some worrying news…Single-malt whisky stocks were running low. According to the Scotch Whisky Association, single-malt whisky sales rose by 159 percent between 2004 and 2014, while a CNN report showed that demand for single-malt whisky has gotten so high worldwide that distilleries are struggling to meet demand.

A brand manager for Macallan said the distillery is working twenty-four hours a day, seven days a week, yet they are still finding it difficult to deliver enough. “In China everyone is talking about it,” says Stephen Notman of the Whisky Corporation. “The shortage of old and rare single malts has already started, and it’s going to get worse,” adds Rickesh Kishnani, creator of the world’s first whisky investment fund.

All this information brings us to one rather terrifying question: could the supply of high-quality, single-malt whisky really run out?

Distillers cannot go back in time to adjust production or make whisky distill faster. Even increasing production of distilled whisky today will take years to mature and counter supply shortfall. This question has and will continue to affect the industry in the years to come. Here is whats happened so far.

Introduction of Young Whiskies

Just when there seemed to be no solution to this looming whisky shortage, young whisky has made a strong appearance. According to multiple reports, there are a growing number of young whisky releases by large distilleries entering the market. Even famous producers like Bowmore and Lagavulin are releasing eight and nine year old whiskies. The releases by these famous distilleries will likely give other producers the push they need to do the same.

When it comes to young whisky, the quality of the wood it is aged in is of higher quality, and so the whisky matures better. At the end of the day, the whisky that drinkers have in their glass will not have the fullness of a well-aged malt but when a shortage looms the options run low.

With the increase of NAS (no-age statement) whiskies, consumers have grown suspicious of new introductions with most single-malt lovers still searching for the number of years on any whisky bottle they reach for on the shelf. This highlights the importance of education in whisky buying. Learning about the different variations of young whisky can help a consumer understand the differences in the whisky they are purchasing.

Distilleries planning to release young whisky will now have to undertake the tough task of educating consumers further, helping them understand that aging a single-malt whisky for less than ten years lies at the crossroads between a traditional well-aged dram and a NAS release.

Although these young whiskies cannot compare with old, rare single-malts whiskies, they are an important step in the whisky industry’s future. They will fill the needs of less discerning consumers without crunching already tight supplies of matured single malts.

Dwindling Releases of Well-Aged Whisky

No matter how quickly producers ramp up production, the craft of whisky making cannot be rushed. The whisky needs time to mature and reach the optimum age for it to be bottled. Even with the aforementioned young whisky releases, a legal minimum of 4 years is required for maturation.

With that in mind, what will happen to rare, well-aged whiskies as the whisky “struggle” grows more and more difficult?

The answer is simple. As well-aged whiskies become rarer, prices will continue to rise and stocks dwindle. The Investment Grade Scotch Whisky Index, which tracks auction prices, rose by 14% last year. Kishnani’s whisky fund has increased by 26% since its inception in 2014. Statisticians all agree that whisky is in a bull market that is not expected to stop anytime soon. Prices are increasing quickly as a new generation of whisky enthusiasts scramble to get their hands on the beautiful single malts they desire.

Independent Bottlers to the Rescue

There is hope still for high-quality whisky lovers around the world. As the prices increase, owners of private casks have been enticed to sell to independent bottlers. Before the whisky boom began taking place distilleries would commonly sell casks to private individuals and investors. Since Scottish whisky cannot legally be sold before it reaches a certain maturation, distilleries would often need to look other avenues to maintain financial viability. One of those ways by selling un-matured casks. In many cases it was through private cask sales that distilleries were able to maintain positive cash flow and keep their operations alive.

Now that the whisky boom is constraining official releases, independent bottlers are purchasing these casks and bottling for public release. In most cases these casks were hand picked for quality, housing some of the finest whisky produced by these notable distilleries.

For those interested in independent bottlers, we’d suggest the following:

Leave a Reply

Your email address will not be published. Required fields are marked *

Privacy Preference Center

Close your account?

Your account will be closed and all data will be permanently deleted and cannot be recovered. Are you sure?