...where distraction is the main attraction.

Tuesday, January 27, 2015

Single Malt Report: BANFF!! Twice


Oh Banff, the poor ol' distillery, always getting its ass kicked like Officer Nordberg.  It survived a massive distillery fire in 1877.  It survived a thorough bombing by the Luftwaffe in 1941.  It survived a still explosion in 1959.  But in 1983, it did not survive the incorporated genital wart that is DCL/Diageo (Ed.: Dude, let it go already).  And, just for good measure, the abandoned building caught fire in 1991 and then was bulldozed.

There haven't been many Banff releases in recently.  Whiskybase shows only 11 total indie casks released in the past four years.  Winesearcher shows only one store selling a Banff in the US (for almost $2000).  I could say that now would be a good time to go Full Hipster and get into Banff before it becomes the next big ticket dead distillery, but there's really not much of an opportunity to do so.

I obtained two samples of Banff right around the same time last year so I tried them together as I huddled in my secret winter East Coast hideaway.  First, here's a 1974 G&M Connoisseurs Choice mini with the "old map label", meaning it was bottled before 1997 (I think).  Many many thank yous to Cobo for sharing this with me.

Distillery: Banff
Ownership: DCL (proto-Diageo)
Independent Bottler: Gordon & MacPhail (Connoisseurs Choice)
Region: Speyside (Deveron)
Distillation year: 1974
Bottling year: ???, before 1997
Maturation: probably not first fill casks
Alcohol by Volume: 40%

The brass-colored whisky's nose has some nice old stink to it, like moldy honey and manure.  Those notes are soon followed by perfumy dish soap, orange oil, and vanilla.  But with more time, all sorts of scents begin to escape from the glass: cucumber, hay, toasted barley, pencil graphite, sea air, and something vaguely meaty.  The palate has some of the old stink as well. Maybe some dry sherry too? But nothing stronger than a re-re-refill cask.  It has a light bitterness and citrus tang.  It's a bit thin texturally, but has solid notes of coffee, ground black pepper, whole wheat bread, Cow Tales (think vanilla and caramel), and Lucky Charms "marshmallows".  The finish is brief at first, but seems to get longer with subsequent sips.  It's sugary and lightly tangy, but also bitterer than the palate. The coffee, pepper, and hay notes linger on, as do barley and smoked toffee.

This probably was a light charming whisky when first bottled 18-20 years ago.  Now that the old dusty stuff has developed, the whisky has likely become more layered.  I welcome those dirtier notes and the general lack of wood and wine influence.  As I referenced in the notes, I do have a nagging feeling there were refill sherry casks in the mix; and the pepper note rung sort of sulfurous.  Some fun stuff going on, but the low ABV keeps it from really blasting off.


Next, I purchased a sample of a Cadenhead Banff at a LASC event.  Though this Banff may have been bottled around the same time as the G&M, it's a different beast.


Distillery: Banff
Ownership: DCL (proto-Diageo)
Independent Bottler: Cadenhead (Authentic Collection)
Region: Speyside (Deveron)
Age: 21 years old
Distillation year: 1976
Bottling year: 1997
Maturation: ???
Alcohol by Volume: 57.3%

Its color is that of a five-beer piss.  The nose buzzes with bright notes.  First there's fresh watermelon, cucumber, and papaya.  Then confectioner's sugar, cinnamon, citron, and black licorice.  Then, after more than 30 minutes in the glass, the whisky releases fresh-cut grass and grapefruits.  The palate gets dirtier.  Dingy sweet spicy tangy malt with a very oily mouthfeel.  The dark dank (musty moldy) note that had escaped the nose arises here, followed by lemons and peppercorns.  Sticky toffee with orange zest.  Green garden herbs and sugar, like herbal candy.  The finish is loooooong, though simple.  Spicy, sweet, citric.  Then grassy with a hint smoke.

This one is wild.  The nose is plum gorgeous.  The palate is a dark stinger.  And the finish hums pleasantly.  For those who are familiar with such things, this was one of those old green bottles that sat on a random liquor store shelf for a decade-plus before someone smart spirited away with it.  The LAWS entry is the only thing online about this whisky (the lone Malt Monitor entry is by Dave who is also part of LAWS).  And I liked it a lot more than they did; maybe something went wrong with their bottle because the nose seems to have been DOA on theirs.  In any case, I loved this one.  If it didn't lose steam in the finish, the whisky probably would have made my all-time Top Twenty.

So, two Banffs: one good, one excellent.  Some of the difference in quality may have been due to the bottling strengths.  Otherwise both were spirit-forward zippy whiskies that I would be happy to purchase if I could find them at their original 1990s prices.

BANFF 1974 G&M CONNOISSEURS CHOICE (old map label)
Availability - Happy hunting!
Pricing - 700mL bottle will likely be over $300 nowadays
Rating - 85

BANFF 21yo 1976 CADENHEAD AUTHENTIC COLLECTION
Availability - Happy hunting!
Pricing - may have been $145 back in 2008
Rating - 91

Thursday, January 22, 2015

Laphroaig 10 year old Cask Strength Batch 005, again, but served four ways

I reviewed Laphroaig 10yo CS batch 005 around this time last year.  Then, after a year of the bottle sitting two-thirds full on the opposite coast, I did another set of notes without looking at the last one.  Last time, I found it to be good, though with an aggressive oak influence that kept it from competing with any of the previous batches.  And this time?

I had two winters to take a picture of my damn bottle
but apparently I was too dippy to do so.
Distillery: Laphroaig
Owner: Beam Suntory
Type: Single Malt
Region: Islay
Maturation: ex-bourbon barrels
Age: minimum 10 years
Batch: 005, Feb 2013
Chill-filtration? No
Caramel colored? Probably not
Alcohol by Volume: 57.2%

This time, inspired by Chemistry of the Cocktail, I added to water in different amounts in order to reduce the ABV and compare each version with the other.  The tasting glasses were lined up as such:

#1 - 1.0oz + no water = 57.2%abv
#2 - 0.5oz + 1/2 tsp water = 49%abv (between 50% and the 48% of their Quarter Cask)
#3 - 0.5oz + 1 tsp water = 43%abv
#4 - 0.5oz + 1-1/4 tsp water = 40%

Again, for some reason I didn't any pictures of the comparison.
Here's a picture of breakfast, instead.
#1, Full strength
Nose - Lots of American oak: pulp, char, and sap. Sugary malt meets a peat that is almost floral.  No grunge, no medicine, no maritime.  Some green herbal stuff, caramel, roasted nuts, and oats.
Palate - Dirtier here (thankfully).  Still, there's lots of vanilla and sugar.  A tiny bit of bitter herbs is overwhelmed by the sweetness.  Some salt and lemon peel sneak in, and a cassia cinnamon note that grows with time.
Finish - Medium length. Big on the vanilla, caramel, and sugar. Mild on the bitter and smoke. Afrin nasal spray. A green peat note develops but that's also smothered by the sweetness.

Comments - I'm getting tired of it in this state. While the oak isn't as odd as I'd remembered it, it is incredibly heavy.  And that hurts the Laphroaig style.

#2, Reduced to 49%abv
Nose - Less oak, more green herbs, more peat moss, and a bit wilder overall.  More earth, slightly inky.  Ground cardamom and burnt oregano.  Subtler vanillin and floral notes.
Palate - A creamier, oilier texture.  A nice bitterness.  Peat!  Salt, anise, and manure.  It's like a high-strength Underberg.
Finish - Medium length.  Big peaty phenols stomp down the sweetness.  Bitter and spicy.  Tart lime candy and hay.

Comments - This bitter, spicy, herbal style is my favorite of the four.  Reducing the sweetness is the key.  Man, do I want me some Underberg right now.

#3, Reduced to 43%abv
Nose - A buttery, vanilla-y version of the regular official 10 year old.  There's the seaweed and moss.  Salty air, manure, bitter lettuces, and cardamom.
Palate - Texture is still good.  The bitterness lightens up.  A little more sweetness arrives, as does caramel.  Some lemons and limes.  A farmy note appears after a while.
Finish - Salty, citric, and spicy.  Mild peat.  Both sweetness and bitterness build with time (that note sounds like some cheap poetry's about to break out).

Comments - Not bad, though it's lighter, of course.  Comma, comma, comma.  I might like this better than the full strength version, too.

#4, Reduced to 40%abv
Nose - The peat begins to fade now.  The sugar returns.  Odd gooey oak note develops.  Moss on a log.  Grass and bitter lettuce.  A random Nutella note.
Palate - Watery, thin.  Mostly neutered.  Hints of peat and bitter stuff.  Sugar and lime register strongest.  Maybe some fresh grass?
Finish - Short.  Lemony, slightly peppery.  Peat lingers a little.

Comments - The gap between the 43% and the 40% is incredible.  The palate and the finish are broken, gone.  It's Laphroaig to ignore.



While it's not terrible at full strength, the Laphroaig style is barely there.  It's masked by oak and a significant sweetness that I've never found in a 'Phroaig.  But, when reduced to the 48-50%abv range, the whisky's wildcat heart is uncaged (more cheap poetry for yous!).  In fact, I re-bottled the final quarter of this bottle at that strength and enjoyed it thusly.

Overall, I still think this was the strangest and weakest of Laphroaig's 10yo CSes by some measure.  The joy of their Cask Strength releases is/was the full powered dosage of Laphroaig's unique style.  Batch 005 covers up that style with too much sweetness and oak, though the charms can still be found when adding a little water.

Availability - I'm still seeing this batch everywhere
Pricing - a broad range that depends on the state you're in: $55-$85
Rating - 85 (with water added only; served neat this barely makes an 80)

Tuesday, January 20, 2015

The Bearded Lady versus Suntory Royal SR (late '80s), unbearded

Once upon a time there was The Bearded Lady...
The corrupted lass
...discovered by a whisky blogger who was unwittingly relieving Long Beach of its sh*ttiest whiskies during his dusty hunts.  The intrepid blogger realized something was wrong on his way home from the liquor store as his car smelled like hot rotten whisky.  He soon discovered that The Bearded Lady's seal had been eaten away and its cork dissolved by the whisky within the bottle.  At first the whisky, formerly known as "Suntory Royal SR", was judged to be drinkable, then sort of not drinkable, then relatively unpleasant, and ultimately bad.  About a third of the bottle found its way down the sink drain.
What remained of the cork
Months later, the ever persistent handsome blogger found a liquor store with a bakers dozen 50mL mini bottles of Suntory Royal SR for all of $3.99 each.  The bottle design itself was cute as a button, mimicking the 750mL bottle almost precisely.  And the seal was intact due to a screw cap.  But what about the whisky within?



Okay, I can't keep this third-person crap going any longer. It's exhausting. The fact that Rickey Henderson did it for 25 years' worth of interviews is more impressive than his stolen base feats.

I had hoped there was something nice beneath the oxidized and possibly-tainted Bearded Lady.  It was a good thing I had optimistically saved two ounces of The Bearded One so that I could compare it to what was likely the real thing.


Info for both whiskies:
Brand: Suntory Royal
OwnershipSuntory Whisky
DistilleriesYamazaki, maybe Chita?
Age: ???
Maturation: ???, my guess is a blend of ex-bourbon, ex-sherry, and Mizunara casks
Type: Blended whisky
Country: Japan
Alcohol by Volume: 43.4%
Bottled: Late 1980s

THE NOSES
Her Royal Beardness - At first it's okay.  Then it's not.  Artificial-watermelon-flavored Yamazaki......in fact there's lots of fake fruit stuff.  Sandalwood in cinnamon syrup.  Fungus.  Old school Bayer children's chewable aspirin.

Suntory Royal SR, unbearded - Malty and a little dusty.  Incense and citronella candles.  Orange peel, hints of dried fruit, a spicy creamsicle. Some bright but not buttery American oak.

THE PALATES
Her Royal Beardness - Something not quite safe, aggressively chemical, perhaps like cleaning fluid mixed with Sweet-n-Low.  Cardboard with pepper, cinnamon, and imitation vanilla extract.  After a while some of the weird artificial fruit notes show up.

Suntory Royal SR, unbearded - Very light and subtle, but with a significant silky mouthfeel.  Salt, sugar, and mild Talisker-like pepper.  A bit of toasted oak and tropical fruit appear towards the end of the glass.

THE FINISHES
Her Royal Beardness - Very saccharine at first.  Then acrid with lots of vinegar.  Mouth drying.  A little bit of spicy zing that quickly gets smothered by stale vanilla.

Suntory Royal SR, unbearded - Short-ish at first sip.  But with succeeding sips more vanilla bean and toasted sandalwood linger, growing ever spicier.

THE VERDICT
While dotted lines connect some of their characteristics on paper, these are two very different whiskies in the glass.  The untainted SR is fresh and spicy.  A better, richer blend than Chivas 12yo, with the nose being the best part.  It would be great to match this with Yamazaki 12 to see how they relate.

At one point during the taste off, I got the two glasses mixed up.  But I immediately sorted them out via the noses.  The Bearded Lady has grown worse at every tasting (the first grade was 75, the second was 71, and this one will be lower) and it may actually get uglier with time in the glass.  It was such a shame that a spoiled bottle was my introduction to Suntory Royal SR.  While the SR won't make anyone swoon, it was good enough that I saved half of the mini to sip for fun later that night.  I'd take it over Hibiki 12yo.

The Bearded Lady
Availability - Hopefully it was unique
Pricing - $25.99
Rating - 69

Suntory Royal SR (un-tainted)
Availability - Happy hunting
Pricing - was $25-$30 before it was discontinued
Rating - 84 (my original guess was actually spot on)

Thursday, January 15, 2015

Beginning a Whisky Buying Freeze and Ending the Dusty Hunt

Man, did you make it all the way through that What Was the Whisky Boom series?  "It's half as long as Das Kapital and only twice as funny."  Thank you for sticking through it and stopping by for more words.  Whisky reviews (and shorter posts) resume next week!

Every year I go on at least one whisky buying freeze, during which time I purchase nary a bottle of whisky.  Each time, I write up a list of rules and regulations then post it on the fridge.  The freeze lasts usually a month or so.  Last year's freeze was technically for 120 days, but there were so many asterisks (due to previous commitments) attached to that one that it wasn't too difficult.  Plus my daughter arrived right in the middle of it so my attention was just slightly diverted away from whisky.
Here he goes again with "The Freeze".
I engage in these buying freezes for a number of reasons:
  1. Storage limits. In 2013, we bought a whisky cabinet. It was actually Kristen's idea. After measuring everything, told her with much confidence that I'd never fill it.  I filled it.  Quickly.  We have very limited closet space and the aforementioned baby, so I have no place to put my bottles other than in the cabinet.  Despite much rearranging, the cabinet is at maximum capacity.
  2. Finances.  If you haven't noticed, whisky prices are higher than they used to be (another plug!).  With less money and more obligations, I have less to spend.  I'm a picky buyer, but I still buy more than I need.
  3. There's not much out there that I find worth buying.  In 2014, I purchased a total of 3 recent (bottled in 2012-2014) officially bottled Scotches.  My preferences lead me to the indie companies and recently discontinued or revised single malts.  Those are the items that excite.  And as the rest of my fellow hoarders buy up those goodies, there are fewer left for me.  Oh well.
  4. Happiness. Buying a bottle is a momentary pleasure.  Even if one stretches out the bottle research for months, like I do, once one obtains the bottle and stashes it away in the hoard, that glee is spent.  If life's stress and anxiety are playing havoc in one's blood, the search for the next bottle(s) begins again soon.  One can keep buying to keep the rush going but I believe that strikes closer to addiction than sustained happiness.  I have more than I need and I would like to enjoy what I have without having to have more.
If you have both the means and room, and you love the chase, then that's great!  Enjoy!  (Though please actually drink some of your stash.  You're not going to live forever.)  But when I'm short on those elements then it's time for a freeze.

This year, my purchase fast will last until at least April 1.  The only exception is the commitment I made to a friend (on this site actually) on the purchase of a bottle of rye.  Otherwise I'm still working out the regulations, ordinances, and bylaws of the freeze.  Usually they look something like this:

1.    The Buying Freeze begins at 00:00 January XX, 20XX.  It continues for XX days, ending at 23:59 on April XX, 20XX.
2.    No whisky of any sort will be purchased during this period. That includes Tier 1, Tier 2, and Tier 3 bottles.
3.    No samples or minis will be purchased.  No bottle splits allowed.
4.    Whisky trades are allowed.
5.    Whisky gifts are allowed from and to other people.  Examples are: etc. etc. etc.
6.    Social whisky events are allowed.

7.    The following are exceptions to the rules as they were commitments made before The Freeze began, and will be carried out during The Freeze: etc., etc., etc.

Punishment for violation includes reseting the freeze entirely and feeling like a sad sack of sh*t.  Anyway, if you're ever interested in doing a buying freeze, I highly recommend that you nail down the particulars before it starts.

Once the first of April arrives, I may choose to extend the freeze longer.  What I am suspending indefinitely is The Dusty Hunt.  Much of 2014 was spent on the hunt.  I found stuff.  I found awful stuff.  In California the good dusties have been picked over and over and over.  I'm getting sloppy sevenths, at best.

Though most of the dusty bottles I've opened have been crap, the disappointment has helped me see
more clearly that all whisk(e)y wasn't necessarily better in the old days.  I've had much better luck with bourbons since they usually stay nice and sweet, especially the National Distillers stuff.  I've found only two palatable Scotch blends (which I'll review this year).  There was a bottle of (tainted?) Teacher's from 1981 that was so bad that I started reading about stomach pumping immediately after swallowing.  That was such a heartbreaker because of my love for its main ingredient, Ardmore.  Damn thing had a perfect fill level and the liquor store had at least a dozen bottles.  Now I know why.  Good thing I bought only one.

Connecting this back to the buying freeze......Dusties are usually cheap and when ya find a bunch ya buy a bunch.  So then ya have a lot of bottles.  That leaves me (changing pronouns) with two problems: I've spent a chunk of money on a bunch of bottles I can't store.  $200 on 10 questionable dusties would have been better spent on a pair (or more, once upon a time) of excellent single malts that I actually want.  So the hunt is done.  But if I were to just happen to step into a store that had a dusty single malt at its original price?  I'll welcome that dilemma if ever arises.

I'm not usually one for New Year's resolutions, but those are my 2015 whisky resolutions.  Have you made any?  What motivated them?  Do you feel good about them or do you give them until, like, March until you crumble?

Monday, January 12, 2015

What Was the Scotch Whisky Boom? Part 3: Plateau and Decline

The seed for this series was planted in October 2013, back in the days when I read Shanken News Daily's site every day.  On October 9, 2013, they posted an article entitled, "Single Malt Scotch Volumes Continue To Soar Even As Retail Prices Surge".  It was twice as long as their usual articles and threw around lots of numbers about single malt prices (though they never cited their source).  But it was the chart at the bottom of the article that blew my whisky mind.  I encourage you to check it out, as long as Shanken doesn't put it behind a paywall.

It's a very small chart, "USA – Top Four Single-Malt Scotch Whisky Brands", but is dense with important information.  It shows actual nine-liter case unit sales numbers for the industry as well as the top four brands.  You'll note the bottom line, which shows a total volume increase of 7%.  That sounds like a good amount, right?  75,000 more cases of single malt were sold in the US in 2012 than was sold in 2011.  But here's the thing, 73,000 of the 75,000 cases worth of growth came from only four brands.  That's right, 97% of the growth was due to Glenlivet, Macallan, Glenfiddich, and Glenmorangie.  All other brands put together accounted for less than 3% of the growth, or only 2 thousand more cases nationwide in an entire year.  That's......not a boom.  Hell, that's stagnation for all but four companies.  In fact, Glenlivet and Glenmorangie accounted for more than 2/3s of all the US single malt growth that year.  And 2012 was right in the center of the boom times we were being told about.

Whatever growth that was happening was not balanced throughout the industry and probably never had been.  I had looked at an SWA report once upon a time but after seeing this chart I went back and downloaded all of them.  The following week, I met up with Tim Read (Mr. Scotch and Ice Cream) for lunch.  We both agreed that the boom was either exaggerated or a total fib.  The data was there for the public to see and whisky "journalists" to detail.  But the myth was printed and the readers consumed it.



First, I'll recap the actual growth that happened to the Scotch whisky industry, the sort of data that support a Pro-Boom Narrative.  (All of the data referenced below came from the Scotch Whisky Association's annual reports.  There's more info and visuals about all of these items in Part 1 of this series.)

1.) Export value.  Starting in 2007 and ending in 2012, Scotch whisky exports grew at a healthy rate:

2007 - +14.0%
2008 - +8.2%
2009 - +2.5%
2010 - +10.0%
2011 - +22.6%
2012 - +1.1%

By 2012, whisky exports' value was 72.4% higher than it was in 2006.

2.) Export volume.  Between 2004 and 2011 export volume grew 32.1%.  In 2011 alone, the increase was 19.0%.  You'll note that I didn't reference the 2007-2012 timeframe mentioned above.  I'll come back to that period's volume soon enough.

3.) Export price per liter. By 2012, the price per liter of export Scotch whisky had grown 44.3% from its 2007 amount.  Though inflation drove much of the increase in price of whisky in previous years, between 2007 and 2012 the UK's inflation was only 17%.

4.) Malt whisky. Between 2008 and 2011, malt whisky exports had climbed 72.3%  In 2010 alone, it had jumped over 50%.  And by 2013, the value of malt whisky exports had risen 78.4% since 2008.  As a portion of the entirety of Scotch whisky exports' value, malt whisky rose from 17% to 22% in that time period.  Meanwhile, existing malt whisky stocks older than 10 years were being emptied at an ever increasing rate.  In 2008, 12.9% of those stocks were emptied.  In 2009 it jumped to 19.8%.  In 2013 it was 22.65%.  Meanwhile malt production increased to meet future demand, going from 168M liters in 2006 to 275M liters in 2013.

5.) Whisky exports to the United States. By 2013, the value of whisky exports to the US were 120.4% greater than they were in 2008.  In 2011, the volume of whisky exports to the US were 21.4% greater than they were in 2008.  You'll see again that I changed the years referenced when comparing volume and value.  There must be a reason for this...



Now I'm going to dig deeper into items 1 through 5 in order to deconstruct the Pro-Boom Narrative and to demonstrate that if this Boom Time ever existed, it certainly has since passed by.

1.) Export value.  I'm going to add a number to the list of value gains from above:

2007 - +14.0%
2008 - +8.2%
2009 - +2.5%
2010 - +10.0%
2011 - +22.6%
2012 - +1.1%
2013 - -0.3%

It can't be denied that there was serious value growth occurring up until 2011.  But in 2012 that ascent was slowed drastically creating a potential plateau and in 2013 it was further confirmed.  Here's a graph from Part 1:


Here are the comparative data, using 2007 as a start date:


That red plateau equals about 0.8% growth spread out over two years, including an actual loss in 2013.

And it has gotten worse.  This past September, the SWA announced that export value in the first half of 2014 had dropped 11% compared to the first half of 2013.  They blame the loss entirely on “economic headwinds and uncertainty” and Chinese government austerity measures.  While the former is a term vague enough to mean anything, the latter is responsible for only a small fraction of the total decline.  China wasn't even amongst the top 20 export markets in 2013.  What was more important and what should have been noted was the fact that there were value drops in 8 out of the top 10 largest 2013 markets.  So not only is the value boom over, but when the final 2014 numbers are released that red line is going to drop to a point closer to 2010's level than 2011's.

2.) Export volume.  When I was referencing the export volume gains in my little pro-boom section above, I did not reference the 2007-2012 timeframe.  Here's why:

(Same chart as before. But note the blue line this time.)
During the big boost in value (arguably the Boom years), volume only had one year of significant growth.  It declined in 2008, 2009, 2010, and 2012.  In 2013 it nudged up all of 2.5 percent.  Using the "Scotch Whisky Export tables first half of 2014" report from the SWA, I did some manual math and found the top 20 export markets cumulatively dropped another 0.8% in volume during the first six months of 2014.  So though 2014's year-end volume slide won't be as drastic as the value's, any decline will mean that there were drops in five out of the last seven years.

3.) Export price per liter. I didn't mention 2013 when demonstrating the price/liter growth above and by looking at the "Growth in Scotch Whisky Exports since 2007" graph, you'll see why.  The price per liter actually dropped almost 3% in 2013.  And judging by the difference in value and volume drops, 2014's price per liter will decline again.

4.) Malt whisky.  While the value of malt whisky exports continued to climb in 2013, volume did not.  In 2012, volume dropped 2.4%.  In 2013, volume dropped a further 4.2%.  Likewise, as malt whisky's portion of whisky export's value rose in 2013, its portion of overall volume dropped.  Here are two little graphs to demonstrate these points:


5.) Whisky exports to the United States.  Here's another graph from Part 1:


While the value of US exports rose like a rocket from 2008 to 2013, the exported volume did not.  It dropped in 2009, 2012, and 2013.  There was growth only in 2010 and 2011.  Admittedly, the 2012 and 2013 decreases were smallish (1.9% and 0.2%).  But according to SWA's "Scotch Whisky Export tables first half of 2014" document, the first half of 2014's volume was 12% lower than the first half of 2013's.  That's not smallish.  IF that percentage holds up, then that would send US volume levels below their 2010 total.

And it gets worse, again.  With the SWA and its major members blaming the Chinese goverment's austerity measures as often as possible, they have until recently avoided alluding to the elephant in the room: us, the US, the largest market, the golden boy of Scotch whisky value growth (120% in five years) is no longer growing.  We're shrinking.  Our 16% value downturn in the first half of 2014 (compared to the first half of 2013), £64m, makes up nearly a third of Scotch whisky's entire export drop.



Taking these financial elements into consideration, I think it's fair to say that Scotch whisky sales are on the decline and some of its major elements have been weakening for more than two years.  Since it's patently untrue that Scotch sales are still strengthening, I would be curious to see how the industry adjusts in order to rebound, if it can.

Diageo is taking a full step back from their well-publicized £l,000,000,000 distillery expansion plans.  They were going to expand Glen Ord, Clynelish, Mortlach, Teaninich, and build a new distillery.  Adding together the figures from all of their press releases, my calculator never found more than a quarter of that announced billion pounds, so I assumed the big number was there to excite investors.  But the important part was that the largest Scotch whisky company saw a bright future for whisky and was willing to invest in it.  Yet those sunny skies clouded over once their quarterly reports started to sag.  But it takes more than a 1.5% quarterly decline to stop a billion pound facelift.  So either Diageo's bean counters know something the rest of us don't or they're more worried about the industry's numbers than I am.  Whatever they know, they're not sharing it with Pernod Ricard who is planning to triple Glenlivet distillery's size just as the biggest market (US) has had an industry-wide volume decline for the past three years.  I suppose they get points for optimism.

Meanwhile, though the Scotch Whisky Association's CEO more or less admits to the real decline in sales, he's either trying to force an optimistic message or is tone deaf when it comes to the "why".  In the linked Spirits Business interview he says “To be honest we’re not totally sure why,” and “To be equally honest we’re not really worried because the fundamental drivers seem so strong. The attractiveness of the category in recent years, the strong interest in malts, the premiumisation in the US – none of that seems to have changed."  Okay.  That's one way to look at things.

Here's another way to observe the situation.  In previous years, with the big increases in value and the moderate gains (or losses) in volume, customers were increasingly spending more on individual bottles.  But in the first half 2014, with the steep declines in value and smaller declines in volume, customers appear to be spending less on the fewer whiskies they are buying.  Have single malts (pricier than blends) lost ground?  Export volume results say so.  Have drinkers been buying blends instead, keeping their expenditures down?  We'll find out sooner than later.  Either way, "premiumisation" in the US (and elsewhere) took a hit during the first half of 2014.  And "attractiveness of the category in recent years" isn't a strong enough fundamental to lean on, especially since volume sales (again) not only never really exploded, and may have even declined for the last three years.

When the price per liter jumps 44% (and higher in their biggest market) in six years shouldn't the Scotch Whisky Association and its members have anticipated real market factors eventually countering their annual gains?  Or with drops in export volume potentially registering in five out of the last seven years, was further "premiumisation" the only tool in their toolbox?  Boost the marketing, product-place with television shows and celebrities, sell the glamour in the brand......and raise the price, countering the drop in unit sales.  How long will that work?  The Value Plateau of 2012-2013 and the first half of 2014's rocky report wouldn't give me the confidence that everything is "strong".

The Boom is over.  Prices are high, but demand has muted.  The Scotch whisky industry could be at a major turning point.  Though I have been cynical about their approaches thus far, I am looking forward to what happens next.  Will the NAS masquerade expand, cheap artificially-flavored whiskies grow in number, and aged single malts get pricier?  Or will consumers' palates and pocketbooks be better valued?  Or will the response be mixed among individual producers?

Where do we whisky consumers go from here?  We'll each have our own personal response: running after each new shiny bottle or being happier with less or ending the chase altogether.  We all have different financial and social circumstances motivating our relationship with our purchases.  The only approach I recommend is to be informed about one's buying decisions and seek out opinions independent from the industry.  Happy 2015 everyone!  It's going to be one hell of year.

Thursday, January 8, 2015

What Was the Scotch Whisky Boom? Part 2: Single Malt Prices in the US between 2007 and 2015

On Tuesday, I took a look at where the aggressive growth was happening during the Scotch Boom.  While volume was indeed up, it had really only grown 20% over 30 years.  But during the same period, export value grew 470%.  Exports were the engine behind the growth since UK consumption had fallen drastically.  Aged malt stocks were declining at a decent clip, but malt production increased once those older stocks started getting bottled at a faster pace.  As a percentage of exports, single malts were growing rapidly and exports to the United States were also burgeoning, especially when considering sale value.

I was probably a little nuts to go as far back as 1980, and should have focused more on the boom time.  2007 was a major lift off year as the annual volume shot past 300 million liters and value jumped 14%.  Between 2007 and 2013, export volume was up 8%, while value was up 51%.  Again, note where the real growth is happening: £££.  Between 2008 and 2013, Scotch's largest export market, the United States, had a 19% growth in volume and a 120% growth in value.

With growing single malt sales driving growth and the US market zooming along, I'm going to take a look at single malt prices in the US between the years of 2007 and 2015.



Background on the data:
I am using Wine Searcher's Average Wine Price system, selecting only US retailers.  Their site has an explanation behind how they arrive at averages.  To summarize, they do not include auctions; all prices are adjusted to 750mL bottles; they remove the highest and lowest 20% prices in order to correct for pricing errors or egregious retailer choices.  Aside from the ability to scroll through pricing history, Wine Searcher's big draw for data purposes is their retailer count.  For instance, if you search for Johnnie Walker Black Label they'll actually stop their listings at 500 retailers.  Their system has over 350 retailers selling Talisker 10.  So they are pulling from a very large data set.  And, anecdotally, their site has proven very reliable and accurate in my searches for beers, wines, whiskies, brandies, etc.  But please note, this is not an advertisement for Wine Searcher.  Their Average Wine Price history requires a paid subscription and I've been known to mooch off of other people's accounts from time to time.

I have also only included single malts for which Wine Searcher has a full history starting in January 2007.  So you will not find a number of well known whiskies in my chart.  Some of our faves didn't hit the market or the system's history doesn't have enough data until 2008 or later.  Distilleries like Bruichladdich are not represented at all because they haven't had a single expression that stayed on the market for these eight years.  Also, I've noted when questionable data pops up in the "Notes" column to the right of the "Total Increase" column.

I encourage you to check out my shared Google Doc at this link.  I'm not sure what you see on a "shared" doc, but I hope it'll let you sort or filter.  There's a lot of info to be seen and it's probably more useful than the rest of this post, so enjoy!



Because I'm looking at these prices from the point of view of the whisky drinker, I considered his or her financial reality when color coding the price increases.  The National Average Wage Index went up 11% between 2007 and 2013.  Between 2007 and 2014, the US's Consumer Price Index rose 14%.  Using those numbers, I got to 15% as a midpoint between the rise in wages and inflation over the expanded eight years.

No whisky producer is going to 15% on the nose so I gave them some wiggle room and assigned the green color a range of 10-20%.  Light blue notates a 0-10% rise. Any whisky that went down in price since 2007 gets a cool dark blue.  On the other side of things, a whisky that went up between 20.1% and 50% gets pinked.  50.1% to 100% gets a darker pink/red.  And a whisky that had an increase of over 100% (yes, there are some) gets a fire truck red.

Now, I was going to just share the list with you and say, "Have fun!", and leave it at that.  I quite seriously have commentary on every single one of the listed whiskies.  But since we have only so many hours on this planet, I'll limit my observations.



Charts!

Please note, these charts are not as solid as Tuesday's, since every whisky is weighted the same here.  If the sales counts were available for each one, I'd be happy to weigh them thusly.  So I wouldn't recommend leaning too heavily on these visuals.

BY AGE GROUP

Note: the stacked graph totals in the first chart do not match the final totals in the second chart exactly since each year's increase gets compounded.


These two are my favorite graphs from this post, as they're less unbalanced than the others below.

The charts reveal both the most obvious shift in pricing and the seizing of the luxury market.  Almost without exception, old malts' prices skyrocketed.  Perhaps it was due to scarcity or it was the realization by marketing units that Old Whisky could be the next Old Cognac or Old Bordeaux.  There was an ultra-luxury market to be tapped.  And tapped it was.

Meanwhile, starter (younger and cheaper) malts increased somewhere around the CPI inflation range.  As whiskies increased in age, so does the rate at which their prices grew.  This all fits a narrative creepily well.  I was relieved to see the non-age statement whiskies remain conservative, but then again the real NAS crop has only been on the market a couple of years.  It's also cute how Glenlivet 12 and Glenfiddich 12 dance instep perfectly like an old couple, at 25.71%.

BY OWNERSHIP

Note: As noted above these charts are occasionally comparing apples to oranges. Glenfiddich 12 should not carry the same weight at Glenfiddich 40 due to the massive difference in units sold.  These charts are only meant as a brief summary.  The spreadsheet has the good stuff.  Also, for these two graphs I've removed the owners who had only one whisky in the spreadsheet.



Well, this sadly proves what we all knew well.  The Edrington Group is at the forefront of price hikes, from Macallan to Highland Park.  They take it sort of easy with their 12 year olds, but then it gets gory.  The pricing on the Mac 18 and HP 18 have led even the uninquistive to wonder what the heck is going on.

Meanwhile, for all of my griping about Diageo's price increases, they're not as terrible as other better loved companies'.  Their Classic Malts' pricing increases average in the high-20s while the Distillers Editions are in the low teens.  Frankly, it's only Talisker whom they decided was vastly underpriced and did so after 2011.  In the stacked graph above, that big red bar over Diageo's name is entirely fueled by Talisker's price hikes.

The Springbank folks have barely moved their prices.  And, surprisingly, the same goes for the LVMH whiskies.  No one should be shocked if one of those two companies start raising their prices soon.  The other surprise is William Grant standing at number 2.  Their 12s had light red boosts, but all of the older bottlings had huge price bumps.

BY DISTILLERY



Hmm, at least this chart is slightly better than the ownership ones.  But it does have one-offs like Tamdhu and Longmorn standing with multi-whiskied names like Glenmorangie and Glenfarclas.

But, look who sits amongst the tallest bars, Macallan and Glenfiddich, the two best-selling single malts in the world.  Glenlivet and Balvenie, two other major sellers, sit not too far behind.  It makes one appreciate Glenmorangie (4th best-selling malt) and its negligible increases.  Laphroaig and Ardbeg haven't moved much, yet.  Meanwhile, all of Bowmore's whiskies went up in price significantly.  GlenDronach is too high up on the list due to what might be a data error, but BenRiach sits in a very good position as they haven't really moved their prices in eight years.



There are some interesting stories with the individual malts.  Laphroaig 10 hasn't gone up in price as much as I'd thought it had, neither has the Cask Strength and Quarter Cask.  Who knows what Suntory will do with that reality, especially since they've raised the prices on all of their other products quite a bit.  I was very happy to see so many cells in blue from companies I like (Arran, BenRiach, Benromach, and Springbank).  And while most of the big distilleries plumped many of their prices, quieter distilleries like Glen Moray and Tomintoul kept some whiskies in the blue.  And half of this country is paying more than $44 for Glenlivet 12?  Yeesh.

What we don't really see in the spreadsheet is where the truly massive US export price/liter growth, as noted in yesterday's post, comes from.  The SWA says the price per liter of US scotch exports grew more than 80% between 2007 and 2013 alone.  Comparatively, the sheet underestimates single malt prices increases.  In the spreadsheet, I would say that even if we weighted the larger distilleries more, we're not seeing an increase of more than 45%, though probably closer to 40%.

(Taking Big Brother Blend into consideration, Dewar's White and Johnnie Walker Red's prices rose about 23% in 8 years.  Black Label's went up 28%.  Chivas 12's rose 20% and 18's 24%.  Grant's went up 21%, J&B only 8%.  Ballantine's went up 43%, but that doesn't take us any closer.)

At this point I can only theorize about the difference.  Since Wine Searcher lists the retail prices, could it be that the retailers themselves were absorbing a lot of the brunt as they bought their supply from distributors?  Thus they hoped to turn a profit from quantity rather than blowing up their prices any further?  Or, by "topping and tailing" the top and bottom 20% in their data set, does Wine Searcher miss out on the larger retailers who charge prices high above the average?  Wine Searcher does not include BevMo, a large national retail chain whose non-sale prices on single malts tend to be higher than most other stores in California.  My list cannot include newer malts, including (as already mentioned) all of the new NAS whiskies; perhaps those whiskies already went up in price?  While there are no independently bottled whiskies here -- and those have gotten much more expensive over the last two years -- they do not make up a significant part of national sales.  Or maybe it's all Macallan 18's fault.

Considering these elements, we could be accounting for a price rise of 45-50%.  That is still punishing to whisky drinkers.  If the wage index went up around 14% over those eight years and inflation went up 16%, we're certainly not sitting on any extra discretionary cash here.  From the drinker's standpoint, how are we going to keep paying for this?

For the whisky producers who have profited off the value boom, how is this a sustainable business model?  Do you expect the structure to hold as you raise prices two-and-a-half to three times the rate of inflation indefinitely?  And how many shaky quarterly reports does it take to get to the center of a Tootsie Roll Pop?

Or has the vaunted growth already started to give way to a plateau or loss?  In Part 3, I'll consider if The Boom was, not is.

Tuesday, January 6, 2015

What Was the Scotch Whisky Boom? Part 1: Value vs. Volume

...the value of the goods at the U.S. port of export. The value shall be the selling price (or the cost if the goods are not sold), including inland or domestic freight, insurance, and other charges to the U.S. seaport, airport, or land border port of export.
--Department of Commerce definition of "Export Value"


Scotch sales were up Up UP!  That was the message communicated by brand ambassadors, master distillers, marketing departments, and retailers over the past few years.  Bloggers and other whisky fans quickly picked up on the tune.  I mean, it seemed like there was a boom, right?  The quantity and size of whisky clubs increased.  The amount of whisky blogs increased.  The variety of bottlings in some areas increased.  The bottom lines of whisky companies' quarterly reports increased.  The prices increased.

But even though prices went up and whisky producers' profits swelled, how do we whisky drinkers know if more bottles were actually selling?  How do we know if there were actual supply and demand issues?  And why do I keep writing about this using the past tense?

One way to gauge the Scotch Boom was via quarterly financial reports by companies like Diageo and Pernod Ricard.  Along with the official numbers for each quarter or year, the reporting company includes a narrative about their ups and down, but mostly just the ups.  My problem with those reports are that they almost always cite only the increased revenues because that's all that most incurious investors and reporters care about.

But honestly, I don't give a flying French fig if revenues are up.  Okay, maybe a tiny fig (and if any of the proceeds actually went to Scotland, that fig would be a little bigger).  I don't want the Scotch industry to fail.  It has busted before and the results were punishing to drinkers; brands vanished and distilleries closed, permanently.  So it's good to see that Big Scotch isn't sinking, currently.

But if you don't own stock in or work for a whisky producer, bottler, distributor, or retailer, the quantity/volume of actual whisky being sold is of much more interest.  Is there a supply issue?  Is there or will there be scarcity?  Is the price of my favorite whisky going up due to real market factors?  Or do individuals and companies who stand to profit see me as nothing but a desperate addict, as they gradually increase the prices they'll know I'll pay anyway?

The fact is, disclosure of individual companies' volume sales are much more difficult to come by than their reported profits.  But!  But there's one source that comes to the rescue each year, a source that's much hipper to scorn than to compliment: The Scotch Whisky Association.  The SWA releases an annual Statistical Report (that's accessible to the public) which provides information about pound sterling as well as liters.  It does not provide information about individual producers, but it does detail some of the big picture.

All of the data in my Excel charts here can be found in the SWA's Publication section, where the reports for 2009 through 2013 are available.

EXPORTS

Firstly, here's a graph of Scotch exports from 1980-2013.


It's an okay graph, but not the best.  One can see the growth in exports since the early '90s, including a decent spurt starting in 2006.  But what you don't see is the value in £.  Plus you don't see how the growth in £££ compares to liters.  Now see this next graph below.  Using the 1980 totals as a starting point, witness the growth in Volume, Value, and GBP/liter:


See that blue line?  That's the growth in exports measured by volume (liters per year) over the last 30 years.  Less than 40% over that time period.  Not nearly as sexy as the other two lines.  The growth in Value has been comparatively astounding, over 470%.  And it's the value assigned to each liter that's driving the growth.

"But wait," someone might say.  "That's just the exports.  Consumption in the UK has to amount to quite a bit.  What about the UK's consumption growth?"  To that person I don't have good news.  I do have a graph.  Hold your breath.


Scotch whisky consumption has been cut in half since 1980.  But, as that hypothetical someone suggests, the UK makes up a significant chunk of where Scotch goes.  So, here's a graph that combines the growth of volume in exports with the decline of UK consumption for another look at volume over the years:


So the total volume growth hasn't been much more than 20% over 30 years.  Even if we just focus on the last decade, do we really want to call a 2.3%/year volume growth a boom?  But a 20%/year boost in the £ value of that volume?  That's sounds boomier.

AGED MALT WHISKY STOCKS

Let's take a look at scarcity worries.  Is there an increasing scarcity on aged whisky stock?  We're getting more new NAS (non-age statement) whiskies every week and price blooms on older stuff continue.  The SWA reports include data on aged stocks, but has a catch-all line for all stock older than 10 years.  Unfortunately they only provide the data since 2008, but that's prime boom time, right?

Here are two graphs showing what's going on:


What you're seeing here is a genuine decline in warehouses' aged malt whisky casks.  The drop in the first chart isn't as pronounced as you'd think it would be from looking at the second chart, because last year's 10 year old cask is 11 years old this year thus the count moves up and down through the year.  But it ends up down.  They're essentially netting a 20M liter loss per year which would become an emergency in a decade.  But (again with the but):


There has been a significant ramp up since 2007 (by 2013 malt production was 107M higher than 2006), so by 2018 the numbers will start to straighten out and then increase.

Hopefully everyone will then adjust their prices.

*crickets snoring*

Oh come on, that was my best joke of the night.

MALT WHISKY GROWTH

This section may be short but it both demonstrates an actual boom AND it supports Part 2 of this series.

Reading books and magazines and interviews, a whisky fan will come upon quotes that single malt whiskies make only up 5 or 7 or 8 or 10 percent of whisky sales.  Well, not anymore, according to the official totals reported to the Scotch Whisky Association by the distilleries.  Here's a chart showing the growth of malt whisky as a percentage of total £££ and liters in exports between 2008 and 2013:


As you can see the value part is higher than the volume as single malts sell for a premium over blends.  While a percentage of this "malt" includes blended malts, the majority of malt is still being exported as single malt.  For instance, in 2013, single malts' value made up almost 90% of exported malt whisky's value.  So single malts now take up almost 20% of the value of exported scotch.  It's still blends' little brother, but it ain't 5% anymore.

EXPORTS TO THE UNITED STATES

Since I am an American and everything is about us, I'm happy to end with this section.  And it transitions into Part 2 nicely (I hope).  In 2009, the US was the #1 export market by value, just edging out the French, with a total of £418M.  In four years, that US export value DOUBLED.  Meanwhile the actual volume sales have increased only 20%, most of which happened over two years.  You probably know where I'm going with this...


The United States is not only the #1 export market for scotch whisky by value, its total is greater than the #2 and #3 markets combined.  While there was growth in 2010 and 2011, actual volume sales declined in 2012 and 2013.  Those declines have not stopped an explosion, a BOOM if you will, in the sale value.



The price per unit not only fuels the US boom, but fuels the entirety of the value increase from exports.  And exports are the key, as I've shown above, because whisky consumption in the UK itself has plummeted.  There is a gradual decline happening in aged stocks; that cannot be denied, but it is not drastic and it has been addressed by increases in production for the last seven years.

To the whisky drinkers out there, as you've seen for yourself, the prices on your favorite whiskies have risen.  Why?  Well, because you are being tested on how much you are willing to spend.  There's an increase in volume sales, but that jump nowhere near matches the jump in the price.  And how much have they risen?  In Part 2, I'll show you.  Yes, the actual whiskies themselves.  And I won't be using the term "Value", I will you show you the price tag...