The Volume Game
I got a surprising amount of emails yesterday about volume and how it affects spirits (based off the previous post), so I figured I'd go over a few examples here today. Let's talk about single malt Scotch whisky and Cognac, since both are pot-distilled and are therefore more difficult to produce in volume than say Bourbon because you have to distill in batches versus a continuous column. I'm also going to throw in Champagne because they're all technically related.
Perhaps you've heard of the term "house" (or "maison") when it comes to alcohol. Remy is a Cognac "house." Louis Roederer is a Champagne "house." Chivas Regal is a Scotch blending "house." When a producer is referred to as a "house" it usually implies that they're purchasing and collecting stocks, rather than producing their own supply (although they may do both). A "house" is simply a brand or a company that cannot create enough volume on its own to supply its demand, hence the need to contract (in that vein, we could call new-wave American whiskey producers like High West or Whistle Pig "houses" because they're doing the same thing with Bourbon and rye). Usually a "house" specializes in blending and creating what's known as a "house style." Blending (as you know) is an art, but it's also a strategy. The goal is consistency. When you're not in control of your entire production, you're at the mercy of your contracted components. You can only work with the base materials at your disposal. In order to successfully sell a global brand, you need both volume and consistency. Veuve Clicquot needs to taste the same every time, even though the wines will be different each year from vintage to vintage. That's why they make it big.
In the case of Cognac and Champagne, both are made from grapes that have to be grown within a very specific geographical area. Vineyards not planted in either designated zone cannot legally produce grapes for Cognac or Champagne production. In the case of Champagne (I'm not quite as certain in Cognac), the zone is fully planted. There's no more room for expansion. It's maxed out. If you need more juice as a producer, you have only one option: buy grapes from another landowner. That's how labels like Dom Perignon and Perrier Jouët are able to make enough Champagne to sell to every store and restaurant around the world. They contract as much extra fruit as they possibly can. In order to maneuver around the inconsistencies in flavor, style, and quality from these sources, they blend. That's why most Champagnes don't have a vintage date. You'll never know exactly what's in them. What you will come to understand is the house style—the flavor that remains consistent even when the components vary. Cognac works in the exact same way. Sometimes houses like Hennessy and Courvoisier buy grapes, or sometimes they buy distillates. Either way, when you visit their production centers you'll find cellars with stocks that are labeled by producer. An example is the Hennessy warehouse below:
If you can see those little chalkboards that are leaning up against the demijohns in the background, each has the name of the property and the vintage on it. When Hennessy makes a blend, they do so from hundreds of different Cognacs from hundreds of different properties, some of which they own and many of which they do not. Scotch blending houses used to be no different. Before every distillery in Scotland became corporate-owned, blending houses would contract what they needed as they needed it. You could call up Caol Ila and get fifty barrels filled, or phone over to Glenlivet and see if they could get you a hundred hogsheads. While I've heard some of the old contracts are still being honored here and there, most of the people I work with are facing reality. That era is dead. Today Johnnie Walker owns all of its distilleries outright. So does Chivas. So does Famous Grouse. When we go to Scotland and purchase casks, we're usually working with older blending houses that are selling off their stocks and getting out of the business (or building their own distilleries). They had originally contracted those barrels to make blends, but today those casks are more valuable as single entities.
Our niche at K&L over the years has been to find products produced in smaller volumes and bring them to our market. We look for suppliers who maybe don't have enough volume for the world, but they at least have enough for us. If you click over to On the Trail this week, you'll see that our Champagne buyer Gary Westby is currently in the region visiting producers like this. In both Champagne and Cognac, much like in Scotland, growers often sell their stocks to the bigger houses in conjunction with their own production. To use Caol Ila as an example again, the overwhelming majority of the distillery's production goes into Johnnie Walker, but there's still enough leftover to make the 12 year old edition. The farmers that Gary is visiting are known as grower/producers because they also do both. They might sell 30-60% of their grapes to a large house, but make a small amount of bottles to sell on their own as well. Those are the wines we've come to specialize in: boutique, tightly-controlled, quality-oriented Champagnes from the small producers who use only their own grapes. It's that same model that we took to Cognac where we began working directly with Dudognon, Ragnaud-Sabourin, Bouju, Jacques Esteve, and others. All of these producers sell stock to Hennessy, but they keep enough back to make their own brandy as well.
Is smaller production inherently better? God, no. Haven't we learned anything from the craft spirits boom of the last few years? Small production doesn't mean anything. What you need is high-quality production of any size combined with careful curation. What usually affects concentration of flavor is the size and volume of the blend (and sometimes even that doesn't matter!). The bigger you are, the less detail-oriented you can be about what you're blending. Remember that when it comes to Scotch, Cognac, and Champagne, there's a limited amount that can be produced. Big companies can't afford to be choosy when they're looking for growth. They're buying anything that can legally be called Scotch, Cognac, or Champagne and hoping to blend away any flaws. The trade off, however, is the price. The larger the scale, the more competitive your costs. The goal for these "houses" is to make the best product they can make, as consistently as possible, for the best possible price. They're looking for the happy medium. When demand goes up, however, these gigantic money-making companies have to choose between running out of supply or selling a lesser product. You can guess which one they usually opt for. What's interesting about Champagne, however, is that unlike with spirits it's actually cheaper to buy stuff from the smaller guys. That's why we have all kinds of Champagnes at K&L that sell for $25-$35 and absolutely destroy things like Veuve Clicquot at $45 (which is why Gary is putting together an order in France right now—we literally sell boat loads of Champagne).
Our goal has always been to locate and work directly with people who don't care about scaling up their production. That's where the ultimate quality can ultimately be controlled. The blend isn't what matters. Even single malts are blends of numerous barrels. The size of that blend and the commitment to quality over volume is what matters most.