The Business of Booze

I had a customer ask me the other day what I thought about a particular California cabernet.  I said it was a bit too "business-oriented" for me, but that it was a good example of what many people like these days.  Granted, that was quite a loaded answer, but nevertheless he was compelled by the vague undertone of that statement to ask further questions.  I explained to this man the difference between wine made by people who like making wine, versus wine made by people who want to make as much money as possible.  Using more new oak to age a wine makes the wine richer and silkier, which then garners higher ratings from popular magazine critics, which then creates higher sales, etc.  At the same time, it takes away from the true flavors of the grape itself. The cabernet we were speaking about was an example of business getting in the way of beauty.  I told the customer I preferred to drink wines that were “wine-oriented.”

Again, as I've written before, this is really no different than any other business where artistry or talent is being sold.  Musicians once revered for their individuality often sell out to corporations looking for a catchy jingle to promote their ad campaigns.  Many talented people are willing to change the way they create if it means earning more money. Whether it's the Rolling Stones changing their lyrics to play on Ed Sullivan, or a wine maker adding more oak to his wine, if there's a way to make your product safer and more palatable to the general public then why not do it?  Sure, it's great to be adored by those who truly appreciate your talent, but can you make a living from them?  It's a decision that some wine makers are forced to confront.  That, or selling their venture off to a larger company who'll just do the same anyway.  That's the business of booze production.  We know that most people just want "smooth" in the end.  Are you willing to give it to them?

The business aspects that we at K&L deal with aren't too different.  As a company, we have to decide which products to carry and what those products say about us as a retailer.  A wine selection is almost like a record collection.  You can go over to someone's house and tell a lot about who they are as a person by what they're listening to.  If a store only chooses to stock big label brands and mass produced products then you know where they stand as a retailer: $$$.  Some smaller stores only carry products from independent producers, which probably means they're passionate about handcrafted quality.  I say "probably" because no one I know of is getting rich off of retailing biodynamic-only wines.  K&L is somewhat unique in the sense that we cater to both sides.  We've been doing business with some of the larger corporations for decades, but still take pride in discovering smaller producers and supporting them directly.  Every day I wake up thankful that there is such a store that allows me to make a decent living and still focus on the promotion of niche spirits.  The business of booze retail is definitely a balancing act.  Is it all about matching margins and swift sales, or is there some thought put into what you sell?

Finally there's the customer's business to discuss.  As consumers, we all have the ability to choose where we spend our money.  What interests us as booze consumers?  Are we just looking for something to get us drunk?  Do we want something to get us drunk that actually tastes good?  Are we possibly searching for an experience, something with actual heart?  There are a myriad of liquor stores that can satisfy the first two desires, but it may take a little effort to find a place willing to sacrifice sales for integrity and credibility.  How far we're willing to go to support what we believe in is completely up to us.  Not only with where we shop, but with what we buy.  Is it worth our money to buy that $100 bottle of locally-made, small-production whiskey, or are we fine with supporting the larger corporations who can mass-produce it for less?  Should we even care about alcohol enough to ask ourselves these questions?  That's the business of consumerism and it's something that every entity involved with booze studies with great ferocity.

There's a lot of crazy stuff that goes on in between these three estates as well.  Distribution, importing, wholesaling, and grey-marketing.  There are backroom deals between companies, driven salesmen who'll sacrifice the brand for a quick buck, mergers that eliminate competition, and producers jockeying for more exposure.  It's really quite fascinating.  I never had any intention of being a businessman and I still don't know if I consider myself one.  However, that being said, the business of booze is constantly interfering with my love of booze.  There are both wines and spirits I used to enjoy that have been forever ruined by what I learned of their business practices.  There are both companies and customers who want us to carry products we don't want to support and they want answers as to why we choose not to do so.  In the end, I just want to drink good booze made by good people and help other people to do the same.  The business of booze, however, is always lingering in the background, waiting to interfere with this ideal and plotting to do otherwise.

-David Driscoll


Youth & Beauty Trumping Experience & Maturity

I have to admit that I wasn't on the Kilchoman bandwagon when they first started releasing their feisty, smoky, precocious Islay single malts.  Being that they were the hot new distillery in Scotland, breaking ground on Islay for the first time in almost a century, I was bit unnerved by the fact that they were selling young whiskies at old whisky prices.  The craft whiskey movement in the U.S. had already been rubbing some customers the wrong way, namely because they weren’t as cost efficient as the big boys.  A two year old, “hand-crafted” bourbon might sell for more than three times the price of something like Buffalo Trace 10 year.  Because we’re a society that has constantly been told “older is better,” we automatically assume that we’re being ripped off. 

What we don’t always know is if the extra money it costs the little guys to make the whisky is ever worth actually spending.  Sure, they can make a $100 white whiskey with local, organic barley and bio-dynamic farming, all with single pot still batch distillation – the question is: should they?  With Kilchoman, the jury was still out.  The first release showed potential, but the price still seemed a bit high.  Their second release I tasted, however, really spoke to me – the sherry aging of the Spring 2011 was something quite needed and it made the malt taste much more mature.  Their next release, a 100% Islay local barley malt, absolutely blew me away, even though it clocked in at $100.  I'd always known that age was nothing but a number in terms of quality, but sometimes one needs to be convinced of that with physical evidence.  There's simply a stigma against young malts because people think they can’t taste as good as the older ones.  However, if a young whisky does exceed the quality of an older malt, shouldn’t it be just as expensive if not more so? 

Our new Kilchoman K&L Exclusive Single Bourbon Barrel Cask Strength Single Malt Whisky $92.99 is perhaps the finest young Scottish single malt I’ve ever had. I've tasted young Ardbeg, young Lagavulin, and young Caol Ila, but they've never been as good or as exciting as this single malt is (some of the older ones haven't been either). The nose is a sparkplug of phenolic energy - peat, smoke, salt, oil, vanilla, sand, sweet barley, with accents of white peach and dried fruit.  Smelling it must be similar to sitting by a beach campfire while eating a Charleston Chew.  The complexity continues onto the palate where black pepper and rich Bourbon wood enter into the equation.  It's so enjoyable I smile just thinking about it.  It's not going to please everyone, but I've learned with experience that we can't worry about that all the time.  Those who prefer the relatively dainty Lagavulin 16 won't want to fool with this. This whisky is like a laser, or a freakishly loud alarm clock.  It's like going to the eye doctor and seeing a clear image through the examination machine - you didn't realize how blurry everything else was until that moment.  I didn't realize how bored I had become with peated whisky until drinking this.

When we talked with Kilchoman about purchasing a cask, I was really hesistant.  "What are we going to do with that much young whisky?" I thought.  Now I know.  We're going to sell the hell out of it. 

-David Driscoll


Tastings Tonight!

St. George finally makes it over to Redwood City to pour some bourbon and other knick-knacks.  In the San Francisco store we've got the lovely Amy Schwartz pouring Bunnahabhain single malts, including the fantastic 25 year old.  Both tastings start at 5 PM and run until 6:30.  Free of charge, as always.  See you there!

-David Driscoll


Independent Ownership

I figured that as long as we're talking about which giant corporations own which distilleries, it might also be useful to bring up independent bottlers and their distilleries.  I don't know this for a fact, but the vibe I've been getting from the indies lately suggests to me that sourcing casks is harder than ever.  The practice of sending one's own barrel to the distillery, having them fill it, and leaving it there to age is coming to an end.  The independent bottlers of Scotland have therefore a need to create their own whisky if the big boys won't sell them any.  At the same time, independent distilleries who have also been able to source aged stocks have created their own independent labels to sell off these barrels.  Here's a quick list:

Springbank/Duthies/Cadenhead - J & A Mitchell, who also own the Glengyle distillery next door to Springbank, release the Duthies and Cadenhead products as well.  While neither is available in the U.S. at the moment, we carried the Duthies selections briefly in 2009.  We do have the saffron-infused Cadenhead gin as a full-time item.  If you visit the distillery, there's a giant Cadenhead's shop where you can find the whiskies pictured above.

Bruichladdich/Murray McDavid - Independently owned Bruichladdich also releases a series of cask-enhanced malts under the Murray McDavid label.

Glengoyne/Chieftain's - Ian MacLeod Distillers has been a family-owned business since 1933.  As you can see by all the Chieftain's products we carry (and have on order for 2012) we love working with these guys.  However, realizing that independent bottling couldn't sustain them forever, they purchased Glengoyne from the Edrington Group in 2003 as well as Tamdhu in 2011.  Luckily for them, Glengoyne is a key ingredient in some high-profile blends owned by big companies, which makes getting interesting casks easier to negotiate.

Edradour/Signatory - Signatory, who bottled our lovely Ladyburn, purchased Edradour Distillery from Pernod-Ricard in 2002.

Benromach/Gordon & MacPhail - Benromach was originally moth-balled by UD (pre-Diageo) in 1983, but then sold to Gordon & MacPhail in 1993 after ten years of inactivity.  It didn't begin operating again until 1998.  Gordon & MacPhail is perhaps the most widely known and distributed of all independent bottlers.

Who's next in the game of "We need to control our own whisky supplies?"  Rumor on the street is that Weymss Blended Malts tried to buy Bladnoch recently, but the entire thing blew up in their face!  Bladnoch is owned by two feuding brothers and apparently one of them agreed to sell behind the back of the other.  When the other brother found out about the promised deal, he immediately refused both to sell the distillery and to ever speak to his brother again.  I wonder which distilleries are even on the market.  I'm sure that A.D. Rattray would also love to own something again.

-David Driscoll


K&L Casks & Diageo

Since I posted the last article about Diageo's take on their single malt distilleries, I thought I'd also enlighten you all a bit as to how many of our 2011 K&L whiskies are independently-bottled Diageo malts.  As a company, Diageo does not do retailer bottlings, but that's not anything to moan about.  Very few distilleries are willing to do retailer casks because the amount of work needed to get it done can be more than it's worth.  They're mostly about goodwill and keeping relationships strong, rather than lucrative opportunities.  Needless to say, because Diageo has a number of distilleries that are either not released as single malts, or are no longer in production, we take a certain pleasure in bringing these whiskies into the U.S. market. We're collectors like anyone else, so we want the chance to explore Scotland's many distilleries just like any other enthusiast.  Here's how our recent K&L barrels fit under Diageo's gigantic umbrella:

1998 Blair Athol K&L Exclusive 11 Year Old Provenance Single Barrel Cask Strength Single Malt Whisky - The most recent of our latest arrivals was a lovely little barrel of old school malt from one of Scotland's oldest distilleries.  In 1798, two businessmen founded Aldour Distillery which was a play on the nearby river Allt Dour (seen in the above photo taken on our trip).  In 1825, the name was changed to Blair Athol when the facility was expanded.  Twice closed (once in 1832 and again 100 years later in 1932), the distillery was sold to Arthur Bell & Sons in 1933 where it became the foundation for what would become the UK's most popular blended whisky today - Bell's Blended.  The Guinness Group purchased Arthur Bell & Sons, and therefore Blair Athol, in 1985 and the distillery became the property of Diageo when the Guinness Group merged with Grand Metropolitan in 1997.  After Talisker and Oban, Blair Athol is the third most visited distillery of Diageo's holdings with around 40,000 per year.  It is not released as a single malt, with the exception of a few rare Manager's Choice releases now and then.

1992 Bladnoch K&L Exclusive 18 Year Chieftain's Single Barrel Cask Strength Single Malt Whisky - While Bladnoch is no longer owned by Diageo, it was acquired by the Guinness Group as part of the same Blair Athol deal mentioned above (as Arthur Bell & Sons took over in 1983).  However, Bladnoch was mothballed by United Distillers (a combination of Arthur Bell and Distillers Company run by Guinness - the pre-cursor to Diageo) in 1993 when they also shut down Rosebank, Pittyvaich, and Balmenach.  In 1994, a businessman from Northern Ireland named Raymond Armstrong purchased the copper-stripped distillery under the condition that he would not produce any whisky with it.  Why he did that is beyond me because he did not get any of the aged stock as part of the deal.  However, after heavy lobbying by both Armstrong and the community surrounding the distillery, Diageo agreed to allow limited production in 2000.  The 18 year old we have is therefore from one of the last Diageo runs before shutting the distillery down.

1983 Dailuaine K&L Exclusive 27 Year Chieftain's Single Barrel Cask Strength Single Malt Whisky - One of Diageo's blending blocks, Dailuaine operates solely to provide quality malt for its owner's great blended brands.  However, since the middle of the last decade, Dailuaine has produced three different types of malt so that there are various flavors to choose from.  Founded in 1852, the distillery was included in a series of mergers until it was ravaged by a fire in 1917.  In 1925, it was purchased by Distillers Company which eventually became Diageo.  The interesting part about our 1983 is that its from the same year that the facility ceased on-site malting.  Is our bottling one of the last home-made malts before barley was sourced externally?

1988 Auchroisk K&L Exclusive 21 Year Duncan Taylor Single Octave Cask Strength Single Malt Whisky SOLD OUT - Auchroisk is just a baby compared to the previously-mentioned distilleries, having only been around since 1974.  The building began in 1972 by the company that would eventually become Grand Metropolitan to help provide a new source for their blended whiskies.  It was the original malt under the Singleton name (now sold stateside with Glendullan whisky) when released as a 12 year in 1986.  Grand Metro merged with Guinness in 1987 to form United Distillers.  Our 1988 was distilled one year later.

1975 Banff K&L Exclusive 35 Year Duncan Taylor Single Barrel Cask Strength Single Malt Whisky - Founded in 1824, the history of Banff distillery is a tragic one (one that I documented in our printed newsletter last month from K&L).  The building's propensity for catching fire was simply incredible and numerous times there were terrible losses as a result.  It was family-owned for more than 80 years, but was sold to Distillers Company in 1932.  Banff was closed in 1983 before Distillers became Diageo, but Diageo still holds the remaining stocks.  Even though the distillery was non-operational, it still caught fire again in 1991 and this time was completely destroyed.

As you can see, Diageo has had quite a role in the making of some of our exclusive casks.  We still have a 1980 Caol Ila K&L Exclusive 30 Year Old Sovereign Single Barrel Cask Strength Single Malt Whisky on the way, which of course is also part of the umbrella, as well as some unannounced casks coming late February that are all Diageo products.  We have to work with brokers, independent warehouses, and various bottlers to acquire these casks, but all were purchased through dealings with Diageo at some point. 

Speaking of those three unannounced casks coming early next year.......they're going to cause quite a stir.

-David Driscoll