Whisky industry

Allied Domecq acquired by Pernod-ricard: follow-up

The acquisition of number 2 in the spirits world by number 3 concerns much more than both industrial groups. Pernod-Ricard was not authorized, or did not want to keep all the distilleries of the Allied Domecq group. Laphroaig, One of the most emblematic distilleries in Scotland has been transferred to the American group Fortune Brands (2006: Beam Global Spirits & Wine ), owner amongst others of the famous Jack Daniels whiskey short after the deal between Pernod and Allied. According to some information, the Speyside Ardmore distillery would have met the same fate as Laphroaig. Further, a part of the deal was the resale of the Irish Bushmills to Diageo.
Consequences for those great groups are that Diageo gets a foothold in the Irish market and that Fortune Brands (2006: Beam Global Spirits & Wine ) comes back on the Scottish market, after having left it for a few years after the Whyte and Mackay story.
Glen Grant was recently acquired by the Italian group Campari. This can be considered as a quite normal thing, knowing Italy is the best client of that distillery.

The question of the destiny of the other distilleries belonging to the group is still not definitely answered. Some of them are closed or mothballed (Imperial), other are destroyed (Lochside). Will the closed and mothballed ones resume production, will they be reopened, will they get sold to other groups, what will happen with their stocks?

I asked this to the Pernod-Ricard group some weeks ago, but it does not look like answering their mails is a priority for them... Either they get so much mails that it takes them a very long time to answer, or they do not think answering questions belongs to their core business. I would think the second possibility is the right one. One could regret this,but it seems to be a fact.

The information in table on the right is still to be confirmed.

For those who would like to know by whom the distilleries in Scotland are owned, the page on the site is regularly updated. Of course I do not pretend it contains no errors, as things sometimes develop really quickly in this world.

Allied Domecq's distilleries

Making an exhaustive list of the distilleries and their current owner is attempting the impossible. According to my information, following distilleries belonged to Allied Domecq and are now owned by:

SWA

Richard Burrows, managing director of Pernod-Ricard is the new chairman of the Scotch Whisky Association. He succeeds Ian Good, chairman of the Edrington group. Richard Burrows was the vice-chairman of the association. Paul Walsh, chief executive at Diageo, succeeds Mr Burrows in the latter function.

Fighting counterfeiting will be one of the main activities of the SWA under the presidency of Mr Burrows. Contraband whisky is becoming a real scourge for the Scottish whisky industry.

Many people are aware of counterfeiting in many emerging countries, like China or India, but the problem does not exist only in Asia or Africa. One of the directors of the SWA, Gavin Hewitt quoted that Australia, France or Belgium markets suffer also from counterfeiting.

According the SWA statistics, 2005 was the best year of the last decade, with about 2,3 billion Sterling Pounds for the export market (which represents about 30 bottles a second). The growing success of Scotch whisky during the few last years makes it an ideal victim of counterfeiting. Only successful products are counterfeiting worth. And the still growing worldwide success of whisky will continue to arouse the appetites and passions of unscrupulous people in the future.

The whole range of whisky is concerned, from cheap but renowned blended whiskies (like Johnnie Walker Red Label) to old collection items, like the counterfeited old Macallan bottlings back in 2004... But the problem is not only financial and on the economic level.

Quality constraints on Scotch whisky are rigorous, and the label is there to inform the buyer on the content of the bottle. A counterfeited bottle could contain anything. Bad distilled spirit, like the false Johnnie Walker, containing a very high percentage of methanol, recently seized in Berkshire, in South of England, which can cause diseases, making drinkers blind, or even worse...

Counterfeiting in India

Official statistics published in India indicate that about 1% of the whisky sold in the country is made in Scotland. This could simply mean 99% of the whisky drunk in India is not Scotch whisky.

However, this figures puzzled the SWA, because according to their own figures, the part of exported whisky from Scotland represents less than 0,5% of the huge consumption in the area (about 60 million cases of 12 bottles a year...). So the conclusion is that the half of Scotch whisky sold in India is forgery. The success of counterfeited whisky in India is partially due to the enormous import duty on Scotch whisky.
And because Scotch whisky is renowned, the market is open for all kinds of pirates...

Harvest 2005

Cereal harvest was quite good in Scotland last year, due to favourable weather conditions. However, the Scottish farmers are do not have so much reasons to be happy. Since many years, the only really "Scottish" ingredient of whisky is water, as the whisky industry buys great deals of its barley from England, South Africa or Easter Europe countries for malting purposes.

Reasons are economic of course. Cheaper ingredients, but not only that. The industry is looking for a diversification of its supplying, to avoid being the victim of unpredictable weather conditions, which characterize Scottish weather forecast.

But there are some people in the whisky industry who speak in the defence of usage of local barley, even if it makes it more expensive. But there are only a few of them left. In fact, the cost price of barley is just a very small element in the price of a bottle at the retailer.

And even bad harvest should not really affect single malt lovers... If the only whisky to be bottled was single malt, Scotland would produce more than enough barley to satisfy the needs of all the passionate's throughout the world.

But everybody knows single malt represents less than 10% of the total production of Scotch whisky. But, on the other hand, if the phenomenal success of blended whisky did not exist, the single malt production could not survive.

Global warming

Can global warming influence whisky? What a ridiculous question, you could think... In fact, the global warming does have an influence on the production of whisky.
Indeed, whisky production needs lots of cold water to cool down the spirit when leaving the stills in order to let the condensation find place in optimal conditions.
The last years, snowfall was reduced in many places in Scotland, and with them, the cold water resources... A distillery uses about 80.000 litres of cold water an hour.
Of course, rain did not disappear from Scotland, but it higher temperature could bring the cooling process in troubles, as it is much warmer than the water gathered from snow in the mountains.

Blended whisky market

Huge quantities of blended whisky are produced in Scotland and emerging markets like China and India offer great prospects to the industry. But Europe is not outdone neither, as the old continent absorbs nearly 40% of the total production of whisky. But for how long...?
The progression of the sales in Asia was about 120% during the first half of 2005, and nobody does to predict when the sales records will stabilize over there.
Apparently, the success of whisky is not limited to blends, but single malt begins to get more and more popular in that part of the world.
Time to get in stock of single malt?

I could imagine a boom on single malt like the one on blended whiskies could affect the single malt market. Effects of short term shortage are illustrated by the "Cardhu affair", where the distillery was the victim of its own success in Southern Europe.

Asia expansion could have much more important consequences... And this without the growing market parts in Russia...

This site's news

Newsletter and site

The number of subscribers grows daily, and unfortunately it is not always possible to publish this newsletter regularly. Please accept my apologies for this...

Statistics show that the site stile is considered as an interesting resource for whisky lovers. An average of more than 700 visitors a day proves this. In December the daily average of unique visitors was over 800, but December is traditionally a good month, probably because people are looking for Christmas gifts... Anyway, more than 26.000 from more than 100 countries visited the site in December 2005.

But there is more than this site...

Forum

The forum is undoubtedly the most active of all French-speaking forums about whisky. It just celebrated its first year of existence in its new form, and more than 13.000 messages were posted during that year. A real discussion place, open and convivial. Earlier suggestions were made to open an English speaking forum as well, but I guess there are lots of them who are very interesting and animated. A possibility could be a kind of forums association, where forums in different languages could cooperate, by opening common rooms for common interest across the forums...

This is what the forums of whisky-distilleries and the Dutch speaking Belgian forum Cask Six have realised recently. A common room (in English) has been created on whisky-distileries and on Cask Six. Doing so, each forum keeps its identity, and subjects or projects which can be interesting for members of both forums are discussed in this rooms. One of the common projects could be the acquisition of a "Special Forums" cask...

Top 10 site visitors in Decembre 2005

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Figures about Individual distillery production, whisky sales throughout the world, productions by owners, etc...
Articles by Charles MacLean, Michael Jackson, David Stirk, Arthur Motley, Helen Arthur or Ulf Buxrud..
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