On Tuesday, I took a look at where the aggressive growth was happening during the Scotch Boom. While volume was indeed up, it had really only grown 20% over 30 years. But during the same period, export value grew 470%. Exports were the engine behind the growth since UK consumption had fallen drastically. Aged malt stocks were declining at a decent clip, but malt production increased once those older stocks started getting bottled at a faster pace. As a percentage of exports, single malts were growing rapidly and exports to the United States were also burgeoning, especially when considering sale value.
I was probably a little nuts to go as far back as 1980, and should have focused more on the boom time. 2007 was a major lift off year as the annual volume shot past 300 million liters and value jumped 14%. Between 2007 and 2013, export volume was up 8%, while value was up 51%. Again, note where the real growth is happening: £££. Between 2008 and 2013, Scotch's largest export market, the United States, had a 19% growth in volume and a 120% growth in value.
With growing single malt sales driving growth and the US market zooming along, I'm going to take a look at single malt prices in the US between the years of 2007 and 2015.
Background on the data:
I am using Wine Searcher's Average Wine Price system, selecting only US retailers. Their site has an explanation behind how they arrive at averages. To summarize, they do not include auctions; all prices are adjusted to 750mL bottles; they remove the highest and lowest 20% prices in order to correct for pricing errors or egregious retailer choices. Aside from the ability to scroll through pricing history, Wine Searcher's big draw for data purposes is their retailer count. For instance, if you search for Johnnie Walker Black Label they'll actually stop their listings at 500 retailers. Their system has over 350 retailers selling Talisker 10. So they are pulling from a very large data set. And, anecdotally, their site has proven very reliable and accurate in my searches for beers, wines, whiskies, brandies, etc. But please note, this is not an advertisement for Wine Searcher. Their Average Wine Price history requires a paid subscription and I've been known to mooch off of other people's accounts from time to time.
I have also only included single malts for which Wine Searcher has a full history starting in January 2007. So you will not find a number of well known whiskies in my chart. Some of our faves didn't hit the market or the system's history doesn't have enough data until 2008 or later. Distilleries like Bruichladdich are not represented at all because they haven't had a single expression that stayed on the market for these eight years. Also, I've noted when questionable data pops up in the "Notes" column to the right of the "Total Increase" column.
I encourage you to check out my shared Google Doc at this link. I'm not sure what you see on a "shared" doc, but I hope it'll let you sort or filter. There's a lot of info to be seen and it's probably more useful than the rest of this post, so enjoy!
Because I'm looking at these prices from the point of view of the whisky drinker, I considered his or her financial reality when color coding the price increases. The National Average Wage Index went up 11% between 2007 and 2013. Between 2007 and 2014, the US's Consumer Price Index rose 14%. Using those numbers, I got to 15% as a midpoint between the rise in wages and inflation over the expanded eight years.
No whisky producer is going to 15% on the nose so I gave them some wiggle room and assigned the green color a range of 10-20%. Light blue notates a 0-10% rise. Any whisky that went down in price since 2007 gets a cool dark blue. On the other side of things, a whisky that went up between 20.1% and 50% gets pinked. 50.1% to 100% gets a darker pink/red. And a whisky that had an increase of over 100% (yes, there are some) gets a fire truck red.
Now, I was going to just share the list with you and say, "Have fun!", and leave it at that. I quite seriously have commentary on every single one of the listed whiskies. But since we have only so many hours on this planet, I'll limit my observations.
Please note, these charts are not as solid as Tuesday's, since every whisky is weighted the same here. If the sales counts were available for each one, I'd be happy to weigh them thusly. So I wouldn't recommend leaning too heavily on these visuals.
BY AGE GROUP
Note: the stacked graph totals in the first chart do not match the final totals in the second chart exactly since each year's increase gets compounded.
These two are my favorite graphs from this post, as they're less unbalanced than the others below.
The charts reveal both the most obvious shift in pricing and the seizing of the luxury market. Almost without exception, old malts' prices skyrocketed. Perhaps it was due to scarcity or it was the realization by marketing units that Old Whisky could be the next Old Cognac or Old Bordeaux. There was an ultra-luxury market to be tapped. And tapped it was.
Meanwhile, starter (younger and cheaper) malts increased somewhere around the CPI inflation range. As whiskies increased in age, so does the rate at which their prices grew. This all fits a narrative creepily well. I was relieved to see the non-age statement whiskies remain conservative, but then again the real NAS crop has only been on the market a couple of years. It's also cute how Glenlivet 12 and Glenfiddich 12 dance instep perfectly like an old couple, at 25.71%.
Note: As noted above these charts are occasionally comparing apples to oranges. Glenfiddich 12 should not carry the same weight at Glenfiddich 40 due to the massive difference in units sold. These charts are only meant as a brief summary. The spreadsheet has the good stuff. Also, for these two graphs I've removed the owners who had only one whisky in the spreadsheet.
Well, this sadly proves what we all knew well. The Edrington Group is at the forefront of price hikes, from Macallan to Highland Park. They take it sort of easy with their 12 year olds, but then it gets gory. The pricing on the Mac 18 and HP 18 have led even the uninquistive to wonder what the heck is going on.
Meanwhile, for all of my griping about Diageo's price increases, they're not as terrible as other better loved companies'. Their Classic Malts' pricing increases average in the high-20s while the Distillers Editions are in the low teens. Frankly, it's only Talisker whom they decided was vastly underpriced and did so after 2011. In the stacked graph above, that big red bar over Diageo's name is entirely fueled by Talisker's price hikes.
The Springbank folks have barely moved their prices. And, surprisingly, the same goes for the LVMH whiskies. No one should be shocked if one of those two companies start raising their prices soon. The other surprise is William Grant standing at number 2. Their 12s had light red boosts, but all of the older bottlings had huge price bumps.
Hmm, at least this chart is slightly better than the ownership ones. But it does have one-offs like Tamdhu and Longmorn standing with multi-whiskied names like Glenmorangie and Glenfarclas.
But, look who sits amongst the tallest bars, Macallan and Glenfiddich, the two best-selling single malts in the world. Glenlivet and Balvenie, two other major sellers, sit not too far behind. It makes one appreciate Glenmorangie (4th best-selling malt) and its negligible increases. Laphroaig and Ardbeg haven't moved much, yet. Meanwhile, all of Bowmore's whiskies went up in price significantly. GlenDronach is too high up on the list due to what might be a data error, but BenRiach sits in a very good position as they haven't really moved their prices in eight years.
There are some interesting stories with the individual malts. Laphroaig 10 hasn't gone up in price as much as I'd thought it had, neither has the Cask Strength and Quarter Cask. Who knows what Suntory will do with that reality, especially since they've raised the prices on all of their other products quite a bit. I was very happy to see so many cells in blue from companies I like (Arran, BenRiach, Benromach, and Springbank). And while most of the big distilleries plumped many of their prices, quieter distilleries like Glen Moray and Tomintoul kept some whiskies in the blue. And half of this country is paying more than $44 for Glenlivet 12? Yeesh.
What we don't really see in the spreadsheet is where the truly massive US export price/liter growth, as noted in yesterday's post, comes from. The SWA says the price per liter of US scotch exports grew more than 80% between 2007 and 2013 alone. Comparatively, the sheet underestimates single malt prices increases. In the spreadsheet, I would say that even if we weighted the larger distilleries more, we're not seeing an increase of more than 45%, though probably closer to 40%.
(Taking Big Brother Blend into consideration, Dewar's White and Johnnie Walker Red's prices rose about 23% in 8 years. Black Label's went up 28%. Chivas 12's rose 20% and 18's 24%. Grant's went up 21%, J&B only 8%. Ballantine's went up 43%, but that doesn't take us any closer.)
At this point I can only theorize about the difference. Since Wine Searcher lists the retail prices, could it be that the retailers themselves were absorbing a lot of the brunt as they bought their supply from distributors? Thus they hoped to turn a profit from quantity rather than blowing up their prices any further? Or, by "topping and tailing" the top and bottom 20% in their data set, does Wine Searcher miss out on the larger retailers who charge prices high above the average? Wine Searcher does not include BevMo, a large national retail chain whose non-sale prices on single malts tend to be higher than most other stores in California. My list cannot include newer malts, including (as already mentioned) all of the new NAS whiskies; perhaps those whiskies already went up in price? While there are no independently bottled whiskies here -- and those have gotten much more expensive over the last two years -- they do not make up a significant part of national sales. Or maybe it's all Macallan 18's fault.
Considering these elements, we could be accounting for a price rise of 45-50%. That is still punishing to whisky drinkers. If the wage index went up around 14% over those eight years and inflation went up 16%, we're certainly not sitting on any extra discretionary cash here. From the drinker's standpoint, how are we going to keep paying for this?
For the whisky producers who have profited off the value boom, how is this a sustainable business model? Do you expect the structure to hold as you raise prices two-and-a-half to three times the rate of inflation indefinitely? And how many shaky quarterly reports does it take to get to the center of a Tootsie Roll Pop?
Or has the vaunted growth already started to give way to a plateau or loss? In Part 3, I'll consider if The Boom was, not is.