16 minute read
Whisky Report by Ken Gargett
WHISKY making WAVES
RESIDENT WHISKY SCRIBE, KEN GARGETT PROBES THE DEPTHS OF THE AUSTRALIAN WHISKY MARKET AND ANALYSES HOW THE PERFORMANCE OF LOCAL LIQUID COMPARED TO BIG BRAND IMPORTS IS SLOWLY SHAPING THE CATEGORY’S FUTURE. WE CAN’T HELP BUT NOTE THE STRANGE COINCIDENCE OF AUSTRALIA’S WHISKY STATE OF QUEENSLAND ALSO BEING OUR WRITER’S HOME STATE. WE BELIEVE HE DID HIS BANANA BENDING BEST, DRAMMING THIS REPORT TOGETHER.
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It would seem the era of Covid, closures, cuts and chaos is proving to be an exciting time for whisky in Australia, both imported and local.
Before hearing the thoughts of producers and importers, and taking a look at the category, David Messum from eBev is well placed to assess the current state.
David notes that over the last 12 months, 50% of the whisky market has been bourbon. Jack Daniels is solid with 26% of the total market and 52% of American whiskies – those stats might not be in the realm of the domination we see with Bundaberg Rum in its sector, but it is a powerful performance. Jim Beam has a respectable 10% and 20% across those sectors, Makers Mark third. Rye is only 0.72% of the total sales, with Woodford Reserve (34%), Bulleit (32%) and Michters (11%) the leaders.
Scotland holds 27% of the total market – blends and malts – Johnnie Walker dominates with 15% (Red Label with 11% and Black Label 3%). Chivas Regal represents 2% of total sales (the 12-Year-Old is 1.7%).
Glenfiddich 12-Year-Old Single Malt leads the Single Malts (Scotland) category with 1.7% (6% of total Scotch, including blends). Lagavulin, Laphroaig and Talisker all equate to around 1% each. Given that these are relatively small and distant distilleries, it does suggest that the smoky/ peaty style from Islay is beloved by malt drinkers in Australia. Glenmorangie is a whisker behind them.
We might think of Queensland as the ‘rum’ state (and the ‘champagne state’), but according to David, it is also the “undisputed whisky state”, with 33% of total sales, 56% of which are bourbon/US whiskies. Queensland has not featured on the radar with local and Japanese whiskies (I am doing my bit, but clearly, I need to drink more). Victoria is next in line behind Queensland with 26% total sales, US whiskeys 39% and Scotch 32%. With 2% and 4% of state totals, respectively, Victoria leads both Australian and Japanese whiskies.
Sales of Irish whiskey are 10% of the total sales. Jamesons is completely dominant.
Starward Distillery, Port Melbourne Perhaps surprisingly, Canadian Whisky has 8% of the total market. Canadian Club is 99% of that.
Australia is still largely niche, with just 1%. Starward is the leading producer with 66% of that.
Japan comes in with 1.5%, with Hibiki dominating – their 12-Year-Old has 25%, and their 17-Year-Old has 30%.
If one goes to the various sectors from each category and looks at the most recent figures (2016 to 2020), we see steady growth across almost every subset, granted with variations on the theme up to 2019 when we saw a serious jump in 2020. Will that be maintained? Even if it should settle back to a degree, it has provided the industry with new benchmarks.
Matt Redin is the long-term representative for Glenfarclas imported by Vintage House Wine and Spirits (formerly Angove) for more than 30 years. He says they have “experienced astonishing growth over the past two years. At the start of 2020, sales were virtually stagnant with only 2% growth; by the end of that year, they had increased by 95%; and all during a period of massive disruption in domestic trade and global shipping and transport. He conceded that sales growth “has now slowed to a more modest 10%”. The main driver has been the off-premise market due to disruption with closures and restrictions in restaurants and bars.
James France from Vanguard has seen a similar expansion. “We’re seeing excellent growth in all the whiskies we carry; they come from all major whisky regions: Australia, USA, Scotland, Ireland and Canada. We will soon be launching a Japanese whisky, and the pre-sales have been overwhelmingly encouraging.”
Let’s look at the leading Australian producer, Starward. They note that “Australian whisky is experiencing dynamic growth (+30% MAT), and Starward is fuelling that growth, accounting for 61% of incremental sales (volume MAT).” Their Starward Two-Fold is leading the way for them. Although beyond the remit of this piece, it is worth noting that it has also proved popular in the United States.
Brand Development Manager for Tasmanian distiller, Hellyers Road (HRD), Kit Wilkinson says “we have experienced unprecedented demand both domestically and globally across our three main categories – Rare and Exclusive (Super Premium), Core (Expression Variety) and Price Performance. Most notable is the surge in demand from our international markets. Europe is our most dominant market as it drives our Exclusive Release program and is a strong performer in
Hellyers Road Distillery
supporting our range across all price points. While Asia is driving the largest demand through volume, partnerships with specialist whisky markets like Japan and Taiwan have seen an incredible uplift on single cask requirements (cask strength, finishes, aged statements) from our bond stores.” The high demand has seen Hellyers Road adopt an allocation system.
Trending producer, Archie Rose, says the significant growth across the entire alcohol industry is “driven by innovative local products that align with one or more of the recent movements (support local, sustainability and better for you)”. Australian Distillers Association figures reflect this growth. It shows 180 registered Australian distilleries in January 2021, up by 200 to 380 by February 2022.
Archie Rose is “seeing great interest from a younger audience who are whisky educated and keen to learn about ingredients and processes through means such as online research vs the more traditional approach of education from bottle shop staff”. Archie Rose has both Rye Malt and Single Malt whiskies available onpremise. From July 1st, they will be available off-premise, so they are expecting significant growth for these whiskies and believe it will follow “for other Australian whisky producers as more volume comes online in the coming years”.
With a supply of ancient barrels holding some of the world’s greatest fortified wine for decades, traditional fortified wine producer Morris of Rutherglen is joining the whisky players. James France says, “they have unrivalled access to the best and largest selection of fortified wine barrels in Australia”. Their initial two whiskies, Morris Signature and Muscat Barrel have already made a strong early impression and are exported to four international markets. “Beyond the hard-core whisky enthusiast, we see a largely untapped group of whisky consumers, who would typically buy known international brands, seeking to trial Australian craft whisky at more affordable prices”.
Thankfully it is not all based on pricing alone, far from it. We asked our contributors their thoughts. The team at Morris identifies the “pricing benchmark and scale for whisky” as set by international brands; <$35 cheaper blends/grain whisky; $35 - $50 mainstream bourbon; $50 - $100 craft bourbons and entry single malts and classic blends; $100+ aged single malts and luxury blends; and $250 - > $1000’s single barrel and icon whiskies. James France has his sectors, noting that “definitions vary on this, but I think the market should segment into premium $60 - $99, super-premium $100 - $199 and ultra-premium $200+. Of course, the secondary market for aged, name-brand whiskies sees crazy prices paid. $5,000 to $50,000 or more is not uncommon. This category needs a name.” He foresees potential difficulties for local products. “Australian whiskies are generally of great quality but have limited potential due to their high pricing. Especially as economic conditions tighten up, I see the potential of the $200, 500ml Aussie whisky becoming increasingly limited”.
Redin noted that “for Glenfarclas, it is about the single distillery, single region origin, and this is where we view premium as the starting point and why they can demand higher price points”. For them, their largest selling whisky is the 15-YearOld, the second being the 25-Year-Old. “So price is not the driving factor in purchasing premium whisky. It is all about quality”.
For Starward, they acknowledge that “price point can be an indicator for something finite. However, quality whisky can be seen across many price points”. As evidence of this, they point to their TwoFold, which won Best Australian Blended Whisky at the World Whiskies Awards and retails at just $65. In more rarefied air, their Tawny #1 won Best Worldwide Whisky at the Hong Kong International Wine & Spirits Competition, retailing at $119 for a 500ml bottle.
For Hellyers Road, I’d love to include all of Wilkinson’s fascinating thoughts on this, but they’d exceed my allotted length for this entire piece. He noted that “much like the wine industry in Australia, the word ‘premium’ often denotes a perceived reasoning to justify a pricing increase and is not necessarily quality-related… Likewise, single malt pricing in Australia was for the majority part driven by the small scale and cost inefficiencies and non-economies of scale of the initial distilleries in the early days”. He concedes the issues of small operations and “unrealistic price points”, as well as the benefits of growing demand, but
warns against any operation producing whiskies “where quality was below expectation”, noting the financial problems that will invite. The popular price points for their whiskies are “ $100, $160 and $300”. These prices are driven by various factors, including accessibility and age. Their “Original” is “typically 7-8 years old and sits just shy of $90” and is the largest selling single malt domestically. Sadly, demand and the desire to maintain quality means that it will not be available again until 2024.
Archie Rose points out that “the consumer understanding of the category has reshaped the definition of ‘premium’”.
The team at Morris notes the justification of higher prices for local offerings by top craft distillers is due to “high excise, high overheads, limited availability, and smallbatch offerings”, but acknowledges there “may be calibration in the future where Australian consumers will demand more accessible pricing for Australian whisky products” and that as “consumers continue to explore the category and become savvier, it will become increasingly challenging for local producers to charge a premium if the product quality is not reflective of the price. In addition, as more new world whiskies from new and interesting countries such as England, US, India, Israel and Sweden enter the marketplace with quality liquid and accessible pricing, it will become increasingly competitive. Morris extends these potential issues to those attempting to enter offshore markets. Morris Signature “was positioned below $100 to make it accessible” while “Morris Muscat Barrel is placed at $150, which is still relatively affordable compared to other Australian whiskies”.
We also asked our contributors to consider NAS ‘no age statement’ whiskies.
The team at Tasmanian distillery, Lark, the Australian craft whisky industry pioneer, noted that “Lark and Tasmanian Whisky have never focused on age statements.” Bill Lark and Chris Thomson originally designed their core range of products to mature within 5-7 years. They discovered that developing an oily spirit with a hint of peat smoke and maturing it in an Australian 100 litre fortified cask was a perfect combination for producing great whisky in as little as five years. They will maintain their core range as NAS; however, they believe that “ultimately as we (and the Tasmanian industry) grow, we will see some of our stocks mature and reach benchmark age statements. These will be worth calling out”.
Redin spoke of the difficulties NAS can create, “We experimented with a no age statement Glenfarclas a few years back as a replacement for the 8-Year-Old. It did not go very well, so the brand reverted to an 8-Year-Old age statement very quickly”. He believes that “at the higher price point, we think it is definitely required to give full disclosure on what the actual spirit is”.
James France has some fairly frank views on the subject, “I think people who judge whisky purely on age statements are uneducated in this area and need to grow up. Whiskies should be judged on how they taste. The oldest isn’t necessarily the best, and what one person likes, another may not. Smarter drinkers realise that NAS whiskies are equally acceptable as those with age
Scotland holds 27% of the total market – blends and malts – Johnnie Walker dominates with 15% (Red Label with 11% and Black Label 3%). Chivas Regal represents 2% of total sales (the 12-Year-Old is 1.7%).
statements. I think the reliance purely on age will diminish – it has to anyway, due to the increasingly short supplies of aged stocks”.
Starward shares this view on certain levels. “Age is just a number; however, we appreciate some people are interested in the number; we also want to share with our consumers that this number doesn’t always correlate to quality; it all comes down to climate”. This is, of course, a reference to the different rates of maturation depending on climate/location. Wilkinson, from HRD, echoed this.
Morris thinks largely along similar lines. “Any well-educated whisky nerd knows that age is not everything and doesn’t necessarily translate as a marker of quality. It is true that many unaged products have failed to replicate the complexity and maturity of age products in the past. Still, with new distilleries popping up in warmer climates and experimentation on barrel preparation, we are seeing a lot of unaged whiskies that are mature, complex, and structured well beyond their years”. Equally, “there are still poor-quality aged products that have spent too much time in wood which has not been appropriately prepared for the purpose”. They acknowledge that for “the whisky novice, age statements will continue to be a marker of quality, and rightly so as it is a shortcut – especially in Asian markets. But we are seeing a shift in mentality in markets such as Australia and the US where a greater understanding and appreciation for less traditional and new world whiskies is being embraced”.
The team at Archie Rose has a more innovative approach. They are less bothered by the NAS debate, providing “Spirit Data https://archierose.com.au/spirit-data/ as the ultimate age statement, which aims to give you the most granular info you can find on our whiskies, whereas NAS only tells you the story of the youngest cask… Spirit Data allows you to delve deeper into our production on a batch by batch basis through detailed tasting and production notes from the distillery floor and bond store”.
Finally, we looked at the concept of Aussie or offshore.
As well as looking after Glenfarclas, the Angove family own the St Agnes Distillery. They have such faith in the future of the Australian whisky industry that St Agnes will be releasing its first whiskies, under the Camborne label (Camborne being the Cornish town next to St Agnes from where Dr Angove originally lived) later in the year. At this stage, baby steps, with four different (NAS) expressions from four different casks – Tawny, Sherry, Brandy and Shiraz.
James France believes that “consumers are becoming more accepting of Aussie whiskies. This will increase as more Aussie whiskies become more competitively priced than their overseas counterparts. Of course, there will always be the dyed in the wool lovers of certain imports – but this is a good thing because there is no way the Australian whisky industry could meet the consumer demand of the entire whisky market at this stage. Also, you can’t make bourbon in Australia!”
Not surprisingly, Starward, HRD and Morris were very optimistic about the future of the Australian whisky industry, despite raising issues of supply, location of maturation and pricing.
Finally, my thanks to all who participated and contributed; there is so much more to discuss in this space, such as regulations, future plans, Covid, new products and more. Perhaps next time, because if there is one thing that emerged from this, the whisky sector in Australia is enjoying an extraordinary period with both opportunities and pitfalls facing it in the future. KBG
Statistics: Whisky Category Sales from the eBev Platform, and all are based on bottled product sold in the last 12 months and IWSR Whisky figures 2020.
GLEN GRANT’S MR CONSISTENT
Glen Grant, based in the Scottish highlands, has been a distiller of Single Malt Whisky since 1840. Glen Grant stands out in an industry rich with tradition, from its historic distillery site to the oversight from a master distiller, Dennis Malcolm, who was born and grew up on the grounds.
“Since I started work some 60 years ago the process parameters for making The Glen Grant have not changed. However, the way that the process is controlled has evolved in as much that most of the manual side of the operation has been automated, making it more interesting and far safer for the modern-day operator. I say ‘safer’ because the cleaning of the mash tun/fermenters and stills do not require anyone to enter into these vessels to carry out this task any longer - it is all controlled by computer now. This computer automation control, in my view, has led to create an extremely consistent product, as computer programmes tend to check control parameters every second, which is impossible for the operator to do.”
Indeed, 60 years of service to the one scotch whisky brand is a level of dedication rarely seen in any industry, so it’s not surprising that there was a period where Malcolm followed new challenges, working up the road at the Glenlivet.
“I moved firstly to The Glenlivet as distillery manager for a period of four years. I then moved to the position of General Manager for the Group with responsibility for the operation of some nine distilleries, one gin distillery, one production plant and three farms. Following that, I returned to manage operations at Glen Grant in 2006, when the Campari Group purchased it, and where I have remained to this day in the role of Master Distiller”
How would Denis Malcolm describe his whisky making philosophy, and how has the whisky drinker changed over the years?
“I have always strived to make the most consistent quality single malt, which embraces the profile style created by my predecessors and never compromising on quality for cost benefit. When I started in the industry it was a more mature person’s thing but now it is getting huge interest from a new generation with a new appreciation for the product which is marvellous to see.
“I am seeing a very welcome change in whisky drinkers of today. First of all, I believe they are more knowledgeable and interested and curious- to know how single malts differ from distillery to distillery. I’ve seen a lot of new interest from people about half my age with many more young women taking a keen interest also – very inspiring.”
