Monday, December 15, 2014

2014: The Year in Whiskey

The year in whiskey 2014 was a tumultuous one.  It started with buy outs and consolidation, shortages and the continuation of what seemed like a boom market that would go on for years, but there was trouble ahead.  By the middle of the year, some unsavory aspects of the American "craft" industry garnered a lot of mainstream press, and the year ended with diminished sales and expectations in the world of Scotch. 

Major business news came early this year.  In January, Japanese beverage giant Suntory purchased the iconic Jim Beam company for $16 billion.  Then, in March, Campari purchased Canadian craft distillery Forty Creek.  Meanwhile, the Bladnoch Distillery, a lowland Scotch distillery with a cult following, went into receivership.

While the American craft revolution continued, there were some bumps in the road.  The issue of whiskey sourcing, well known among the whiskey crowd for years, went mainstream due to a Daily Beast article that went viral.  This led to further publicity and lawsuits targeting well known producers such as Templeton Rye and Tito's Vodka and curiously, a suit against Maker's Mark, which has never misled about its product.  All of this tumult led to some results with  Templeton and Bulleit changing their labels to more clearly state the source of the whiskey.  Meanwhile, other sourcing companies went further in the direction of distilling their own with Willett releasing its first in-house whiskey and Michter's building a real distillery in Kentucky.

Then there was a melt down at Balcones Distillery in Waco, Texas, one of the most successful American craft distilleries.  The Balcones Board sued founder Chip Tate, and the suit exposed some of the tensions that can arise among investors in small distilleries.  The battle appeared to end earlier this month with the Board buying out Tate's share of the business.

Demand for aged whiskey continued to outstrip supply in the US, leading Sazerac to drop age statements from Very Old Barton and Old Charter, but there were signs of a slowing market as well.  A crackdown on bribery in China led to diminished sales of Scotch in a market that many had seen as limitless, and this fall, Diageo announced that it would halt some expansion plans after their quarterly report showed a drop off in sales.

 My guess is that the whiskey frenzy, on an international level, is going to start to wane in the next few years.  American whiskey joined the frenzy later than Scotch, so it probably has a few years of insanity left to go, but I wouldn't be surprised to see a continued slow down next year that extends to the American market as well, though the companies will probably be able to make up any difference with sales of flavored whiskey, which remains wildly popular.

All in all, a rocky year for whiskey, but let's see what the next year holds.  Any predictions?


Anonymous said...

Predictions for 2015. What do you do when you have massive demand for ultra premium bourbon, but a shortage of aged bourbon?

Barrel Finishes. Barrel finishes everywhere.

Steffen said...

It's the bottom end of the market that will (is?) crashing. I reckon the top/medium end is going to be just as popular for a long time. If the Johnnie Walker Red Crash is going to see more whisky being aged, I won't complain


Keith W said...

Has "young whiskey" become a semi-official category in the US, with marketing teams spinning it as edgy and like the stuff cowboys and bootleggers drank; not that overly mellow aged stuff OLD PEOPLE like. I see that continuing in 2015.

As for 2014 -- it was all a little hysterical for my tastes.

I look forward to 2020, when distillers chastise us for buying NAS whiskey when we should all be caring about their amazing new age statement releases, a sure sign of quality and care

Funky Tape said...

Further consolidation, BS, higher prices across the board, more BS, lower quality booze with fewer age statements, a whole bunch more BS....and on and on.

Don't agree on any slow down as the bubble in American anything will go bonkers.

Justin said...

Prediction: with scotch prices soaring, American bourbon, rye, and Tennessee whiskies take over the throne as top world whiskey.

TylerP said...

I think this is well said and explained Sku. Always a good read.