Archive for the ‘Whisky News’ Category

Bourbon Tax Credit Passed

Friday, April 4th, 2014

Author - Fred MinnickAs Tennessee legislators are in the middle of a used barrel fight, Kentucky lawmakers are taking concrete steps to improve the commonwealth’s cherished bourbon whiskey industry.

On March 31, Kentucky passed House Bill 445, which allowed distillers a corporate income tax credit for the ad valorem barrel taxes paid on aging whiskey. According to the Kentucky Distillers Association, distilleries pay $13 million a year in barrel taxes.

Although ad valorem taxes—“according to value,” usually a tax on real estate or property—on Kentucky distilled spirits have existed off and on since 1906, the current system has been in place since 1990, when the General Assembly raised the rate from $0.001 to the current rate of $0.005. This 24-year-old legislation also allowed county and cities to tax the aging spirits, creating significant taxation liability without the ability to write off these contributions on their corporate income taxes.

Thus, HB 445 is an historic piece of legislation for the bourbon industry. But the distillers will not receive the tax credit if they do not reinvest the money, says Eric Gregory, president of the Kentucky Distillers Association.

“There’s a list of capital improvements that can be utilized for the credit. All our members agreed to that,” Gregory says. “We wanted to show the legislature that we’re serious about using this money to strengthen our industry, create jobs, and compete on an international scale. I think that’s important. The state Revenue Cabinet also is required to report to the legislature’s Interim Joint Appropriations & Revenue Committee each year on who has taken the credit, how much and what capital improvements for which it was used.”

Since Kentucky distillers are the only alcohol manufacturer in the world required to pay aging barrel taxes, Gregory says, this new law will at least allow distillers to better compete in the global marketplace with non-tax-burdened brands. It will allow them to reinvest that money in their Kentucky operations, create jobs and spur production, Gregory says, and allow the Bluegrass State to better compete with other states for new craft distilleries.

“Distilleries will still pay these taxes, so both the local communities and state will receive their money,” he says. “It will simply allow a tax credit on the distillers’ corporate income tax. We strongly believe that the reinvestment credit will actually create more than it will cost. Bourbon is a great investment for the Commonwealth. We have one of the state’s highest job spinoff factors; surprisingly, higher than other signature industries like tobacco, coal, and horses. For every distilling job, three more are created down the line.”

Senate President Robert Stivers, R-Manchester, speaks with reporters in the Kentucky Senate.

Senate President Robert Stivers, R-Manchester, speaks with reporters in the Kentucky Senate.

But no matter how much the KDA, its distillery members, or non-KDA member Buffalo Trace Distillery’s lobbyists—who all actively pursued this legislation for seven years—campaigned for change, a Kentucky legislator needed to take action. That man was Kentucky Senate president Robert Stivers (R-Manchester, a dry district), and I spoke with the president the day after the bill passed.

Tell us about the ad valorem tax credit. Why was it important?

Years go, a particular legislator wanted to add more funding to his local school system, so he got the legislature to pass an ad valorem tax on barrels in the warehouses aging. It’s how they funded their school systems and has gotten to the point that the school systems have developed their budgets on this. You couldn’t repeal [the local tax] because the schools would lose their money. What we’ve done is create a credit at the state level. [Distillers] get a dollar for dollar credit on their state corporate tax liability and are supposed to reinvest part of that into their operations. It’s what they’ve been wanting for years.

For all these years, distillers have not been able to write these taxes off. Was that fair?

Their bourbon was sitting there unusable for six to eight years and they’re paying taxes on it. That’s the only product like that you have. It wasn’t fair.

I’ve been told you’ve been working on this bill behind the scenes for a while.

When I got into leadership five years ago, I started looking at it. I thought it was an unfair tax and saw an opportunity in this session, so I took advantage of it. People in the House have been saying for they’re for it; I just gave them an opportunity to prove they were for the tax credit.

In private meetings, Senators and House members indicated they wanted to give distillers a barrel tax credit?

They would say they were supporting this, but you never saw anybody doing anything about it. Actions speak louder than words.

Were there any organizations or distilleries that helped make this happen?

The KDA and the distilleries, but I saw this opportunity and I took it.

How did you put this in motion?

As an amendment to a House Bill that the House Leadership really wanted. They basically saw the amendment and said we’re willing to talk. It passed with large numbers in senate.

Would this have passed if bourbon were not so popular?

I think you’re onto something. The Kentucky Bourbon Trail has become so popular and accepted. Bourbon is a true signature industry in Kentucky. It creates employment, peripheral jobs, and there’s also the image of Kentucky bourbon.

What is next? Are there other bills for bourbon?

We’ve are working on an option for state parks to go wet. But right now, the bourbon industry is on solid footing from a legislative standpoint.

I can’t let you off the hook without asking: What’s your favorite bourbon?

I have a lot of Woodford Reserve, but I also like to drink a little Maker’s Mark every now and then.

Campari Buys Forty Creek

Wednesday, March 12th, 2014

Author - Davin de KergommeauxNews today that Italy’s Campari Group has bought Canada’s Forty Creek Distillery, should come as no surprise. After decades of marginal decline, Canadian whisky sales have rebounded strongly in recent years. Much of the credit for this must go to Forty Creek’s whisky maker, John K. Hall.

JohnHall_106It is more than a decade since Hall began taking his whisky from bar to bar in New Orleans and Texas. At the time Canadian retailers had shown little interest in the upstart Canadian whisky maker. As he pounded the pavement, selling a case here and a case there, Hall effectively became the face of Canadian whisky in the U.S. Happily, despite the sale of his distillery, this will continue.

From the firm base he began building in America, Hall returned to Canada to conquer his home market. Forty Creek is not the largest, but it is now the fastest-growing whisky brand in Canada. Today, Campari, which also owns Wild Turkey bourbon, confirmed Hall’s unshakable faith in Forty Creek by purchasing 100% of the distillery, its brands, and holdings for $185.6 million Canadian. Forty Creek, as the consultants say, was low-hanging fruit, ripe for the picking.

Campari was one of a number of firms that was interested in purchasing the distillery. Hall was looking for a buyer that would keep the Grimsby facility open and ensure that all the employees could keep their jobs. The deal was sealed when Campari committed to those objectives.

When I met Hall in Victoria this past January, he seemed tired. “I just can’t keep this up,” he said of the non-stop pace of appearances at whisky shows and liquor stores across Canada and the U.S. “I want to spend more time with my family. When I’m in my distillery now I spend half my time behind a computer.”

“You need to hire a CEO and get back to tending your stills,” I offered. And I guess, in a way, that is what he has done. Little will change in day-to-day operations at the distillery and Hall will remain as company chairman and whisky maker. With the full strength of Campari’s sales force supporting him, Hall will likely have more time to do what he loves best: make whisky.

“I am very excited about my 2014 Limited Release,” Hall told me recently. “It will be bottled in July, and then after two and a half months of bottle rest I’ll release it.” That’s typical John Hall. Ever the wine maker, he wants to be sure his whisky has time to recover from bottle shock.

Forty Creek is a small distillery. With two pots and one column still, it has yet to reach its annual production capacity of 555,000 cases of whisky, but with the Campari deal, that can’t be far off. Watch for expansion plans in the not-too-distant future as Campari uses its global resources to grow Forty Creek in Canada, and around the world.

Meanwhile, congratulations are due to Canada’s hardest-working and best-known whisky maker, John K. Hall, and the whole Forty Creek family. For that’s what it feels like when you visit the distillery.

Canadian Catches Up: Hiram Walker expansion planned

Thursday, March 6th, 2014

Author - Davin de KergommeauxAfter several years of very encouraging sales, managers at Canada’s largest distillery have decided to expand production capacity. In 2014, $8 million will be invested on new and upgraded facilities. The coldest winter in a century delayed construction, but the cement is now poured for a new tank house at Pernod-Ricard’s Hiram Walker and Sons distillery in Windsor, Ontario.

“The bottleneck here is the column stills,” master blender Don Livermore told me. “We can’t speed up the stills without affecting quality, so we are constructing a new building with four tanks to hold excess high wines. That will let us run the beer stills longer without getting backed up.”

Changes are coming in blending and bottling as well, where expansion will increase overall volumes while enabling smaller production runs. When your lines are geared to over 400 bottles a minute, it’s difficult to do small batches. New equipment in the bottling hall will permit a more leisurely pace, allowing it to process smaller runs. And good news for whisky lovers: capacity for short runs could lead to more new products making it into field-testing and onto your home bars.HIRAM WALKER & SONS LIMITED - Major Investment in Windsor, ON

“When you are set up for high production it’s difficult to attract business from small producers,” says Jason Leithead, who manages the bottling hall. “Right now a seemingly trivial change can be a monumental undertaking for us.”

Hiram Walker and Sons president Patrick O’Driscoll agrees: “The new production volume will smooth out the seasonal peaks to offer more stable employment and enhanced partnership opportunities for our customers.”

The expansion will boost overall bottling capacity by 230,000 cases. Hiram Walker currently employs about 400 people across Canada, 300 at the distillery.

“In my 18 years at Hiram Walker I’ve never seen it this busy,” Livermore tells me. “We were distilling about 20 million liters a year when I started. Last year we made the equivalent of 55 million liters of pure alcohol.” That translates into a lot of whisky. Key brands include Wiser’s, Canadian Club (made for Beam), and Gibson’s Finest (for Wm. Grant). Hiram Walker and Sons makes about 70% of all Canadian whisky, of which about 75% is sold to independent bottlers in Canada and abroad.

If Livermore has his way, this expansion is just the start of bigger things to come. “My long-term vision is to have an education center right here at the distillery. We make great products here and we need to tell people all about them.” That project is at least a decade down the road, says Livermore. For now, expanding capacity to keep up with demand and support growing consumer interest in small-batch high-end specialty whiskies is the top priority.

Mortlach: more news…and the price

Tuesday, March 4th, 2014

Author - Ian BuxtonDiageo have announced further details and pricing for the forthcoming release of four new Mortlach expressions. First revealed here in early December, the new range – which sadly means the demise of the much-loved Flora & Fauna 16 Years Old expression – comprises Rare Old (43.4%, no age statement); Special Strength (49%, non-age, non-chill filtered, Travel Retail exclusive); 18 Year Old and 25 Year Old (both 43.4%).

Rare Old

Rare and Old

Coming alongside a major expansion of the distillery, this is a big play for Diageo. Dr. Nick Morgan, the company’s head of whisky outreach, described the launch as “positioning Mortlach as the luxury malt to redefine the category. We didn’t just hang it with luxury trappings. It has great single malt credentials.” Quite what The Macallan will make of that remains to be seen but, as I warned last time, new Mortlach comes with a wealth warning; prices are very definitely going to rise sharply.

European consumers will get the new whiskies in smaller 500 ml bottles.  Morgan stated that this was “to make a little go further, as supply is constricted” but also suggested the new pack designs worked better in this bottle size. Be prepared for some fiscal easing: currently the Flora & Fauna bottle runs to around £70 in the UK (savvy merchants having moved their prices up as soon as supplies of these bottles were withdrawn).

Special Strength

Special Strength

The new ‘entry-level’ Rare & Old (it’s a NAS expression, but let’s not open that particular bottle here and now) in 500 ml is priced around £55 (£77 for the equivalent of a Euro-standard 700 ml bottle).  Special Strength will be £75 (£105); the 18 Years Old £180 (£252); and the 25 Years Old a thumping £600 (or £840 for a standard bottle).  U.S. consumers will get a 750 ml bottle, as the half-liter size is illegal there, so expect a shock at the check-out (actual U.S. prices have not been set yet).

The launch will be a global one, with priority given to high-end bars and specialist retailers in “core metro markets.” That means London, New York, Paris, Chicago, Shanghai, Moscow, San Francisco, and so on.

18 Year Old

18 Year Old

The highly distinctive packaging, said to be two years in development, was created by New York-based Laurent Hainaut of the Raison Pure design house, who claim on their website to offer “a platform for design excellence and social progress.” Clearly design excellence comes at a price, and with retail stickers such as these they will hardly be mistaken for socialists or philanthropists! The packs pay homage to the distillery’s founding father Alexander Cowie, and are heavily influenced by the great engineering achievements of Victorian Scotland, including icons such as the Forth Bridge and the mighty foundries and steelworks of Glasgow and the west of Scotland. (Note the metal framing on the 18 and 25 year old bottles.)

As for the distillery expansion itself, ground works have started to ready the site and construction will begin as soon as the final planning permissions have been received from the local authorities. It’s hoped that building will start very soon as the planning process is stated to be in its final stage.

25 Year Old

25 Year Old

The new Mortlach expressions themselves will enter global markets in late June and July this year, beginning with the UK and Germany, followed by Asia, and the U.S. later in the year. I await the launch with some interest: I cannot remember Diageo ever taking this amount of time and care to brief the whisky press over any previous release. These are big, meaty whiskies and the company is evidently playing for big steaks (pun intended, please forgive me!).

Diageo Announces Restoration Project at Stitzel-Weller Distillery

Friday, February 21st, 2014

Author - Lew BrysonWe’ve heard that Diageo intended to make the fabled Stitzel-Weller distillery the “home” of Bulleit whiskey. Bulleit’s been a very successful brand, but that’s starting to become a problem, because Bulleit fans who want to go see where it’s made are finding out that there is no Bulleit distillery. It’s a pretty poorly-kept secret that Bulleit bourbon is made at Four Roses; it’s open knowledge that Bulleit rye is made at MGP in Indiana.

But Diageo had a couple options to solve that problem, and this is one of them. Although the only operating American whiskey distillery owned by the world’s largest drinks company is George Dickel in Tennessee, Diageo also owns the Stitzel-Weller distillery, even if the place has been silent since the end of 1991. So the plan became to develop Stitzel-Weller as the Bulleit home.

Wednesday we learned that Diageo would be investing $2 million to renovate the original administrative building at the distillery, “to bring to life the history of the Stitzel-Weller Distillery through artifacts from the site’s archives; a whiskey education section; an homage to the people, land and water of Kentucky; and a celebration of the heritage, brands and people behind Diageo’s award-winning collection of American whiskeys.” That would be Bulleit and what Diageo is calling their “evolving craft whiskey portfolio,” which includes the Orphan Barrel Whiskey Project.

S-W MI_Mosaic imageDiageo plans to begin the work immediately, in order to have this first phase finished in time for Derby Day, which is when Stitzel-Weller opened, in 1935. There will be a visitor center and gift shop.

All things being equal, we’d rather see Bulleit get a distillery than a gift shop, but it’s a start. It’s a bit disturbing to hear all this talk about “craft whiskey” coming from the world’s largest drinks company (they referred to this as “another step in our support of and leadership within the American craft whiskey movement”), and we suspect the country’s craft distillers are greeting it with either gloom or hysteria.

But Bulleit has a home, and we’ll be able to walk the grounds of Stitzel-Weller again.

DISCUS Briefing Confirms Surging Growth of American Whiskey

Thursday, February 6th, 2014

Author - Lew BrysonAt the annual Distilled Spirits Council of the United States (DISCUS) industry review on Tuesday, February 4, the usual graphs and numbers on domestic sales of distilled spirits and export sales of American spirits were presented, and they told a great story about American whiskey producers. American whiskey is solidly on its way back, after thirty years of steeply declining sales. (see graphs 1 and 2). I started writing about whiskey in the mid-1990s, and much of what there was to write about back then was how the decline in whiskey sales was slowing down (I referred to it as “the glide path” to emphasize that it was a gradual decline, but I must have forgotten that glide paths always end on the ground!), and optimistically noting that there were some small niches in the overall category that were showing growth: single malt Scotch whisky, and small batch bourbon. Everything else was dropping.

Graph 1 shows a 30 year drop of over 50% in U.S. whiskey sales.

Graph 1 shows a 30 year drop of over 50% in U.S. whiskey sales.

Now things have turned around, and the DISCUS numbers were rosy indeed, especially in the export market for American whiskey. Exports of bourbon and Tennessee whiskey topped $1 billion for the first time, and represented 2/3 of total U.S. spirits exports. The top six markets for export growth (by dollar sales) were Japan, Germany, France, the UK, Spain, and Panama, while Canada remained the single largest export market by far. DISCUS attributed this export growth to economic recovery, a recognition of American quality, a drop in tariff barriers in key markets, and a continuing strong interest in classic cocktails. They also noted the Department of Agriculture’s promotion of American spirits overseas.

Graph 2: 13 years of accelerating growth in U.S. whiskey sales

Graph 2: 13 years of accelerating growth in U.S. whiskey sales

Here at home, total spirits sales were up 4.4%, to $22.2 billion, and a lot of that stemmed from the growth in sales in the “High End” and “Super Premium” categories, the most
expensive bottles. It was noted that whiskey provides substantially higher revenues per standard 9-liter case (an average of $133, compared to $85 for vodka), and the whiskey category’s growth of 6.2%. In volume, total spirits cases sold were up 3.9 million cases, and whiskey’s 3.1 million case increase was 80% of that growth. It’s not all American whiskey, either. While total whiskey volume was up 6.2%, Irish was up 17.5%, “Blended” (which includes flavored whiskey; more on that shortly) was up 14.3%, single malt scotch up 11.6%, bourbon/Tennessee/rye was up 6.8%, Canadian up 2.9%, and blended Scotch whisky was up 2.0%.

Flavored whiskey continued to grow strongly, with 1.4 million additional cases sold, accounting for 45% of the total whiskey category growth. Straight whiskeys, however, accounted for 80% of the revenue growth, so you can bet that the distillers won’t abandon them in a rush to flavors. There was talk of how distillers are being cautious about introducing the rainbow of flavors that has typified vodka sales, and open speculation over whether vodka has gone too far with flavors, jumped the shark; it seems doubtful to me that the bottom of that well has yet been plumbed, but whiskey is going to be a different case. Don’t expect birthday cake bourbon anytime soon.

Where is all this growth coming from? It appears that a good chunk of it is coming from the decline in sales of beer, particularly traditional major brands. The folks from DISCUS saw this as a triumph of their focus on increasing accessibility (by encouraging Sunday sales where restricted and urging modernization of control state systems) and encouraging cultural acceptance of spirits. As spirits become easier to buy, as people don’t have to make a special trip out of their way to buy them, people are choosing them more often than they have in the past. But a lot of it, clearly, is coming from the increased appreciation for whiskey, and the increased innovation and choice presented by whiskey makers, both from the traditional regions and from the increasing number of craft distillers.

You can see the full report at the DISCUS website here.

Diageo’s Orphan Barrel Whiskey Project

Wednesday, January 29th, 2014

John HansellBack in late November, the whiskey media received news from Diageo of the Orphan Barrel Whiskey Project, a new series of old and rare limited-edition whiskeys from their warehouses. It’s something we’ve seen from Diageo before, but these are American whiskeys, not Scotch or Irish.

Many of you are aware that Diageo owns and operates the George Dickel distillery in Tennessee. They do not, however, own an operating bourbon distillery.  They own the Bulleit brand, but it’s an open secret that Bulleit bourbon has been produced at the Four Roses distillery in Kentucky; Bulleit Rye is sourced from MGP in Indiana.

Old Blowhard Lo ResBut Diageo does own the Stitzel-Weller distillery (mothballed around 1992), where they have stocks of bourbon aging, some distilled at Stitzel-Weller and some from other distilleries. They also once owned the existing Bernheim distillery (from around 1992 to 1999, when they sold it to Heaven Hill) and a different, older Bernheim distillery (theirs into the late 1980s).

So, in theory, future Orphan Barrel whiskey releases could be sourced from a number of operating and mothballed/demolished distilleries, including Stitzel-Weller, Bernheim (current and older), Dickel, Four Roses, MGP, or their Gimli, Manitoba distillery where Crown Royal is produced. There might even be some additional sources that I have omitted, but for the sake of (relative) brevity, let’s leave it at that.

The first three releases, all bourbons, are about to hit the shelves. The press release states that they were bottled at the Dickel distillery, but they weren’t made there. These won’t be the only three releases; at least, this is Diageo’s thinking at present. The two that were mentioned in the November release (Barterhouse and Old Blowhard) are being released first. A third one, tentatively called Rhetoric, will follow on a month or two later. These bourbons will only be sold in the U.S.

I recently had the opportunity to taste all three (along with another separate new Diageo bourbon release called Blade & Bow). All three Orphan Barrel bourbons have identical mashbills: 86% corn, 6% rye, and 8% barley. Whiskey geeks reading this will identify this as the formula from whiskey made at the Bernheim distilleries.

The youngest of the three is Rhetoric, clocking in at 19 years, followed by Barterhouse at 20 years and Old Blowhard at 26. If you do the math, you will discover that Old Blowhard was actually produced at the old Bernheim distillery. This is from the last remaining stocks. There will be no more Old Blowhard releases, according to Diageo. The suggested retail price of $150 is great when compared to other older bourbons and ryes these days—especially from mothballed and demolished distilleries. (Think Pappy Van Winkle and Stitzel-Weller.)Barterhouse Bottle Lo Res

Barterhouse is from the existing Bernheim distillery. My sources at Diageo say there might be another batch release of Barterhouse, and perhaps Rhetoric, down the road. Barterhouse, at a suggested retail price of $75, is also very attractively priced, considering its age.

But how do they taste? My informal tasting notes are below. Because they are informal, and not official Whisky Advocate reviews, I have not assigned a rating to them yet. This will come at a later date and eventually be published in the magazine.

There’s a sliding scale in flavor profile, with the Barterhouse being the sweetest of the three, Old Blowhard brandishing the most dry oak influence, and Rhetoric somewhere in the middle. I list them in that order, not by age.

Barterhouse 20 year old, 45.1%, $75

Surprisingly lacking in oak intensity, given its age. Very creamy and soothingly sweet, with notes of honeyed vanilla, crème brûlée, sultana, orange creamsicle, peach cobbler, and a subtle array of tropical fruit. Soft and mellow on the finish. It’s very easy-drinking and should be enjoyable under most moods and circumstances. Very nice indeed!

“Rhetoric” 19 year old, 45%, $TBD

Situated between Barterhouse and Old Blowhard in oak influence (and flavor profile in general). Firm spice, botanicals, and dried fruit delivered on a bed of caramel. There’s a kiss of honey to marry with the resinous oak grip, with polished leather and a hint of tobacco on the finish. This whiskey does indeed show its age with the oak presence (much more than Barterhouse), but the sweet notes make a valiant effort to keep the wood influence in check.

Old Blowhard 26 year old, 45.35%, $150

Old Blowhard indeed. The most intense of the three Orphan Barrel releases.  Very robust, with leather, tobacco, and roasted nuts. Quite spicy and resinous too. There’s toffee, maple syrup, and caramel struggling to sooth all this robustness, but the oak maintains the upper hand, I’m afraid.  A digestif, perhaps, after a large meal? Unless you are purchasing for a piece of bourbon history, my advice would be to try it before you buy, as it is very woody.

I did not take notes on the new Blade & Bow offering, but this is a younger, more standard offering that will be a regular stock item, bottled at 45% and sold for around $40. I did not ask the source.

In summary, my favorite of the three Orphan Barrel releases is Barterhouse. It’s very versatile, and the price is right for a 20 year old bourbon. Having said this, you may prefer Rhetoric when it comes out if you like more oak in your bourbon. It was my wife’s favorite. Old Blowhard is the rarest of the bunch, but whether you like it or not will largely depend on your oak tolerance. It’s my least favorite of the three, quite woody, and the most expensive.

Examining the New Whisky Auction Record

Tuesday, January 21st, 2014

Author - Johnnie McCormickJonny McCormick puts the auction of The Macallan M Constantine in perspective.

Sotheby’s, Hong Kong have set a new record for the highest auction price for a bottle of whisky. On Saturday January 18th, the sum of $620,000 was reportedly paid for The Macallan “M” decanter. The Macallan partnered with Lalique to produced four ‘Imperiale’ 6-liter decanters designed by Fabien Baron. Each of the imposing vessels was named after a Roman Emperor: Caesar, Augustus, Justinian, and Constantine. It took 17 craftsmen over 50 hours to produce each statement piece, which weighed 16.8 kg (37 lbs.) when filled with whisky. The Speyside single malt whisky within is a non-age statement vatting of The Macallan from distinctive casks dating from the 1940s-1990s selected by their whisky maker, Bob Dalgarno.

So let’s take a longer look at the numbers. This sale breaks the record that stood for 1,160 days from Sotheby’s, New York for The Macallan 64 year old in Lalique Cire Perdue (hammer price $460,000). Careful checking of the Sotheby’s, HK website reveals that The Macallan (lot 212) in their Finest & Rarest Wines auction sold for HK$4 million, a figure boosted to HK$4.9million ($620,000) with the addition of the 22.5% buyer’s premium.

The Macallan M Hong Kong Auction

Hammer Time!

Due to local taxes and variable buyer’s premiums between auction houses, the only practical manner to meaningfully compare international prices is to use the hammer price. In this case, I calculate that HK$4 million to be $515,600, an increase of 12% over the previous record. Contemplate that if Sotheby’s, New York had charged 22.5% on the one-off sale of The Macallan 64 year old in Lalique Cire Perdue, the press releases of the day would have championed its sale at $563,500, not $460,000. Check the search engines and you’ll see that I’m right.

The large format of the bottle, (unique in The Macallan’s history) undoubtedly contributes to its value. You will recall that world records were claimed for the Glenfiddich Janet Sheed Roberts 55 year old when it was first auctioned. However, it was The Macallan 64 year old in Lalique Cire Perdue 1.5L, not the Glenfiddich, which was recognized by the Guinness Book of Records.

The Macallan M is a 6-liter decanter, so I make that an equivalent value of $64,450 per 750 ml (or $2,580 for a 1oz. pour; and there are 200 pours inside). The Macallan 64 year old in Lalique Cire Perdue was a 1.5L ship’s decanter, so by the same measures, that’s worth $230,000 per 750 ml. For comparison, the top price paid for Glenfiddich Janet Sheed Roberts 1955 was $94,000 for a standard sized bottle. However, Lalique is highly collectable and the desirability of a beautiful object of this magnitude can transcend the boundaries of whisky collecting. Standing at 28 inches tall, The Macallan M is definitely no standard bottle.

You can be too big, of course. The world’s largest bottle of single malt whisky, authenticated by the Guinness Book of Records, is a 105.3 liter bottle of 14 year old Tomintoul. It was valued at $164,000 to $246,000, but failed to sell at auction when offered last December. I don’t imagine it’s an easy pour at that size, but that’s still a staggering $1,168 per 750 ml at the low estimate! It can work both ways. A miniature of Karuizawa 1964 48 year old sold at an online auction last year for £1,100, the equivalent of $27,000 per 750 ml, even though a full bottle fetched a mere $6,000 at Bonhams, New York.

Well then, does age matter? It is noteworthy that the upper echelons of the list of top prices for auctioned whisky bottles are untroubled by non-age statement whiskies. Until now, that is. The Macallan M is a balance of some very old whiskies with younger whisky from the 1990s. Clearly, an age statement of around 20 years would have been legally accurate but inelegant and inappropriate to competently describe Bob Dalgarno’s creation. The Dalmore Oculus in 2009 (now the 14th most expensive bottle auctioned) is the closest equivalent project that comes to mind. Even so, it’s interesting to note that the majority of the most expensive whisky bottles ever auctioned were bottled in the 21st century and sold to collectors from new by the producers.

How about the charity angle? The proceeds of the hammer price will benefit charities in Hong Kong. Sotheby’s have agreed to donate part of their $100,000 buyer’s premium too. Although four ‘Imperiale’ M decanters were made, this was the only public offering. Two others sit in The Macallan archive and one was sold before the auction (not for charity) to a collector in Asia. That matters, as Bowmore found in 2012, following their two unsuccessful attempts to auction the Bowmore 1957 54 year old for $160,000 for charity when there were eight similar bottles for sale on Islay at the same price (and without the competition). The Bowmore 1964 auctioned for £61,000 at last October’s Distillers’ Charity Auction demonstrated just how well they could execute a one-off spectacular.

Lastly, how does the location of the sale in Hong Kong reflect on the auction market? Both decanters of The Macallan M have been sold in Asia. Sotheby’s wine department does not routinely deal with rare whiskies other than working in conjunction with The Macallan. Bonhams 2013 sales in Hong Kong were very impressive, and it has become one of the strongest growing markets for whisky auctions on the planet.

My congratulations go to The Macallan, Lalique, Baron & Baron, and Sotheby’s, on this outstanding achievement, not forgetting the successful bidder. I recognize this record as the world’s most expensive bottle of whisky ever sold at live auction (although history books should record the HK$4 million hammer price). Furthermore, I wager that only The Macallan can potentially break this record at present.

Whisky Returns to London

Wednesday, January 15th, 2014

Author - Dave Broom

It’s hard to know precisely what a distillery looks like these days, but I’m not expecting one that shares a building with a boxing gym, an Islamic Arts Centre, a cinema, and a bar. The blue neon sign declaring “The London Distillery” looks like some post-modern irony rather than a working plant. Outside, the muddy coffee waters of the Thames flow under Albert Bridge. Not, as I said, the location you think of when talking whisky.

In the tiled, high-ceilinged main room is a highly burnished, 650 liter copper pot called Matilda, built to the firm’s specifications by Christian Carl. At the other end of the room is the mash tun and stainless steel fermenters. Most excitingly, there’s clear spirit running into the large receiving vessel.

Although in the 18th and 19th ceThe London Distillery Companyntury the Thames and its tributaries were home to many substantial distilleries, the last dedicated whisky plant, Lea Valley, closed at the start of the 20th century. The notion of English whisky laid dormant for over a century, that of London whisky even longer. This is a significant event: whisky making returning to London after 100 years.

This is a chance for CEO Darren Rook and distiller Andrew MacLeod Smith to start creating a London style. It also indicates a relaxing of the attitude of the UK Excise, who had to have their own regulations quoted back at them in order for Rook and his team to be granted their license to distil spirits (rather than the license to rectify granted to gin distillers). Distilling whisky in the capital is a symbolic moment in the development of a national English whisky industry.

The way they are approaching it is hearteningly forensic. That trickle of clearic in the vat is the first runnings, not an end product. The next few months will be a period of assessment of the options open to them, “to find what excites us,” as Rook says.

Darren Rook and Matilda

Darren Rook and Matilda

Barley strains (brought in as grist) will be looked at as will yeast strains. “The idea is to use yeasts which have historically been used by London brewers,” says Rook. “At the moment we are trialing Young’s and an old Whitbread one. We’re working through the decades to discover which strain works best for which style.”

Matilda is equally flexible. The vapor can be run through a condenser, or diverted to a copper rectifying column should they wish to distil in a single pass. The plates in the column can also be removed, effectively extending the length of the lyne arm. At the moment, though, double distillation is being used, with the heads being returned to the next batch of wash and the tails into the second distillation.

Each distillation, handily enough, will give sufficient spirit for one standard cask; there’s no sign of quick-fix, small cask maturation being used. “It will be ready when we think it’s ready,” says Rook. “If that’s 25 years, then so be it!” He then floats the idea that chestnut casks might be trialed along with new oak, should they make a rye and corn-based whisky. Options open.

Consultant distiller John McDougall smiles. “Anyone can build a distillery,” he says, “it’s making it different that’s the tricky bit.”

Suntory Bids For Beam

Monday, January 13th, 2014

Author - Lew Bryson

It was revealed today that Beam, the all-spirits company spun off by Fortune Brands in 2011, has agreed to be acquired by Suntory for $13.62 billion, upon approval from Beam Inc. shareholders. Suntory already distributes Beam’s products in Japan, and Beam distributes Suntory’s products in several other Asian markets. The deal is targeted for completion in the second quarter of 2014.

Given numbers from the Impact Databank, the deal will make Suntory the world’s fourth-largest spirits company, behind Diageo, India’s United Spirits Limited, and Pernod Ricard; Bacardi will now be fifth. By dollar amount, this is a bigger deal than the Fortune Brands/Pernod takeover of Allied Domecq in 2005.

Assuming the deal goes through, this will put a lot of new whiskeys under Suntory’s roof. In addition to their own Suntory, Yamazaki, and Hakushu brands, and Scottish brands Bowmore, Auchentoshan, Glen Garioch, and McClelland’s, they will now own all the associated Jim Beam brands, Maker’s Mark, Canadian Club, Laphroaig, Ardmore, Teacher’s, Alberta Distillers, Cooley, and the Spanish DYC brand. They’ll also own the still-growing Pinnacle flavored vodkas, Courvoisier cognac, Sauza and Hornitos tequilas, Gilbey’s, and Skinnygirl cocktails.

What’s this mean to you, the whiskey drinker? Probably not much. Beam CEO Matt Shattock and the current management team will be left in place to run the business. Bourbon, Irish, Canadian, and Scotch whisky are all growing strongly. Given Suntory’s record with Morrison Bowmore, it seems unlikely that they’d change anything with their new acquisitions. Should we worry about Suntory owning both Bowmore and Laphroaig, and possibly closing one Islay distillery as unwelcome internal competition? Not for now, when both are selling well, though it may become a factor if there’s a downturn; but in that case, everything is going to be in play anyway.

The deal will increase Suntory’s debt load considerably; Moody’s Investors Service indicated that they would be evaluating the company for a re-grading in light of it. Should we worry about prices going up to cover the debt? Realistically, at this point in the whisky market…would we notice?

This was a sale that everyone interested in the industry had been expecting, at least on the “Beam sold” end. As a purely spirits company that was neither family-owned nor large enough to fend off purchasers, Beam was widely considered as a very likely takeover target. The “Suntory acquired” part was more of a surprise, in that one company is swallowing them whole. That’s the only potential downside; that a richer purchaser might have been able to put more into the new brands than Suntory will, but that’s all speculation.

In the end, it looks like a ‘move along, nothing to see here’ moment. Just another swapping in the game that has gone on for decades. Suntory has a good track record; rest easy. We might even see more Suntory whiskies in the world market.

Meanwhile, in a much, much smaller deal that was also announced today, two Tasmanian distilleries are merging. Lark distillery will acquire Old Hobart distillery and the Overeem brand. Both companies will remain as separate brands and entities, Overeem becoming a wholly owned subsidiary of Lark. Perhaps more importantly, Bill Lark will be reducing his time at the distillery and becoming the Lark global brand ambassador, and Casey Overeem will be doing the same. We’ll wait to see if this means more Tasmanian whisky in America.