tag:blogger.com,1999:blog-3101162324715983722.post7295739901057020932..comments2024-03-16T11:28:41.525-04:00Comments on Diving for Pearls: What Was the Scotch Whisky Boom? Part 2: Single Malt Prices in the US between 2007 and 2015Michaelhttp://www.blogger.com/profile/02288790197865570681noreply@blogger.comBlogger23125tag:blogger.com,1999:blog-3101162324715983722.post-37957058871926824692019-06-23T22:22:20.848-04:002019-06-23T22:22:20.848-04:00Thanks, Anon! It's sounds like you're on a...Thanks, Anon! It's sounds like you're on a good path. That "integrity bottling" approach often results in better quality whisky. That way we snoots are happy and the actual product quality is higher. Plus someone at the top saves money when they skip the filtration step.Diving for Pearlshttps://www.blogger.com/profile/02373371259792882112noreply@blogger.comtag:blogger.com,1999:blog-3101162324715983722.post-50107865307078101572019-05-17T16:55:23.762-04:002019-05-17T16:55:23.762-04:00This is a great blog and a great article series, t...This is a great blog and a great article series, thank you, Michael!<br /><br />As someone who is relatively new to the hobby (about 5 years), I am still on the journey to try every Scotch distillery I can, HOWEVER I decided (and was forced by my budget) to find a "calm in the eye of the storm". There are plenty of bottles in my "library" at this point so I never "need to grab a bottle". So I never EVER pay retail. Ever! I keep a spreadsheet of price history and I do travel a bit, so when I encounter something below "the usual", I'll purchase a bottle (or a case if warranted). I've picked up Laphroaig 10 for $40 and Ardbeg Ugi for $55 (on sale at Binny's), some nice 1L bottles at Niagara Falls Duty Free that are very well priced, some Costco buys, etc. And I've purchased bottles with $10 mail-in rebates (typically Diageo and LVMH malts). Never had a rebate not honored. On the other hand, I love Lagavulin 16 but I've never purchased a bottle - and likely never will, unless I find it cheaper. Ditto: Macallan. For less money I've purchased various expressions of Hazelburn and Longrow, Kilkerran, Benromach, Kilchoman, all cask-strength, Inchmurrin/Loch Lomond and so forth. I also avoid gimmicky NAS even though I'll make occasional exceptions for the likes of Ardbeg Ugi, assuming the price is right. I gravitate to value, which in my mind is aligned with what Ralfy calls "integrity bottling" - higher abv, NCF, no colorant, honest age statement or declared vintage.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3101162324715983722.post-35880455456304970802015-01-28T15:03:47.273-05:002015-01-28T15:03:47.273-05:00Thank you Kevin! Yes, Sku's post came as a hap...Thank you Kevin! Yes, Sku's post came as a happy surprise this morning. :) I promise that my reviews are (slightly) shorter than these Boom posts.Diving for Pearlshttps://www.blogger.com/profile/02373371259792882112noreply@blogger.comtag:blogger.com,1999:blog-3101162324715983722.post-78179903596463224392015-01-28T14:29:49.494-05:002015-01-28T14:29:49.494-05:00Dang. This is some damn fine detective work. Glad ...Dang. This is some damn fine detective work. Glad to have found this (courtesy of SKU).Kevinhttps://www.blogger.com/profile/07750058195438298365noreply@blogger.comtag:blogger.com,1999:blog-3101162324715983722.post-57858468366383405162015-01-14T18:58:12.739-05:002015-01-14T18:58:12.739-05:00That was a lot of words to say: prices should have...That was a lot of words to say: prices should have gone up but holy crap they went up a lot more than is justified by the data.Diving for Pearlshttps://www.blogger.com/profile/02373371259792882112noreply@blogger.comtag:blogger.com,1999:blog-3101162324715983722.post-67177287815360692092015-01-14T18:52:53.319-05:002015-01-14T18:52:53.319-05:00The amounts are the same for 1982 and 2007 (when a...The amounts are the same for 1982 and 2007 (when adjusting for inflation) as far as how the companies price the volume that they're exporting. What distributors, importers, and retailers do/did after that I attempted to illustrate with the US price spreadsheet. But I don't have that data for 1982, just 2007-2015. I wish I could break it down between maturation lengths using the SWA's info but I can't because they lump everything over 10 years into one line. So, without that age info and without a big 1982 US price dataset to pull from, I'm not sure how it would turn out. You could be right, or the whole ultra-premiumization could, historically, be a new approach during this past decade.<br /><br />Regarding the increase in prices between 2007 and 2015, no one should be surprised that the prices went up. It's the degree of the ascent that's tough to reconcile. Companies could easily utilize market forces to raise the price per liter back out of lower historical regions, but the market forces didn't exist for a boost of this size. There's the external force of inflation (17% in UK, 14% in US) which would explain some increase. But the internal forces of supply and demand weren't as strong as advertised. Volume sales only increased two of those years equalling a total of an 8% increase over the whole stretch, and malt whisky % of the exports went from 10% to 14%. So a 20% increase in prices (the green shaded cells in the spreadsheet) would have been understandable/defendable, maybe even 25% could be argued depending on the volume sales of older malt. But 44% worldwide and 72% in the US? I don't see anything motivating that other than various unkind descriptors. Though outrage mileage may vary.Diving for Pearlshttps://www.blogger.com/profile/02373371259792882112noreply@blogger.comtag:blogger.com,1999:blog-3101162324715983722.post-29441354939030202502015-01-14T09:29:43.879-05:002015-01-14T09:29:43.879-05:00Hey--I don't have any concerns per se; just tr...Hey--I don't have any concerns per se; just trying to wrap my head around all this. Do I understand correctly then that the situation in 2007 is as though there has been no effective price increase since 1982? That if you were to redistribute the rise in prices from 2007-15 to 1982-2015 it wouldn't look like such a dramatic increase, especially for older malt? If I am understanding correctly, does this mean that while on the one hand we shouldn't fall for the talk of a boom we shouldn't also be too exercised about the increase in price (on the whole)? I'm sorry if I'm not understanding. You may have to explain this slowly, as though to a developmentally challenged golden retriever.My Annoying Opinionshttp://www.myannoyingopinions.comnoreply@blogger.comtag:blogger.com,1999:blog-3101162324715983722.post-54270601914562887312015-01-14T01:01:28.495-05:002015-01-14T01:01:28.495-05:00The results of price +/- will definitely change de...The results of price +/- will definitely change depending on the analysis's starting year. I tried to have a good reason to choose 2007. 2007 was when the SWA's numbers started showing the industry's sudden large value gains. Those gains were largely due to jumps in the value assigned to the whisky, rather than big jumps in actual liquid being exported. Since the price per liter started its jump in 2007, that's where I started this analysis to see how individual whiskies moved as well. The potential problem I think you're pointing out is, what if the prices were at a low point in 2007 due to the whisky bust? That would mean the prices would understandably go up because they were already depressed.<br /><br />If I adjust for inflation, the price-per-liter in 1981 is exactly the same as it was in 2007. Once the market busted in 1983 (though export volume sales never dropped more than 10% overall during the "bust"), the adjusted price actually increased slowly until it peaked in 1992 then gradually dropped until 2007 when it's back to the exact pre-bust prices. So while price-per-liter was at a low point in 2007, that's where the price sat before the bust (during which the price-per-liter was actually higher). I feel like a graph would explain this better than words because you make a good point and I want to use visuals to explain my logic.<br /><br />But in my analysis I also wanted to show that different companies have reacted very differently to the situation. Even if they were due to a correction for depressed prices, the gains aren't a boom but rather a return to normalcy. But if the SWA is right, then the value assigned the average liter of whisky was the same just before the bust as it was just before the boom (after adjusting for inflation). Thus the 2007 starting point.<br /><br />I hope this addresses your concern. There'll be a part 4 in February(?) that might help.Diving for Pearlshttps://www.blogger.com/profile/02373371259792882112noreply@blogger.comtag:blogger.com,1999:blog-3101162324715983722.post-36446042341509390642015-01-13T21:16:02.902-05:002015-01-13T21:16:02.902-05:00I meant also the question of whether the price of ...I meant also the question of whether the price of old whisky was depressed post-1983 such that the sharper rise in its prices vis a vis younger whisky might amount to the same as it would have if they'd all increased at more or less the same rate over the entire larger period. I have no idea if this is true, of course--it's just something you hear a lot of old-hands say: that the whisky loch post the 1980s bust created an artificial situation that cannot be taken as the norm against which to measure the current situation. In other words, I'm wondering if 2007 is too late a start for such an analysis.My Annoying Opinionshttp://www.myannoyingopinions.comnoreply@blogger.comtag:blogger.com,1999:blog-3101162324715983722.post-66237554478862211522015-01-12T14:59:32.725-05:002015-01-12T14:59:32.725-05:00I was tinkering with UK's inflation data while...I was tinkering with UK's inflation data while writing these posts. There could seriously be another series of posts just on the history of whisky prices and inflation. As an act of mercy I'll keep it to one post, sometime in the future.<br /><br />One argument could easily made that there was no value boom at all, that it was all just a correction for inflation. If my maths be correct then our current Scotch prices are less than half of what they were in 1949 when adjusting for inflation. But there was also a period of time during The Dark Times (specifically 1990-1996) when the export price-per-liter was much higher than now (again adjusting for inflation) as if the industry was trying to recoup some of the damage. Yet, the price did sink a bit by 2006. I'm not sure how all of this plays into our US prices, but it likely had an effect. <br /><br />While raising prices during an bullish period to correct for lower price during a bearish period is probably good business, it's a tough sell to customers. Meanwhile, short-attention-span investors wouldn't want to hear it. Anyway, I'm just speculating but calling it The Whisky Inflation Correction would only be sexy to 0.1% of the population. Whisky Explosions are much hotter.Diving for Pearlshttps://www.blogger.com/profile/02373371259792882112noreply@blogger.comtag:blogger.com,1999:blog-3101162324715983722.post-33407187546200712932015-01-12T10:28:53.674-05:002015-01-12T10:28:53.674-05:00I don't really understand any of this but I...I don't really understand any of this but I'm outraged anyway.<br /><br />(Could the argument be made that prices at the start of the period you looked at were depressed on account of the previous bust? And so that some of the subsequent rises is a correction?)My Annoying Opinionshttp://www.myannoyingopinions.comnoreply@blogger.comtag:blogger.com,1999:blog-3101162324715983722.post-55505424306212245522015-01-11T21:31:31.257-05:002015-01-11T21:31:31.257-05:00@Jordan. Hazelburn's prices are so weird. I...@Jordan. Hazelburn's prices are so weird. I've seen the 12 selling in some places for less than the 8 sells at others. Or other places that have both an sell the 12 for only $5 more. Then there was the weird Costco sighting of the 12. II wish I liked Hazelburn more. I don't think it sells well in the US. There's also a big swing in Springbank prices across the country and I'm wondering if that's turnover related, or something else. For instance, on the East Coast and in some of the Midwest, it's not difficult to find Springbank 18 for $125. On the West Coast, we're lucky to find it less than $180.Diving for Pearlshttps://www.blogger.com/profile/02373371259792882112noreply@blogger.comtag:blogger.com,1999:blog-3101162324715983722.post-34037898730427038302015-01-11T21:25:54.182-05:002015-01-11T21:25:54.182-05:00@Florin. All but one of Burn Stewart's product...@Florin. All but one of Burn Stewart's product refreshes jumped in price more than 15%. The odd one out (always the odd one!) was Ledaig 10 which didn't change much at all. Deanston 12 and Tobermory 10 were up over 60%.<br /><br />I'm very interested in brand shift. It's still sort of new. Many of these shifts happened in 2011. Curiously that's when things started going downwards across the board for whisky's financial numbers. I'm still wondering when Macallan will be bringing their purdy colors to America. Could this be the secret reason why Mac 12's quality has gone down? So that no one will miss it when it's gone? Don't worry Edrington, we'll keep this secret between us.Diving for Pearlshttps://www.blogger.com/profile/02373371259792882112noreply@blogger.comtag:blogger.com,1999:blog-3101162324715983722.post-91659651245252710722015-01-10T18:20:42.550-05:002015-01-10T18:20:42.550-05:00As a statistical note, even though the average pri...As a statistical note, even though the average price is not adjusted by store sales volume, as long as the store sales remain relatively stable (or grow at same rates across stores), the *change* in price over time will be correctly estimated. In other words, the price bias will be the same at all time points, and will be canceled out when looking at changes (differences).<br /><br />To me, there's another very important aspect that you could consider in your analysis, Michael. And that has to do with the "brand shift". By this, I mean the gradual shift of various brands to new expressions (often NAS or with reduced stated ages), that are either added to, or ultimately meant to replace, the existing "legacy" expressions. Macallan is a prime example, but others would include JW 15yo Green & 18yo Gold, Glen Garioch 10yo & 15yo, Longmorn 16yo, Balvenie 15yo. The reverse phenomenon is that of pimping up the expression - 43-46% abv, non-chill filtering, no fake tan, such as Tobermory and stablemates Bunnahabhain & Deanston, Glen Garioch (again!), maybe BenRiach? - which justifies a reasonable increase in price of 10-15% in inflation-adjusted dollars. Florinhttps://www.blogger.com/profile/14445344658258056628noreply@blogger.comtag:blogger.com,1999:blog-3101162324715983722.post-18884031886122416912015-01-10T18:01:47.536-05:002015-01-10T18:01:47.536-05:00That's interesting indeed. A Google search sh...That's interesting indeed. A Google search shows anecdotes of price matching vs. Total Wine and Costco (but no up-front, stated policy). However, I doubt that down here in San Diego they'll start matching prices for Total Wine (70 miles away) or Hi-Time (90m) or K&L. Worth looking into.Florinhttps://www.blogger.com/profile/14445344658258056628noreply@blogger.comtag:blogger.com,1999:blog-3101162324715983722.post-25700355374727412792015-01-09T22:41:03.421-05:002015-01-09T22:41:03.421-05:00Hmm, I can't seem to find their price match po...Hmm, I can't seem to find their price match policy online. But they did match the price on a bottle of Hawaiian vodka that was lower at Hi-Time. However another store wouldn't match Hi-Time's $65 price on Bushmills 1608 (which is $100 at BevMo) so I just bought the bottle online at Hi-Time and had it shipped to my home. So it's a bit dependent on the store manager.Erichttps://www.blogger.com/profile/13215982348779717643noreply@blogger.comtag:blogger.com,1999:blog-3101162324715983722.post-9813992311917564432015-01-09T21:06:20.920-05:002015-01-09T21:06:20.920-05:00Given how much Springbank prices jumped when they ...Given how much Springbank prices jumped when they switched distributors from Preiss to Pacific Edge, it does seem safe to say that it's almost all distributor-driven in the US. Though I think Springbank also has some weirdness because the turnover is low enough that it often takes a while for price increases to flow through to all retailers, so there's often a lot of variation - e.g. Hazelburn 12 Year selling for anywhere between $60 and $120.Jordanhttps://www.blogger.com/profile/06448702693643593156noreply@blogger.comtag:blogger.com,1999:blog-3101162324715983722.post-10059956903259581382015-01-09T18:54:03.058-05:002015-01-09T18:54:03.058-05:00Hey Andrew. Since Wine Searcher only collects pric...Hey Andrew. Since Wine Searcher only collects prices (though they do it daily), I think their Price History toy is just there to give shoppers an idea about what the median price for X Wine would have been on X Date. So they wouldn't weigh Total Wine & More more than Mr. Kegs. (I think.) They'd have to get sales volume data from each retailer. If they had that info, that would be incredible, but I don't think individual stores would part with their figures even if it was kept confidential.<br /><br />Yeah, brand volume would determine the big overall single malt price increase number. Sadly, individual brand sales numbers are difficult to come by. I'll show a rare example of one in Part 3. Meanwhile, the companies are happy to share their (book-cooked) profit numbers to the market/investors. But it's safe to say that the big companies' (Grant, Diageo, Pernod, and Edrington) price raises fuel the main number almost entirely.<br /><br />It's good that you referenced Springbank since they're so very different than the big kids. Their processes are less modern and sleek, requiring more human labor, so their overhead is much higher. Meanwhile, their US distributors have plumped up their US prices to crazy levels, sometimes almost 2x the UK price. And I wouldn't be surprised if the distributor isn't taking most of that cut.Diving for Pearlshttps://www.blogger.com/profile/02373371259792882112noreply@blogger.comtag:blogger.com,1999:blog-3101162324715983722.post-20526372193974838532015-01-09T18:38:50.512-05:002015-01-09T18:38:50.512-05:00Well, Dalmore was kinda weird according to the Win...Well, Dalmore was kinda weird according to the Wine Searcher history:<br />--12 year old - a 72% price increase over the 8 years, thanks to a fancier bottle and 7% more water added<br />--18 year old - was $200 for a few months in 2007, then there was a huge price change down down to $115. Then it dropped as low as $85 in 2010 and has since gradually increased 77%. So I have no idea what went on there.<br />-- 15 year old - the history only starts in April 2009, but it's only gone up 20% since<br />-- Gran Reserva - history starts in May 2009 and the price has basically treaded water since<br />-- King Alex III - again 2009, and its price is all over the place, ending up at less than a 10% increase since 2010<br /><br />So even if I moved the bar to 2010-2015, its Dalmore's products' average increase doesn't change much.<br /><br />I had no idea BevMo had a price match policy. Hmm......Diving for Pearlshttps://www.blogger.com/profile/02373371259792882112noreply@blogger.comtag:blogger.com,1999:blog-3101162324715983722.post-44943164812186304742015-01-09T18:25:18.419-05:002015-01-09T18:25:18.419-05:00Thank you! I hope to have Part 3 posted early next...Thank you! I hope to have Part 3 posted early next week.Diving for Pearlshttps://www.blogger.com/profile/02373371259792882112noreply@blogger.comtag:blogger.com,1999:blog-3101162324715983722.post-48506413969289787702015-01-09T10:16:31.744-05:002015-01-09T10:16:31.744-05:00Amazing work, well done and thank you very much fo...Amazing work, well done and thank you very much for sharing! Meleklerin Payıhttp://www.meleklerinpayi.comnoreply@blogger.comtag:blogger.com,1999:blog-3101162324715983722.post-65659508584229291082015-01-08T16:21:46.895-05:002015-01-08T16:21:46.895-05:00Firstly, absolutely fantastic work; it's amazi...Firstly, absolutely fantastic work; it's amazing the kinds of "reverse-limbo" some companies are trying to play with us. <br />But I have to wonder, do the Wine Searcher figures take into account sales volume? I can see it that some of the larger sellers might have better prices and sell a ton more than specialty retailers, especially for lower-end products like Glenfiddich or Glenlivet 12. <br />Along with store volume, what about brand volume? If the prices of Springbank 18 and Glenfiddich 12 both go up by X.XX%, it would make sense that so much more profit could be extracted for William Grant and Sons because of it. Could this be how some smaller brands internally justify higher prices and higher inflation, that the overall net burden on consumers is still less that that of a bigger brand's hikes?<br />I could be way off on these, but I'd love to have it made sense of.Andrewnoreply@blogger.comtag:blogger.com,1999:blog-3101162324715983722.post-82713888234082860132015-01-08T15:16:02.306-05:002015-01-08T15:16:02.306-05:00I'm a bit surprised United Spirits didn't ...I'm a bit surprised United Spirits didn't see significant price increases compared to Edrington or William Grant (still 25% increases are a big change). Does that mean Dalmore has always been pricey compared to other whisky?<br /><br />While I love going to Beltramo's and K&L, BevMo tends to be closer to home for me. BevMo does have a price match policy though certain store managers are more amiable about it than others.Erichttps://www.blogger.com/profile/13215982348779717643noreply@blogger.com