The Whisky industry is heading into a new decade full steam ahead. The question is, will it continue to grow and prosper or is it destined for another crash?
e-Valuing Whisky in a Postmodern World
The Scotch Whisky Association in their 2018 report said that a new generation of whisky industry entrepreneurs was emerging; and the modern consumer demographic was shifting from North American and European markets to Asian markets. New Asian whiskies were capturing the limelight, with India now leading the top 30 whisky sales in the world by volume.
For the single malts, Asian whiskies of note are those produced in Japan, such as Hakushu, Kakubin and Black Nikka Clear and in Taiwan, Kavalan is taking whisky aficionados by storm. New distilleries are emerging throughout with Pernod Ricard, the second largest producer in the spirit’s industry, announcing in 2019 that they are investing $150 million on a new distillery in China. Elsewhere, there has been strong growth in volume of Scotch exports to Latvia, Russia, China, and the Middle East. Although blended Scotch makes up eight-five to ninety percent of the global Scotch whisky market with its blend of grains and malt, single malt Scotch represents the essence of what the whisky distilling industry is all about.
Tradition or Innovation?
Tradition is about the distilling process and the methods and practices that have been maintained over the past several hundred plus years. There have been numerous changes since the days when distilleries grew their own barley and had its own malting floor. New technology has created efficiencies in stages of production for meeting the growing demand. Although technology is important, consistency and quality of the whisky is what remains central.
In search of new markets, some Scottish whisky producers are pushing back on long standing practices of stating the age of the whisky and introducing instead ‘non-age statement’ brands as if hiding their youthfulness.
Producers are now experimenting with different refill casks that range from beer to ice wine. And, independent bottlers are seeding further experimentation in defining their place in the global market. However, as Dave Broom noted in his August 2018 ScotchWhisky.com article, “[t]rying to be all things to all drinkers isn’t the answer”.
Experimentation and innovation may be important strategic tools, but innovation, in and of itself, can be a “blind alley” as it lacks a connection to the whisky consumer. However, with more and more distilleries producing new products and with it more marketing hyperbole, the consumer/explorer can be easily overwhelmed.
Redefining the Consumer
The challenge in a geo-expanding whisky market is redefining the ‘consumer’, especially one that no longer fits the monolithic Western European profile. The ‘new consumer is more likely polylithic and drawn to simulacra, through visual interpretation, rather than branding narratives, emphasizing cultural value rather than story. In this context, whisky is a commodity, a must-have, a signifier of prestige. But with prestige, there are those who find ways to replicate and black-market the product in midst of demand.
The expectation is that there will be more replication, not less, and this will lead to market ‘blindness’ and potential health-related issues for those who indulge. Market blindness is a huge concern for collectors who will no longer trust whiskies they are buying.
Notwithstanding the industry challenge, the question is when will market expansion cease to continue?
We know that in the late 1800s, the ‘Pattison Crash’ was precipitated by greed; the 1930s and 40s by war and religious intolerance; and the 1970s and 80’s by changing demographics of a baby boomer generation that was now old enough to drink, but no longer interested in being the image of their parents. This time, will it be due to cultural contraction, another economic recession or some unbeknownst market disruption? And, how will it be mitigated or possibly avoided?
The current industry focus has been on branding, innovation and experimentation. But if innovation and experimentation is what we can expect, where does tradition and integrity fit?
For some, single malt whisky is trendy and fits with their lifestyle choices. But for others it is not about trends or enticing branding narratives. Their interest in whisky came to them through self-discovery – some with friends and others alone. Intrigued and curious, to the extent that they were able to find a deeper sense of what a dram offers, they knew that beyond the myths and lore, a good single malt Scotch was something special to pair with their moods, share with friends or partake in activities that made pairing enjoyable.
Recognizing that change is a constant, the whisky industry cannot be stuck in its own drive for profitability and economic gain or worry about whether they will continue to be the whisky of choice with the emergence of new whisky entrepreneurs. The essence of a single malt Scotch is its tradition. It has certain features at its core, some locked in regulation and others to reflect the integrity of the product. We all must be willing to go back to that place of being curious that allows for new core experiences and new ways of doing things. This is when we rediscover our sense of authenticness. A true pairing with the consumer/explorer is when the distiller continues to value authenticness, by demonstrating less concern about cosmetics (such as chill filtration or adding E150a to colour their whisky) and more concern for maintaining the artistic expression that emboldens their spirit. The true essence of the single malt Scotch is in the expression of what is offered and the tradition in which it is produced. Underlying the essence is, and should continue to be, a willingness on the part of the industry to listen to the consumer/explorer to maintain their trust and loyalty. Authenticness is about defining who we are, rather than being defined by others. For those who have discovered this, we raise a dram and wish you a Happy, Healthy 2020!