How Relevant Are Independent Bottlers in 2022?
Where Indies See Themselves Today — And Tomorrow
Granted, there’s a fair amount of clickbait in that headline. The straightforward and direct answer as far as we’re concerned, rest assured, is: yes, they are!
However, there’s no denying the fact that in recent times we’ve seen plenty of shifts, interesting developments and curious changes happening in the world of whisky, forever altering the landscape and reshuffling the cards amongst the players. One of these players with a steady spot at the big table of the whisky industry are the independent bottlers.
Historically speaking, indie bottlers were at the heart and centre of whisky. Going back as far as the early 19th century, if you wanted to buy some whisky, by definition you would turn to an independent bottler. John Walker & sons, Usher, Dewar’s or Chivas Brothers — all too familiar names who, by and large, started out as grocers who learned the craft of blending whisky much in the same way as the craft of blending tea. Although these companies developed from indie blenders and bottlers into distillery owners, producers and sellers over time (in order to make sure they had plenty of future stock for trading as well as their own house style and signature blends), there are still plenty of household names in the world of independent bottlers whose age-old model of doing business is a present-day a benchmark for other companies great and small. Cadenhead’s, Gordon & Macphail, and Berry Brothers & Rudd, to name probably some of the most well known and most successful ones, go back well over a century. The latter even dates back as far as the late 17th!
For many years during the 20th century — decades even — independent bottlers filled a significant niche: buying casks from brokers or directly from distilleries to either create their own blends, or, as became more and more the case, to release them as small batch or single cask whiskies, which were often significantly cheaper than official releases.
Indeed, as the success of the first blended and later single malt whiskies grew, indies were often the interesting option for the avid whisky enthusiast and true anorak. The indie bottlers could provide fresh and interesting releases that gave you a different profile from the ‘house style’ of official releases, often at an attractive price. Single cask releases, cask strength bottlings, exotic secondary maturation…all were, by and large, the realm of the indie, as official releases tended to (and often still do) cater for a broad audience — aiming for a consistent profile, they were bottled at 40% or 43% ABV, coloured and, chill filtered.
So, I’m broad-brushing things here a bit, but the boundaries were quite clear. Official releases of single malt whiskies pretty much copy-pasted the tradition and methods of blending into their business model, where striving for consistency in both appearance and flavour profile were key. On the other hand, there were the independent bottlers who, released from the burden of delivering a consistent product time and again, were a bit like the buccaneers of the whisky industry.
Or so it was until roughly the late 20th to early 21st century, when things started to diffuse. Bouncing back from the great whisky loch of the 1980s, whisky started a steady climb and soon became a bit of a global phenomenon again. Surfing the ever growing wave of whisky popularity, indie bottlers started to branch out. They started buying up existing established distilleries, bringing those once mothballed back to life, or building new ones, more or less in the same way as their predecessors a century ago – Gordon & MacPhail at the helm of Benromach since 1993, or Signatory gaining ownership of Edradour in 2002. (Oddly enough, with Springbank and Cadenhead’s, it’s rather the other way around, as Springbank owners J&A Mitchell bought Cadenhead’s as far back as 1969.)
Not much later, another big player, Douglas Laing, introduced its own core range of blended malts with the Remarkable Regional Malt series: Big Peat first, in 2009, followed soon by brands like Scallywag, Timorous Beastie, and so on. Despite them already having a well established ‘brand’ of single cask releases with Old Particular, Douglas Laing’s regional malts releases seem to be taking the game to the home turf of the established distilleries by playing in the same market as a lot of official single malt releases. What’s more, they’ve proven to be a big hit: so much so that this series has all but taken over as Douglas Laing’s flagship range. And Douglas Laing too are now owners of a distillery, Strathearn, with a second one in planning. What with Kingsbarns, Single Malts of Scotland/Elixir Distillers, Adelphi and more, the list of indie bottlers becoming distillery owners is growing fast .
Douglas Laing’s Remarkable Regional Malts Series
Now obviously, distilleries have been offering special releases aimed at enthusiasts for some time, but not even a decade ago, in order to get one, you likely would have been required to travel to the actual distillery or know which dedicated store would offer some of these special releases or distillery exclusives. It wasn’t until online shopping became big that more and more distilleries started to tap into the anorak market by releasing more and more single cask and cask strength expressions alongside their own core range. Gradually, the lines and boundaries between official and indie releases were blurred, with no one seemingly bothering to stick to their own turf but rather having a jolly good time thinking, producing, and releasing outside of the old familiar box.
The growing popularity of whisky we witness today translates into a frankly unprecedented wave of new distilleries and independent bottlers. Since the turn of the 21st century, over thirty new distilleries have seen the light of day in Scotland alone, and to start counting the number of new indie bottlers in recent years is a task so daunting only the most patient of us would dare to attempt the endeavour, as they seem to pop up like mushrooms in an autumnal forest.
This is a good thing. There’s no such thing as too much variety, after all. Yet, another consequence of the booming business that is whisky is that despite the increasing availability, prices are at an all-time high. This is for a multitude of reasons. Obviously, the price of resources plays a huge part. Gas, electricity, petrol, and — less dramatically, yet still significantly — grain and water are skyrocketing in cost. Then there’s the factor of casks. With an increasing demand for good quality casks, prices for these have now become eye-wateringly expensive.
Gone are the days where indies and brokers could have their pick of pretty much any old barrel lying about in the warehouse without too much hassle. Sure, those long existing relationships between distillery owners and well established independent bottlers will mean many of them will still get first pick, but many others have to settle for whatever a broker or distillery will select for them, possibly without even getting the chance to try some cask samples first. And if they don’t like it, there’s about two dozen waiting in line right behind them.
Fair to say, this change in balance impacts the traditional business model indies have tended to rely on. When you are no longer automatically the cheaper, cask strength or more exotic/interesting option, and with a plethora of other releases from other companies providing some rather stiff competition, how do you go about navigating today’s whisky market?
It’s a question that’s been nagging at me, so rather than keep fretting, I proposed a series of theorems and questions to a few folk who could tell me more based on first-hand experience. Established and relatively new players like Cara and Fred Laing (Douglas Laing), Mark and Kate Watt (Watt Whisky), Kai Ivalo (spirits director at the Scotch Malt Whisky Society, or SMWS), and Kenny Macdonald (Dràm Mòr), have all been kind enough to spare some of their precious time to provide some insights on where they see indie bottlers today. And tomorrow, for that matter.
The answers, I’m pleased to say, have been insightful and interesting, sometimes surprising even, showcasing again how despite me being into whisky for a number of years now, every day is very much a school day. Even more so, I’m happy to report that their responses have allowed me to adjust some of my own preconceptions and biases…
“There are lots of people selling casks that they don’t actually own and a cask can pass through several hands before reaching the final independent bottler. I was offered the same cask in one week by five different people, with the price rising fivefold from the lowest price to the highest.”
Mark & Kate Watt of Campbeltown’s Watt Whisky
Indie bottlers are becoming distillery owners, and traditional distilleries are tapping into the enthusiast market: the old boundaries and former business models no longer seem to be as clear, or relevant, as they once used to be. Was it easier or simpler and clearer in any way back when each player used to stick to their ‘part of the pitch’, so to speak?
Mark Watt agrees that it was “probably easier to explain the role of an indie bottler in the past, [as they were] offering things that distillers themselves were not yet offering.” On the other hand, he isn’t too concerned about the old boundaries between official and indie releases becoming a bit of a blur. In fact, he sees nothing but benefits to official releases are tapping into the single cask market: “I don’t think this really has much impact on independent bottlers, at least not for us. If anything, it could be beneficial, in that customers that are perhaps trading up for a distillery single cask or small batch may now become aware of the benefits of the differences a single cask or small batch can offer you and this may lead them to discover single cask bottling from independent bottlers. I don’t imagine anyone who has been a consumer of indie whiskies is suddenly going to turn their back on them because of distilleries releasing single cask bottlings.”
An interesting take on this comes from Cara and Fred Laing. Into their third generation as a family business in whisky, adapting to change is nothing new to them. “It is fair to say that Douglas Laing have had to adapt and use various different business models across the last 75 years, so change is nothing new for us. The one thing we believe we have ALWAYS brought and continue to bring is that adaptability, commerciality and ongoing creativity, with offering quality whisky at our core — because the markets do not stand still.
“The blending and branding background runs strong in our blood, but all family businesses have to avoid that very common problem of the second generation failing; so now we are into the business's third generation and this allows a much longer perspective. That is where we are today. Yes, our Remarkable Regional Malts will continue to be very important for us, being our focus for growth and investment for many years to come, but that is not so much ‘branching out’, because blending our Regional Malts, or blending malt with grain, comes naturally to us. So there is nothing new there. Perhaps we are seen as an independent bottler, but we have only been working with single casks since 1999. Strathearn and shortly Clutha distilleries are certainly new territory for us and will be the natural cherry on the whisky cake!”
And obviously, things are never that black and white to begin with, the Douglas Laing team continue. “There has long been a symbiotic relationship between distillers, blenders and bottlers. Remember that whilst today most are combined under one roof or range of brands, 100 years and more ago, they were mostly all separate entities. So historically, independent blending and brand owning companies dealt directly with distillers, and as most distillers cannot bottle and sell 100% of their own spirit production, much of their stock is sold to other companies for blending. So there is a closeness there , from which we all learn and benefit, which has been the case right back to when our company was founded. That was a virtuous circle and all concerned benefited, so like a living thing we learn from each other, and ideas and ways of doing business blur.”
Cara and Fred Laing
Currently, the end of the boom is nowhere to be seen and more and more distilleries and bottlers are popping up. How much more can the market take before we reach saturation?
Dràm Mòr’s Kenny Macdonald is careful about what the future might hold. “At present, we have such a glut of indies that it would be unthinkable that they will all see a bright future in the industry. In fact, the combination of so many new independent bottlers — and let’s face it, we are one of them — along with the amount of people buying casks for investment has put a real strain on cask supplies and as most are buying from the same handful of brokers, the availability of quality casks at anything like an affordable price is now a thing of the past.”
While we’ll touch on the aspect of cask prices in a minute, Kate Watt shares this view: “ I think it’s a very exciting time for whisky and I’d love to see all the new distilleries and bottlers, including us, succeed. But I do worry that the market will become saturated. It’s not enough to be able to make a great product, you’ve got to be able to keep making a great product, which implies you can rely on qualified staff to do so, which is anything but a given. Then you need to actually get it out onto the market and off the shelf into the hands of the consumer (and keep it moving off the shelf). When Arran started up there was a huge buzz and a lot of goodwill about THE new distillery and people followed its journey from all the wacky wood finishes to the 10yo and now 25yo that we have today. Is there going to be the same excitement about the 35+ new distilleries that have opened in the last 10–15 years? And how are they all going to differentiate themselves from each other? How many new, young distilleries/whiskies are distributors going to be willing to take on?”
Kai Ivalo of SMWS looks at the bigger picture as well and seems confident the industry is well placed for what possible challenges the future might bring: “We have new consumers coming into the category and new markets opening up around the world. They’re increasingly demanding in terms of the variety and quality of whisky experience that they are looking for. The industry isn’t complacent and recognises that it needs to play its part in a sustainable future. The SMWS and the wider industry are all committed on ensuring there is a focus on every aspect of sustainability in everything we do, whether that’s in the level of skill within the business, knowledge, research and of course in making sure we’re in the best possible position to ensure quality and sustainability.”
Kai Ivalo of SMWS
No longer by definition cheaper, not necessarily the ‘go to’ option for cask strength or single cask releases anymore… Is it a concern that indie bottlers are losing their Unique Selling Proposition?
Not according to Mark Watt: “I think independent bottlers have always led the way on the smaller scale bottlings and for what the drinking ‘geek’ wants from their whiskies. Look at chill filtering: most indie bottlers have never chill filtered, going back many decades, and then distilleries started doing special releases that were non-chill filtered and made a song and a dance about it as if they had invented not doing something. Also, the internet has allowed an explosion of information, so people have become more knowledgeable and are looking for different things, so as everyone tries to please everyone, then lines will get somewhat blurred.”
Cara and Fred Laing also see things differently: “We'll probably disagree with the proposition of your question here. Rightly or wrongly, our single cask releases were always MORE expensive than the distillers'. Back in 1989 when we first offered a single cask bottling, we used to take some ‘flak’ based on the expectation that our prices should be cheaper than from the distillers. But no, our prices have always been more expensive on a like age basis. The difference is based on volume, time and labour and it's always more expensive to produce anything in small quantities. One cask might produce only 348 bottles which require personalised labels, with tasting notes individually written by the family for Old Particular, plus all the same associated design, paperwork, planning and time which a larger production needs. Compare that with a distillery bottling which may contain 348 casks and many more bottles using the exact same label throughout, and you will see they benefit considerably from economies of scale.”
Kenny Macdonald further points out that while distilleries’ “main role is to ensure that the core range is always available to its fan base and, despite an increased amount of official limited releases, that core range is still the distilleries’ bread and butter. I think the one thing that is very noticeable of the new distillery releases of single cask and cask strength bottlings is that very few will carry an age statement and yet the price is often higher compared with middle range ages of independent releases. And when official single cask releases do carry an age statement, prices are now easily sailing towards £150 for whisky often not even 10 or 12 years old.
“Now if I were to try and sell a 10yo at that price the criticism I would receive would be brutal, and quite rightly so. Don’t get me wrong, this is not meant as a criticism towards those producers, I’m merely pointing out where I feel indies have the high ground. Yes, our prices have indeed risen, but, on the whole, we still manage to offer you more for less.”
“There is not a single area of the industry that is not suffering stress at the moment. A hike in prices for standard glass bottles, capsules, label printing, outer cartons and don’t get me started on the new prices for services such as re-racking and bottling. This doesn’t only affect indie bottlers; it very much affects our distributors and retailers as well, who in turn are pumping up prices to allow their own margins to hold against all these external pressures.”
Pretty Indies, left to right: DL Scallywag, SMWS, Watt Whisky, Dràm Mòr, Signatory and Adelphi
Casks! Surely, today’s biggest threat for many indies, apart from possible market saturation, is the skyrocketing prices for casks?
Mark Watt: “We have been lucky in that we have managed to source quite a few casks at sensible-ish prices – although still much higher than the prices I was paying even three to four years ago. There are lots of people selling casks that they don’t actually own and a cask can pass through several hands before reaching the final independent bottler, which can make things difficult. I was offered the same cask in one week by five different people, with the price rising fivefold from the lowest price to the highest.”
Kate chips in: “I think cask prices definitely play a part, and a big part at that, but there’s also the simple question of supply and demand. Particularly for the sought-after whiskies like Springbank, Macallan etc, the market is prepared to pay hefty prices, both on the primary and secondary market, so it’s perhaps only natural that indies are hiking their prices on these distilleries too. Why shouldn’t they get a fair slice of the pie, after all? That said, for newer bottlers like us, they’ll have had to pay a hefty premium for the cask in the first place.”
Kenny MacDonald points out that it’s just not down to expensive casks: there’s a whole list of factors in play at the moment. “When were are looking at prices currently there has to be a ‘big picture’ view of what is going on and not just a glance at the cask price ticket to see where current shelf prices are. Obviously we are all suffering from quite frightening rises when it comes to energy prices as we see our domestic bills grow and grow. That coupled with the soaring cost of fuel at the pumps has been one area where costs are being passed onto us, but sadly it doesn’t stop there. There was a great reliance on Ukraine for tons of barley every year which has now been stolen from us along with the fact that they were the biggest producers of corks for our bottles. We then have a hike in prices for standard glass bottles, capsules, label printing, outer cartons and don’t get me started on the new prices for services such as re-racking and bottling. In fact there is not a single area of the industry that is not suffering stress at the moment and this doesn’t only affect indie bottlers; it very much affects our distributors and retailers who in turn are pumping up prices to allow their own margins to hold against all these external pressures.
“At the end of the day all Scotch whisky is going to see pretty horrible price rises, I’m guessing. However, for single cask, cask strength bottles which provide a kaleidoscope of flavour profiles seldom found in distillery editions (most of which still revolve around sherry, bourbon or a double wood) I honestly believe that what the good indie bottlers out there are delivering is still great value for money, but this cannot be just down to sticking the content of a cask into a glass bottle.”
Adding to this, having access to the market is key, Cara Laing points out: “Route-to-market is very important. You have to remember that there are 90 to 100 other distillers out there ahead of you who have been promoting, spending and tasting their malts in important markets for the last 60 to 80 years and they will not give up their market share without a fight. The whisky cake is currently big and pretty solid, but acknowledge that globally, for different political reasons, markets may weaken and only the strong may survive, even if the quality of spirit is superb. Also, as the eighties showed us, the consumer can be contrary, and their preferences often change from generation to generation.”
Cara, Chris Leggat, Fred and Cooper
So how do you prepare your own company for the future?
Mark Watt: “I hope that the people who have helped us so much so far don’t get run over by a bus! We are starting to lay down some stock and in an ideal world we would be laying down more but cashflow will always be an issue for a young company. I think the main thing we can do is make sure that we stick to our ground with regards to quality, and not bottle something just because we need to. We will strive to make sure that we are happy with our price to quality ratio, as prices rise we may have to re-adjust slightly but want to make sure for any of our whiskies that we would be happy to pay the price on shelf from our own pockets.”
“We see ourselves as having come from a blending background in the late 1940s and gone full circle via the indie bottler moniker dangling around our neck over the last 20-plus years, back to being blenders.”
Kate Watt: “Like Mark says, we’re keen to start working with some of the newer distilleries (or older ones if they’re willing!) to buy and lay down new make or young stock for the future. That and not restricting ourselves to whisky. We’ve already bottled some rums and we’re looking at doing other cask-aged spirits in the future too. I also think it’s important to not spread ourselves too thin - when we first started up there was the temptation to sell to everybody that expressed an interest in the brand but instead we deliberately kept it to just a few markets. That way we can service the markets properly. Also, there’s only the two of us to do shows or tastings or festivals, and we have small kids at home, so we can’t be in more than one place at a time. So an important part of our focus is to make sure we can supply these select markets with enough stock and hopefully build the brand together with the distributors.”
Looking ahead, Kenny Macdonald agrees that “the future for independent bottlers is very much in their own hands and it is down to how they are willing to approach the issues of price hikes that we’re dealing with at the moment, and how they intend to plan for the future. Currently we buy much more new make spirit than mature stock so that we can ensure quality spirit with a sound maturation history and at a reasonable price for years to come.”
Keeping your finger on the pulse is vital, explains Kai Ivalo: “We’ve had to respond to the changing nature of the ‘whisky consumer’, taking into consideration areas including education, awareness, curiosity, myth-busting, building wider/inclusive audiences, developing new international markets and audiences and the need to respond to ‘environmental’ (be it economic, social or technical) opportunities and threats. The whisky consumer today is quite different to that of 10 years ago.”
Cara Laing: “We are constantly adapting, and that has been the case over the last 75 years. The new generations who join family businesses also have the previous generations’ experience to draw on, and ‘plus ça change, plus c'est la même chose’ [the more things change, the more they remain the same – EA], as our chairman boringly likes to quote. Nothing is new and much has been seen and acted on before. Ally that to our investment in growth of brands like Big Peat and Scallywag, which with our other Regional Malts are still relatively new in the market, and we reinvest constantly in their maturing stocks and their promotion, because it's a long-term game for us. New ideas bring forth new offices, new members of the team, new warehousing space, the new bottling hall at our Glasgow “Campus” site and the upgrading of our Strathearn distillery with plans progressing at pace now for our Clutha distillery.”
Getting back to the deliberately provocative headline of this article: are indies still relevant?
Mark Watt: “I think they are and always will be hugely relevant. Oliver Chilton from Single Malts of Scotland says that with indie bottlings, you can taste the personality of the bottler across their ranges and I would agree with this — especially bottlers that are selected by one or two people as it gives a consistency in style from that bottler. People can find the bottler that they like and know they will like that style more often than not.
“One thing that I think indies can deliver possibly more than distillers is a closer connection between the consumer and the producer. For instance, with Watt Whisky, there is only me and Kate in the business, so if you reach out on social media or email with a question, we will answer. You are much more likely to have a connection with the people that pick the casks and everything else involved with an indie bottler than with a distillery. When Kate and I started in the industry we were going to shows with the likes of Richard Paterson, Jim McEwan and Billy Walker. As the industry grew and more and more shows started to take place across the world, the less chance there was of meeting the main decision makers at these shows. The booze trade is all about relationships for me, and we like to try and have a good relationship and be approachable to everyone.”
Having that connection and personal relationship is also a key factor for the SMWS, as Kai Ivalo confirms. “I can’t speak for others, but we believe that the SMWS proposition is stronger and more relevant than ever and retains the very same ethos that we started out with almost 40 years ago: sharing the love of exceptional whisky and bringing people together to appreciate it. Look at our membership numbers: we now have more than 35,000 members around the world, who are passionate and engaged in what we do and who we are and are always looking for the next amazing bottling that we bring out. We’ve gained 41 awards this year and 259 since 2018 so the quality of what we’re offering members speaks for itself. As long as we keep offering a fantastic experience for our members, I’m confident we’ll continue to not only be relevant but to be the ‘go to’ place for whisky lovers in the UK, EU and around the world.”
According to Cara and Fred Laing, adapting and being able to adjust your course are key factors if you want to remain relevant. “Our industry is full of strata upon strata of players at different sizes and stages of development, which is healthy because without this, the spirit could fade. Without that ability to accept new Scotch whisky based companies (so long as they do our industry no harm), our own founder Fred Douglas Laing could not have kick-started his dream. We see ourselves as having come from a blending background in the late 1940s and gone full circle via the indie bottler moniker dangling around our neck over the last 20 plus years, back to being blenders of both malts and repute. So the Douglas Laing USP may be that we are a hybrid of blender, independent bottler, and distiller. However, on closer scrutiny we may have unwittingly become a small part of the Scotch whisky establishment — but always ploughing our own very independent furrow.”
So wrapping this up (and if you’re still here at this point, you’re probably an equally big geek as us here at Dramface, so kudos to you!), it has been insightful to hear how, despite the people involved all having not only different backgrounds but also different strategies for the future, there is a firm if cautious amount of optimism for times to come, even as they seem to be potentially challenging. Rather than being burdened by the fact that things aren’t as black and white between official releases and indies as they once were, they are looking well ahead instead.
Costs and price will be important factors for success — or failure — in the future, and while it is true that a rising tide lifts all ships, time will tell which companies shall manage to survive when the dark, stormy clouds start to roll in over the whisky landscape. This storm will likely be caused by external factors impacting us all (rather than self-inflicted), be they over-saturation, artificial inflation or lack of quality casks.
The fact that the people I’ve talked to are very much aware of there being two sides to the coin, and the fact that they know when and how to adapt when the future brings challenges, even reinventing themselves along the way when necessary, are clear signs that if they play their cards right, the future for independent bottlers can truly be a bright one.
EA
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