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The Future Of American Whisky Retail

If you've read any of my previous posts about distribution in the liquor world, then you probably have a good idea about how competition and selection works among retailers.  For a quick refresher, I'll give you brief example.  Beltramos, BevMo, and K&L all the get the exact same pricing from the exact same set of distributors, so the only way we can differentiate ourselves is by price, selection and customer service.  There is nothing available to me that would be unavailable to them, period, and vice versa.  I might have a few connections that they are not privvy to, but I don't know one distributor that would sell to us exclusively.  The point is that retailers are looking for an edge and a way to build their customer base.  My passion for helping people and building relationships (hence why I used to be a teacher) fuels my desire for our customers to have perks that other stores cannot offer them.  Since a liquor importer cannot hold a retail license, we cannot import our own exclusive goods, so that's not an option.  The best way to get individualized products is through independent barrel purchasing, but at this point, not everyone in the industry is happy about jumping on board.

From my perspective there are no drawbacks for anyone in buying an entire cask.  The customers get an exclusive product unavailable elsewhere, the retailers don't have to worry about competitive pricing, and the distributor gets a huge chunk of cash all at once.  Everyone wins, right?  With all the independent bottlers reaping the rewards of private bottling, you would think that the major distilleries would want a piece of this action.  In the United States, this has been the case.  We've already done a Four Rose's cask and two barrels of Buffalo Trace with customers gushing continuous positive feedback.  The fact that these are limited products makes them even more exciting, so the buzz really gets around town.  Knob Creek, Evan Williams, and Elmer T. Lee have also jumped into the game and I've been successful in convincing smaller producers like Steve McCarthy, St. George, and Corsair into getting involved (as we should have private bottlings from all three with the next six months).  However, with the exception of Bruichladdich, the Scottish distilleries have been resistant.  To find out more about this, I met with David Blackmore, brand ambassador for Glenmorangie and Ardbeg, to find out more about their point of view. 

Most distilleries have master distillers and blenders who fine-tune each of their expressions to achieve optimal balance and create the house style.  In the single malt world, no figure looms larger than Ardbeg/Glenmorangie's Dr. Bill Lumsden.  The mind behind the Corryvreckan and wine barrel finishing has brought us some of the tastiest whiskies of the last few years and is always dreaming up new ways to make single malts better.  Because his whiskies are never the result of single barrels, but rather a multitude of different barrels all consisting of different ages, it is easy to see why Glenmorangie would be uninterested in a cask program - namely, their whisky is not meant to be drunk as such, so what would be the point?  That's just stating the obvious, but after talking with David I found out more about the headaches involved.  Everytime a whisky is bottled, there must be a label approved by the federal government, which takes both time and money.  If Ardbeg releases a new whisky for the entire world, then that's one label that needs to be approved.  If they do a single barrel bottling for us, then they would be obliged to do one for every other interested retail store, which would require a new license and label everytime.  This would bury them in paper work and licensing fees, taking time away from what they do best - make whisky.  The demand for single casks of Ardbeg would also be so high that it would likely drain heavy supplies of whiskies they planned on using for future blends, crippling their plans for exciting new products. The list goes on from there.

Independent bottlers like A.D. Rattray and Signatory can execute their cask programs so efficiently because that is there sole function - they buy the barrels, apply for the paperwork, bottle the whisky, and done.  They have that routine down.  American distilleries selling to American retailers have hired specific people to handle this process as well, creating whole new divisions in their companies, however, I'm pretty sure this is a domestic program only.  The fact that single barrel cask strength bourbon seems to highlight what we like most about the big flavor of American whiskey only makes the process easier.  Bourbon and rye are not rooted in the blend like Scotch whisky is.  Four Roses, Elmer T. Lee and many other bourbons offered single barrel cask strength expressions long before the cask purchasing program began.  Single malts are rarely offered as such because many barrels are not meant to stand on their own.  They are components in a formula, each whisky offering its own character to the overall flavor.  Let's face it, Glenlivet 12 isn't a single twelve year old whisky, but a blend of forty different whiskies of which the youngest is twelve years.  Even though it is the top selling single malt in the world, it's possible that any one of those whiskies bottled on its own might be very underwelming.

If you add on the fact that Scottish distilleries would have to hire more staff to travel the American countryside and meet every interested retailer, the odds against private cask purchasing become even smaller.  At the same time, I can't envision that Diageo is sitting too well with the fact that we've just sold a privately purchased 27 year old Clynelish that trumps any of their own expressions, or the fact that we've got a 28 year old Mannochmore coming this winter.  We're making money off of their brands and leaving them out of the equation.  Sure they sold the barrel originally, but I guarantee you they would have made much more (and charged much more) had they sold it directly to us.  If the future of American whisky retail is going to be sold directly from the barrel, then it would seem wise for the Scottish distilleries to find a way in.  However, like all industries, change comes slowly to the liquor world.  In this case, though, it's more of a regression.  The very first American whisky retailers bought a barrel and put it right in the middle of the store for easy access.  Wouldn't that be nice?

-David Driscoll


Reader Comments (3)

thanks for sharing...tag aquaracer|

October 12, 2010 | Unregistered Commenteryont

As an American looking to purchase a cask for myself from Bruichladdich, I have noticed there are import laws that arent exactly in favor of me getting the product into the country upon maturity... Do you know of any alternatives or loopholes with which I can work around this? I have already contacted Bruichladdich directly, and theyve essentially told me to work it out on my own... I am as ready as I will ever be to purchase a cask and play the waiting game, I just don't know the way to go about it with import laws being difficult in the US.
Any advice?

November 4, 2010 | Unregistered Commenterjoe

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November 14, 2010 | Unregistered CommenterUGG Infant Erin

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