Or: Who will buy all this NEW whisky?

In something of a follow up from my first post which kicked off 2024 for Dramface, it occurs to me that a deeper dive into the marketing and strategy of some of the newer distilleries is also worth a look.

As much as I love this industry I have to admit that several of the new(ish) distilleries have me scratching my head at times.

Take the release ‘Ryelaw’ from Inchdairnie as an example. Let's ignore the fact that the whisky is rather good for just a moment. A non-limited, 46.3% bottling that, whilst challenging SWA conditions (which can be argued is a good thing), is only 5 years old and has a staggering price tag of 130€/£115.

This is in no small part due to the extremely lavish packaging; aimed at the semi-interested, casual whisky drinker this is not. Thinking about it, what drinker is this aimed at? Not the collector surely? Nor the die-hard Scotch whisky drinker? And very hard to argue the American market where rye whisky of a similar age starts at $25 a bottle.

Was production of Ryelaw so finite that the price itself became the limiting factor in who would/could buy it? If yes, I believe they have succeeded, although judging by the noticeably expensive stand the company had at last year’s Whisky Show this is hard to believe. Had the Inchdairnie owners gone down the route of a simpler bottle and accoutrements the whisky would have retailed considerably south of 100€/£90/bottle.

And then there’s Annandale. I'll leave aside the rather cynical and headline grabbing initial prices and cask offers and instead concentrate on their rather confusing and quite baffling insistence on single cask, cask strength 'Man o’ Swords' & 'Man o’ Words' (which immediately has people confused - what was wrong with promoting your distillery name "Annandale", either peated and unpeated?).

Currently there are six different offerings (a peated and unpeated version of each): an ex-Fino Sherry, an ex-Bourbon and then a twice re-racked version. All are single cask offerings (although with the new SDVS interpretations the re-racked version cannot be called a single cask whisky) and all are at cask strength of high 50s to low 60s abv. These range in retail from 130€/£75 to 160€/£95 (price differences are clear evidence of a muddled pricing strategy) again hardly enticing the casual drinker or tourist to dabble and really only appealing to a limited number of whisky drinkers.

For the majority of those visiting or trying Annandale for the first time the high alcohol will be a major turn-off and the price will only compound the problem.

Like Annandale, playing more on its 'Words' & 'Swords' stories more than the actual name of its distillery, Nc'nean appear to be more interested in promoting local flora over the fact that it is Single Malt Scotch Whisky. You would be forgiven for initially believing this is some expensive bath product or possibly some herb-infused gin. It does not even state ‘Distillery’ on the front of the bottle and you need good eyesight to read the fact that it is Single Malt Scotch Whisky. So difficult is the packaging that other than the occasional change in bottle colour it is nigh-on impossible to determine one bottling from the next. At least their core bottling is 46% and around 64.99€/£50 (don’t worry, we’ll get to prices later). For any retailer stocking numerous whisky bottles, Nc’nean do not make it easy.

Kingsbarns have at least got their packaging in line with what, I believe, most consumers want but the plethora of releases is confusing and frankly does the whisky really stand out? Who, reading this, would list a Kingsbarns in their top 50 whiskies they have tried recently?

And here we get to the real, and I believe most pertinent, issue and ultimately what could decide the future of some smaller distilleries; quality.

Are all of these new distilleries really that interesting? Are their releases really what whisky drinkers are reaching for? Arbikie, Wolfburn, Lochlea, Kingsbarns, Annandale, Raasay, Glen Wyvis, Nc’nean, Clydeside (and certainly several others) are simply not that interesting or different. I can already hear a few screams of horror from some fans out there. But you are the fifteen fans that follow the small ‘unknown’ band on tour hoping that the hordes will see in their music what you do. And as we all know, so many just don’t have what it takes…

Now before the hate mail comes, have a think and honestly answer this: How many of these new-ish distilleries are interesting enough that you will buy several and continue on buying their releases?

Very few of us are really that brand loyal. Sure, we might collect a series or certain outputs from certain distilleries, but if you are collecting everything that say ‘Ardnamurchan’ (one of the best new distilleries by a country mile) is bottling please don’t do this for a financial return.

As I said in my last post the fervour that accompanies every new distillery releasing its first batch is almost always accompanied by a serious lull in interest. Harris will be a very interesting case to watch – by far the most ambitious first release was met with such incredible demand that surely they will sell everything they do from now on? I doubt that. Once those that missed out, or are keeping their ‘first release’ (there were eight first releases – rather confusing) get their second bottle demand will fall.

There is simply too much choice and another new release is just around the corner from the next new distillery. Secondary market prices do not show well on these subsequent releases – although who doesn’t love the smell of a burnt flipper or two?

Reports of the recent (horrendously packaged in my opinion) first release from Ballindalloch was that it was an ‘ok’ whisky – not bad, but nothing special. Didn’t stop people queuing to get their bottle – granted there is an element of ‘getting a piece of history’ but really the idea is that the bottle will increase in value.

When it becomes patently obvious that these subsequent, rather mediocre, young whiskies are dropping in value the customer is wary. And the customer is now very wary. Distillers still caught up in their own self-importance and ‘1st Release’ fervour don’t understand why importers and retailers are not bending over backwards to find more shelf-space to fit in their most recent Chinkapin or STR release. They even send out memorandums about how they are going to grow an already saturated and bored market by a hefty percentage with yet more over-priced and run-of-the-mill products. (Some mass generalisation here and I apologise for that. To go through every new release and new-ish distillery would take forever.)

Getting back to ‘price’, nothing demonstrates better how out of whack the industry has become than looking at the case of Lagg from the Isle of Arran Distillers. Arran is a fantastic whisky. So much so, that they are struggling to release decent age statements, such is the demand. Their 10 year old expression, the oldest commonly available Arran, is currently available for under 37€/£40 (one of my favourite retailers has it currently on sale for 30€). Not the cheapest 10 year old but a decent price for what is, unquestionably, a very, very good whisky. The success of Arran allowed the company to build Lagg Distillery and now just over four years later we have whisky available. There are two current expressions; Kilmory at around 50€/£ per bottle and Corriecravie at around 65€/£. Both well above what the 10yo Arran is.

Now I appreciate that we are living in a time where public knowledge has never been greater but even so, imagine a retailer trying to explain to a consumer how a four year old, and let’s be honest here, it’s not the greatest whisky yet, can be 25-60% higher in price than a whisky from the same company that bottles a 10 year old is nigh-on impossible without sounding like you’ve just left the company’s marketing department. [And apologies to Arran for picking on them – perhaps a better example would be the ludicrous and deeply cynical £120/130€+ price for the Roseisle 12yo from Diageo’s 2023 Special Releases.]

There are too many ways now for consumers to try whiskies without making the commitment of buying a bottle be it in a sample swap, festival, tasting or from those retailers selling 2-5cl samples. The Emperor is no longer buying his new clothes without several cat walks first. Or in other words, the ‘Have you tried XXX distillery?’ question no longer requires you to have bought a bottle to reply with an opinion.

The caveat to the above doom and gloom is to head to the origin story of Arran. Granted we have to go back to the early 1990s when plans for this distillery began, near the genesis of when malt whisky began its meteoric rise. Hands up all those that thought the early Arran bottlings were very good? I’m guessing not many of you.

Distilleries take time to ‘bed in’. Bottling the first ‘whisky’ then a few releases each year from then on was not really selling the quality of Arran. It took a lot longer than ten years’ of production for Arran to really start to shine – and one can argue that this does not just apply to their 10 year old but also to their recent NAS bottlings.

Having enough stock of different ages and in different wood types allows companies to truly strut their stuff. This reminds me of touring one of the newer distilleries and hearing the owner state they were going to mature all distillate solely in ex-Bourbon oak. I remember thinking to myself: ‘But what if your whisky shines brightest in ex-Sherry, or ex-Port or is best with a mix of many?’

My point is, for the most part, distilleries generally get better with time. If you are in agreement then it follows (again generally) that each expression of a new-ish distillery is pipping the one before - and of course there are exceptions – ergo any stock left with a retailer of older expressions is inferior, and often the same price, to the newer ones. Anyone heard a distillery say anything different? “Oh, you should have tried last year’s release, so much better than this year’s.”

“So what you’re saying is that all of the new distilleries should just model themselves on Daftmill?” Well, pots of cash willing, and to a certain extent, yes. But then again, no.

It should not be a reasonable pre-condition or barrier of entry that a distillery must sit on stock for over a decade before releasing anything. What I am suggesting is that those distilleries that forecasted possibly unrealistic sales growth from a product, and price, that does not show well against others, may struggle. The Daftmill model does not work if we take it back to when Arran started. There simply wasn’t the following or enough interest for anything to be sold out immediately and the prices would have been laughed at by retailers and consumers alike.

So, what is the solution? Well, simply put, some distilleries will achieve a greater following than others. Make a mental note of your five favourite distilleries. They are in your list because you love, consistently, what they produce. Unlike the great cull of the 1980s when distilleries were closed due to either being inconsistent for blenders or lacking allegiance from company directors, what we may witness is a period where distilleries fall out of favour for lack of enough difference to malt whisky drinkers. And that means retailers, stockists and the buying public will overlook the less interesting ones for the more appealing ones. It’s not as if there isn’t a bamboozling, multitude of choice.

So what does a distillery do with excess bulk stock and dwindling cash reserves…?

Also, worth noting, in both articles I haven’t even touched on the competition from just about every single country in the world making their own whisky… another article.

But before that, let’s have something upbeat in the next piece.

FF