The State of the Independents

Most of you reading this blog regularly understand what an independent bottler is and how they function. However, as we're adding more new readers here every day, I'll refresh everyone's memory just in case.  Along side the major whisk(e)y brands, there are numerous other Macallans, Caol Ilas, and Highland Parks not labeled with the standard packaging we're familiar with.  It's because, while these whiskies were still made by their respective distilleries, they are from barrels long sold off to another party.  It has long been tradition in Scotland for a distillery to sell off extra casks in times of surplus, which has allowed for independent companies to purchase whisky they did not make, create a label of their own, yet still market the single malt under the banner of the distillery that provided it. 

Chieftain's, A.D. Rattray, Signatory, Gordon & MacPhail, and Hart Brothers, just to name a few, are all examples of independent bottlers.

I've become pretty good friends with Stan Morrison from A.D. Rattray over the last few years.  We both enjoy going out to new restaurants in San Francisco when we have the time, so we met up last night at Locanda for some delicious Italian cuisine.  I ordered a cocktail, Stan wanted some rye so he asked what I would suggest.  They had Pappy 13 on the menu.  I told the waiter to bring him some of that, if they indeed had it available.  The waiter said indeed they did.  Then he came back five minutes later and said, whoops, indeed they didn't.  "Not surprising!" I said.  Stan's family used to own Bowmore distillery (along with Auchentoshan and Glen Garioch) on Islay before Suntory bought them out in 1994.  They used some of their backstock to create A.D. Rattray, where, not surprisingly, they still put out amazing expressions of Bowmore, amongst other distilleries.  We generally talk about non-whisky related topics, but naturally we're going to eventually talk shop.  Last night, Stan echoed some of the sentiment about independents that I've been hearing for a while now.  Getting new casks is currently not easy.

"Why would a distillery ever sell their casks off?" I asked at one point.  While I know there's profit to be made, a distillery probably stands to make as much percentage-wise as K&L does from Pappy Van Winkle - which is to say almost nothing.  What is really to be gained other than allowing someone else to capitalize on your name?  Stan said that the whisky industry has always been full of peaks and valleys.  Producers up their production in times of profit, and, should they ever find themselves in a glut, they can sell off excess whisky to other interested parties.  The independents are always there to keep the balance in check.  What's interesting right now, however, is that we're in the middle of a recession, yet sales of whisky are through the roof.  You would think that this would be a moment of excess, yet distilleries are finding themselves short of supply.  Stan thinks this will all right itself in a few years since most producers are currently increasing their operations, but none the less, he said that independents are all scrambling to find a way of controlling their own production.

Cheiftain's, in my opinion, is sitting prettiest at the moment.  They purchased Glengoyne from the Edrington Group in 2003 and found themselves in a wonderful position.  You see, Glengoyne is an ingredient in some of Diageo's blended whiskies, which means that Diageo needs to offer up something in exchange - be it casks of Lagavulin, Caol Ila, or what have you.  Not only has Chieftain's found a way to control its own supply of whisky, it managed to sustain its independent barrel trade as well by finding a permanent stream of access into Diageo's vault.  That's why they can make the Isle of Skye blends with Talisker whisky.  While Signatory bought Edradour and Gordon & MacPhail purchased Benromach, neither of those distilleries are nearly as successful, at least not here in the states.  Duncan Taylor tried to purchase Glendronach, which would have been a fantastic move, but they were outbid by the Benriach group.  Stan has admitted to a few inquiries into available real estate, but nothing has materialzed so far.  I think they've got something up their sleeve, but I didn't press him for what it is.

Stan also talked about how other invested groups are planning to build new distilleries in Scotland, an idea that both of us find terrible for the moment.  However, back here at home, many U.S. companies are following that model.  High West, Templeton, Whistle Pig, and Willett are all examples of independent bottlers who have recently begun, or plan to begin, their own distillation while they currently sell whiskey from other distilleries.  They're all facing the same problems here in the U.S. - not enough whiskey.  Buffalo Trace isn't selling - they've already announced that Sazerac, Eagle Rare, and Elmer T. Lee are out for 2012, so how could they have extra for anyone else?  LDI has been purchased, so the source for High West, Templeton, Bulleit, Willett, Big Bottom, Hooker's House, Redemption and other independently-bottled brands has dried up.  How else do you get more product other than by making it?

The problem with making it is time.  By the time your new product is ready to sell, the other distilleries will have caught up in their own production and will likely have extra whisky again.  Or maybe not?  How long will sales continue to grow?  What if China collapses and the Asian market shrinks as fast as it has expanded?  These are all business decisions I'm glad I'm not facing.  Meanwhile, the quality of independently-bottled whisky has proceeded to decline.  If we're in a take-what-you-can-get market, then that's what were going to be presented with.  It's the main reason that David and I decided to go to Scotland ourselves. Hopefully this May we'll still be able to find some fantastic options.

-David Driscoll


What Does K&L Do With Empty Barrels?

When we buy a barrel of Bourbon from Four Roses or Buffalo Trace, they bottle the whiskey for us and send it over in cases - but they send the empty barrel too!  As any Scotch drinker knows, used Bourbon barrels are quite valuable to a distillery looking to get some more wood contact on their spirit.  In the past, I've sent one barrel up to Germain Robin to fill with their Low Gap whiskey, and another two over to Davorin at Old World Spirits to age some fruit distillate.  However, one of our first barrels from Buffalo Trace went to Drakes Brewery in the East Bay and they filled it with locally-made sour beer.

After 18 months in that barrel, our beer buyer Bryan Brick is ready to show off the goods tonight.  We haven't had it bottled yet, but Bryan got Drakes to fill a keg and send it over to the best beer garden on the peninsula - Gourmet Haus Staudt in Redwood City.  Tonight, beginning at 6 PM, Bryan will be behind the bar, filling up glasses from what I've heard will be the most amazing beer of 2012.  Bryan is not usually giddy about anything, but his review of our new Kalinda Bourbon Barrel-aged Sour has me positively excited.  We'll have it bottled in 750ml soon enough, but to taste it on tap tonight should be truly special.  Our whole store is heading over after we close to get our hands on some.

Gourmet Haus Stadt, 2615 Broadway Street, Redwood City - Be there! (and remember to go around to the back entrance)

Oh.....and maybe we should take that sour beer barrel and do something with that! 

-David Driscoll


The Opposite of What You'd Expect (i.e. Irony)

Being the distiller behind two of the world's great whiskies and someone who gets paid to taste whisky for a living, you would think Dr. Bill Lumsden's favorite single malt would be something crazy - Brora 30, an old 1970's Ardbeg cask, or something he tasted in the GlenMo cellar.  It's not.  Dr. Bill really likes drinking Glenmorangie 10, a basic, $35-a-bottle single malt that just hits the mark for him.  Sure, it might have something to do with the fact that he made it, but most people find it ironic that a bonafide whisky expert prefers to quaff more pedestrian malts. 

But that's always the way it is, isn't it? 

Guess what - Dr. Seuss wrote kids books, but he hated kids.  Doctors are some of the least healthy people.  Fashion designers make amazing clothes, but are often hideously dressed.  Interior designers have boring homes.  All of my friends whose parents are psychologists are the most troubled!  Irony is everywhere, and the whisky world is no different sometimes. 

Someone asked me yesterday if the oldest malts were always better.  In my opinion, they're often not as good as the younger ones.  I'll take Springbank 10 over the 18 any day.  Give me 5 year old Kilchoman over Laphroaig 18. 

I had a customer ask today why Talisker 25 at $200 is so inexpensive compared to other similarly aged malts, like say Macallan 25 at $600.  I said, "Because that's the way good whisky usually works."  The expensive ones rarely live up to the satisfaction the value-priced ones.  I still really love drinking Glendronach 12, more so than the pricier bottles in my bar.

As for me - I break a whole slew of whisky geekdom rules.  Personally, I don't really love cask strength bottlings.  That's just me.  The point is - don't take anything for granted when broadening your whisky horizons and don't feel like the obvious answer is the right one.  In life, in whisky, there are things that maybe should be the case, but are not necessarily so.

-David Driscoll


Botanist Gin Finally Arrives

Bruichladdich Botanist Gin $34.99 - What happens when you take one of the great single malt distillers of all time, put him in a room with an old Scottish pot still, and have him make gin using only botanicals found on the legendary isle of Islay?  Trouble.  Trouble for other gin producers, that is.  Bruichladdich's Jim McEwan has decided to tackle the gin market and his Botanist gin is simply to die for.  Clean, brimming with lemon peel and vibrant juniper, lovely floral notes, and utterly soft on the palate, this is gin to drink neat - straight from the bottle.  Made entirely on Bruichladdich's old school pot still (known affectionately as "Ugly Betty"), this is one of the great and more unique gins to hit the market - ever.  We've been waiting impatiently for more than a year for this to finally make it to California.  I've talked it up to customers for what seems like ages, but the time to get some for ourselves is finally here.  While the gin itself isn't limited, getting it here has been quite a challenge.  We were only able to secure 120 bottles for the time being and I'm not sure when we'll be able to order again.  You know what that means: buy it sooner than later.

-David Driscoll


More Tastings Tomorrow!

Remember that Wednesday is free spirits tasting day at K&L Redwood City and San Francisco.  Here's a sneak peak at what's ahead.

February 8th

RWC - Four Roses Bourbon

SF - Lagavulin Single Malts

February 15th

RWC - Glenlivet Single Malts

SF - Distillery 209 Gin (OWS cancelled due to conflict)

February 22nd

RWC - Templeton Rye

SF - Mount Gay Rum

February 29th

RWC - Firelit Spirits (St. George)

SF - Templeton Rye

Remember that all tastings begin at 5 PM and last until 6:30.  See you there.

-David Driscoll