Navigation
Search This Blog

Return to KLWines.com

Spirits Journal Podcast Archive

Spirits Journal Twitter Feed

K&L Uncorked Blog

K&L Spirits Tasting Schedule:

Weds from 5 - 6:30 PM

4/23 - Redwood City: Ardbeg Single Malts (w/the chopper!)

2014 K&L Exclusive Scotland Whisky

1988 Littlemill 25 Year Old K&L "Exclusive Malts" Single Barrel Cask Strength Lowland Single Malt Whisky IN STOCK NOW!


1996 Bowmore 16 Year Old Faultline Single Cask Strength Single Malt Whisky IN STOCK NOW!


Bladnoch "Young" K&L Exclusive Heavily Peated Single Barrel #57 Cask Strength Single Malt Whisky IN STOCK NOW!


Bladnoch 11 Year Old K&L Exclusive Lightly Peated Single Barrel #303 Cask Strength Single Malt Whisky IN STOCK NOW!


Bladnoch 23 Year Old K&L Exclusive Single Barrel #1054 Cask Strength Single Malt Whisky IN STOCK NOW!


Talisker "The Speakeasy" K&L Exclusive Single Barrel Cask Strength Single Malt Whisky IN STOCK NOW!


2005 Glenrothes 8 Year Old K&L Exclusive "Sovereign" Single Sherry Barrel Cask Strength Single Malt Whisky IN STOCK NOW!


1997 Glengoyne 16 Year Old K&L Exclusive "Sovereign" Single Barrel Cask Strength Single Malt Whisky IN STOCK NOW!


Kilchoman K&L Exclusive Single Bourbon Barrel #172 Cask Strength Single Malt Whisky IN STOCK NOW!


Kilchoman K&L Exclusive Single Bourbon Barrel #74 Cask Strength Single Malt Whisky IN STOCK NOW!


2013 K&L Exclusive Scotland Whisky Still Available

1991 Cambus 21 Year Old K&L Exclusive Signatory Single Barrel Cask Strength Single Grain Whisky 750ml IN STOCK NOW!


2002 Bowmore 11 Year Old K&L Exclusive "Exclusive Malts" Single Barrel Cask Strength Single Malt Whisky 750ml IN STOCK NOW!


2005 Island Distillery 7 Year Old K&L Exclusive "Exclusive Malts" Single Barrel Cask Strength Single Malt Whisky 750ml IN STOCK NOW!


2001 Royal Lochnagar 10 Year Old Faultline Single Barrel Cask Strength Single Malt Whisky 750ml IN STOCK NOW!


1995 Glendronach 18 Year Old Single PX Barrel Cask Strength Blended Scotch Whisky 750ml IN STOCK NOW!


1994 Benriach 19 Year Old Single Bourbon Barrel Cask Strength Blended Scotch Whisky 750ml IN STOCK NOW!


1989 Cragganmore 23 Year Old Faultline Single Cask Strength Single Malt Whisky IN STOCK NOW!


1992 Longmorn 21 Year Old Faultline Single Cask Strength Single Malt Whisky IN STOCK NOW!


1987 Mortlach 25 Year Old Faultline Single Cask Strength Single Malt Whisky IN STOCK NOW!


1983 Miltonduff 30 Year Old Faultline Single Barrel Cask Strength Single Malt Whisky 750m IN STOCK NOW!


« Three Gifts of the Magi -- Part II | Main | Bladnoch's-A-Go-Go »
Friday
Dec202013

Letters to the Editor

Here's a great letter from Spirits Blog reader David Knopfler (not of Dire Straits) out in North Carolina in response to yesterday's post about whisky profiteering:

David,

Thanks for the thought provoking blog post today.  I've seen any number of articles, blog posts, and comments on forums expressing rage at the rise in prices, accusations of gouging etc.  What I haven't seen is a clear eyed analysis of the whisky business balance sheet to determine what is in fact reasonable pricing to ensure a sustained profit, and the capital necessary to expand to meet the burgeoning global demand.  We are comparing the current rising prices with those that were set at a time the trade was attempting to purge a glut of product before it went over the hill.  A time when the industry still suffered a hangover from almost two decades of declining demand.  Certainly that is not a reasonable pricing baseline for a healthy business.  You've used your industry contacts to provide great insight into the nuance of the products you carry.  It would be interesting if your could do the same to illuminate the business side of things since that has become such a hot topic for everyone.

Thanks and best regards,

Dave Knopfler

David makes a great point that I'm not sure today's generation of drinkers really understands: the prices we were used to paying for whisky (pre-spirits boom) were based on low demand and high inventory. The industry was sitting on a large amount of mature casks (at one point the Laing brothers dumped a 30 year Brora cask into a cheap blend because they didn't know what else to do with it) and the prices reflected that. Many producers were happy just to break even after investing so much capital into supply. Now that their product is back in demand again, however, they can now start to profit from that extra inventory--if they still have any left. I think that's an important fact to keep in mind, especially when trying to find an answer for David's request: taking into account expenses and cost projections, what is actually a fair price for a bottle of whisky?

I'm not sure that many producers would be willing to open up their accounting books to someone like me, but there's something else you have to keep in mind when looking at today's newer distilleries: production overhead. Some distilleries are including loan payments and debt into their bottle price, while others have long paid off any outstanding investment fees. That's part of the reason why Armagnac is so reasonably priced for what you're getting: these guys are producing on farms handed down for generations, with backstock that was paid for decades ago. Any sale is pure profit at this point. Craft distilleries, on the otherhand, have to work quickly to pay off the loans, and if they've taken money from investors, to make sure those investors are getting a return on their money. These investment expenses are definitely factored into the price of each bottle sold, after taking into account supplies, labor, maturation, etc.

Nevertheless, you've got me thinking, David! Thanks for the letter. Hopefully I can get back to you about this subject with some sense of accuracy.

-David Driscoll