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Monday, March 12, 2012

The Macallan - A History

This week is Macallan Week on the Single Malt Report.  Each day (with one notable exception) I'll be submitting a blog post about The Macallan.  Today, I'll talk about the distillery and the company's history.  Then I'll be posting single malt reports on three of their products throughout the week.

In 1824, the Elchies Distillery obtained a license to legally distill whisky.  It's widely believed that farmers on the Elchies Estate had been divining the spirit for many decades, but with the license they gained the legal right from The Crown to make and sell (and pay taxes on) the product.

Alexander Reid is credited as the founder of the distillery and ran it until his death in 1847.  After that, ownership bounced around through his family members for some time.  James Stuart obtained the whisky license in 1868, then later purchased the distillery outright in 1886.

Immediately after his purchase he rebuilt the distillery in stone, which was probably wise since they were producing an instantly combustable product within a wooden building.

In 1892, Roderick Kemp sells off his co-ownership of Talisker.  His attempts to buy Glenfiddich, Cardu, and Mortlach fall unsuccessful.  But his purchase of the Elchies distillery from Stuart is a success.  Kemp improves the quality of the spirit, rebuilds and expands the distillery, then names it Macallan-Glenlivet (after the Macallan church near the Elchies estate).

Upon Kemp's death in 1909, ownership goes into the hands of a trust run by his descendants for the next 87 years.  In 1968, the trust agrees to two large business decisions.  Firstly, they issue an IPO for 37.5% of the company in order to fund a massive updating.  Secondly, they begin casking the spirit to prepare for official bottlings of single malt.  Around this time, the product is renamed, The Macallan.

In 1980, their sherry-seasoned Spanish Oak matured single malts go on sale worldwide.  By 1984, they are the third best selling single malts in Scotland, and fifth best in the world.

In 1996, Highland Distilleries and Suntory execute a hostile takeover of company ownership.  In 1999, Edrington Group Ltd (70%) and William Grant & Sons (30%)  -- as the 1887 Company -- buy Highland Distlleries, which owns 75% of Macallan while Suntory holds onto their 25% share.  In 2001, Macallan is taken off the public stock market.

Having largely set the standard for lush Speyside sherried whiskies, Macallan throws the market (and fans) for a loop by releasing a Fine Oak brand that combines whiskies matured in Spanish Oak sherry casks, American Oak sherry casks, and American Oak bourbon casks.  This move rankles gruntles, but ultimately creates a different brand of whiskies that allow the malt spirit itself to shine through.

Until 1994, Macallan had only used the Golden Promise barley strain (native to Scotland).  But because that strain produces a low yield of a grain that further yields low spirit quantities, Macallan switches to more productive strains until phasing out Golden Promise altogether.  Currently they still use a local barley called Minstrel in about 20-30% of their malt.

The distillery uses very small stills which in turn give the malt its creamy style, so when the business expands they build more stills rather than buying larger ones.  According to their figures, The Macallan receives 65% of all the Spanish Oak casks imported to Scotland, and they further invest large sums in oak and spirit scientific studies (expenditures of which they often boast).  The sherry casks they purchase are first seasoned with Mosto grape juice for three months, then hold sherry for two years, then are brought to Scotland for filling and storage.  About 70-80% of their casks are first-fill, then the remainder are second-fill.

Generating more than half of their business in Asia, Macallan has been doing battle with The Glenlivet for second place in worldwide single malt sales since 2004.  In 2010, thanks to a 14% gain, they placed second behind first place Glenfiddich.

They promote themselves as a luxury brand in their advertisements as well as through their partnerships with jewelry, watch, and crystal companies.  This has allowed them to sell their products at a significant premium despite the enormous level of supply worldwide.

On Wednesday, I'll take a look at their US standard expression, the 12 year old Sherry Oak.  (In the meantime, you can also take a peek at my report on their Cask Strength release.)