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24 October 2008
New World Order
By
Andrew Beach
The received wisdom is that the world of Scotch malt whisky is unassailable and that its quality will always be far superior to other malt whiskies.
Yet the real reason for the boom in malt whisky is worldwide demand, especially from the likes of Russia, China, India and Brazil.
It is perhaps inevitable that these countries are developing their own significant malt whisky industry to meet local demand and tastes. These "new world" malt whiskies could be adapted for local palates and might have no obvious connection with what we know as Scotch malt whisky. As a consequence, there are now, more than ever, opportunities for new malt whiskies to have significant relevance in these new countries and challenge established brands.
Many other countries already have one or two local malt whisky distilleries - from obvious places such as Ireland and Japan, to the likes of Sweden, Germany, Austria, France, Bulgaria, India, New Zealand and South Africa.
Russia and India currently produce a number of local whiskies - but where will it end? Will they always be seen as a cheap alternative to established brands, or will they one day grow to the extent that people will start buying local Russian whiskies rather than buying into the heritage and quality associated with established Scotch brands? And will they expand beyond local home country sales into the export market?
It is no longer a pipe dream to suggest that there will soon be a number of new and very strong players in the malt whisky market that come to the fore.
From the Society's perspective, we will continue to pay attention to non-Scotch malt whisky and, if it is good enough, we will bottle it and allow our members to make up their own minds. We have already done that with Irish and Japanese malt whiskies and even other pot still spirits such as rum, Armagnac and cider brandy.
In conclusion, the question we're asking is; will there come a time when "new world" malt whiskies grow significantly and challenge Scotch malt whisky? And, if so, what does the Scotch malt whisky industry need to do to ensure that it maintains its status?
Neelakantarao Jagdale, Managing Director, Amrut Distilleries, India
The Scotch malt whisky industry is hundreds of years old, while the rest of the "new world" whiskies are less than a century old, barring a few Irish and American brands. This pedigree of Scotch malt whisky gives it a natural edge over all the others.
But in terms of advances in technology in fermentation, distilling and, in particular, maturation, there is a lot happening in the "new world" which needs to be acknowledged.
I think there is enough room for everybody to survive and grow. The Scotch whisky industry has nothing to fear but themselves.
Yoshisuke Motojima, Executive Manager, marketing, Asahi Breweries (owners of Nikka Whisky), Japan
I don't think there will come a time when "new world" whiskies rival the strength and prestige of the traditional Scotch malt whisky industry - but I do think they will co-exist.
The reason why Japanese whisky has succeeded is that the distillers have improved its quality through constant practice to be suitable for Japanese people's taste. As a result, Japanese whisky has established its own style which is different from Scotch whisky and has been praised by consumers and the world's leading whisky experts.
I believe this will lead "new world" whiskies not to rival the traditional Scotch whisky, but to simply expand the choice of whisky. Growing the market of "new world" whiskies means 'coexistence' with Scotch whisky and providing alternative tastes for new markets. It's good news for whisky lovers and the industry.
Mike Keiller, Chief Executive, Morrison Bowmore
This is a very relevant question as the world of whisky is evolving and it's already more than just Scotch.
In the case of somewhere like India, I do not accept many of the cheap local Indian whisky as whisky. As far as I'm concerned, it is alcohol distilled today, bottled tomorrow with colouring added. If it wants to become a serious player, they need to change the name or create production processes with rules that protect the integrity of whisky.
The problem is that we can't compete in India as the taxes that are imposed on traditional Scotch don't allow us to compete.
There is a risk there to traditional Scotch - but the whisky industry worldwide needs to stand together to protect Scotch.
I haven't got a problem with world whiskies evolving as long as the product that evolves is broadly built around the same traditional, but expensive, production processes to protect the integrity of whisky. If it doesn't do that, it's not whisky and it's cheating.
Tetsu Mizutani, Executive General Manager of Whisky Department, Suntory Limited, Japan
Suntory built Yamazaki Distillery in 1923 - it was Japan's first whisky distillery and the aim even then was to create a Japanese style of whisky that would appeal to Japanese tastes.
Suntory has never seen Japanese whisky as being "second best" to Scotch whisky, nor do we see the global growth of Japanese whisky as being threatening to Scotch whisky.
At one time, the world's wine industry showed huge growth on the back of a significant surge in production and quality from the "new world" of the USA, Australia, New Zealand, South Africa and Chile. Likewise for whisky, Suntory will continue to develop its own Japanese style of whisky by maintaining our own traditions and our culture of innovation.
Rachel Barrie, Master Blender, Glenmorangie
I believe that the Scotch malt whisky industry will continue to be the strongest and most prestigious in the world while "new world" malt whiskies are likely to have a part to play in local markets as niche products.
There are several reasons for this. Firstly, its quality. Scotch malt whisky is renowned worldwide for its exceptionally high quality.
Secondly, its scale. The Scotch malt whisky industry has been around for more than 500 years, with around 100 malt distilleries currently in existence. The industry has had a strong 'head start' through significant global growth in the last century.
Thirdly, its strength. The industry has many strengths. It has been around for centuries and also works together as a united force to protect the quality and integrity of Scotch whisky.
And finally, its prestige. A reputation for excellence using the highest quality ingredients, time-honoured processes and being at the forefront of spirit and packaging innovation has ensured a prestigious image worldwide, as drinkers aspire to Scotch malt whisky.
The "new world" whiskies will have a place in local markets, but I believe it would take a significant step-change in investment, knowledge, quality and access to global markets for any to get close to rivalling the strength and prestige of the Scotch malt whisky industry.
Richard Paterson, Master Blender, Whyte & Mackay
I don't see "new world" whiskies as a real threat. It's important to remember that Scotch whisky is not something that happened overnight - the first reference to Scotch whisky goes back to 1494.
Scotland also has around 100 distilleries in operation at the present moment and that level of production can't be copied by the majority of countries. Japan has some different styles emerging, but it remains relatively insignificant in comparison to what Scotch has achieved in the last 100 years or so.
In India, there are various local whiskies available, but it's a different playing field. I'm not worried about people drinking cheaper, locally produced brands instead of quality Scotch. They might start with that, but then they might move on to a 25-year old blend. I see it being the same as people drinking sparkling wine then buying vintage Champagne.
The variety of styles and price in the traditional Scotch industry is also huge. Other countries may consider that they are producing whisky of some sort, but they won't be able to grow into that dimension. They simply don't have the heritage or the range of styles - and you can't buy that.
Erkin Tuzmuhamedov, Russian whisky industry commentator, TV presenter and teacher, Moscow
I don't believe there will ever be a time when Scotch whisky will be rivalled or challenged to such a measurable extent that it will cause concern. I've sampled quite a number of local "new world" whiskies, but they are in most cases not comparable even to an average traditional Scotch.
India produces billions of litres of "molasses whisky", but their real malt whisky production is miniscule. It's the same with Brazil - they drink a lot of whisky, but they are unlikely to develop a good malt soon.
In China, they don't have a local whisky while Hong Kong, despite the long British 'liaison', never had one. Taiwan has had some local blended whisky brands for quite some time, but their sales are modest compared with Scotch malt imports.
I am sure local whiskies can only pose a threat to Scottish whisky in traditional producing countries - Ireland, Canada, the US and Japan.
Magnus Dandanell, Managing Director, Mackmyra Svensk Whisky, Sweden
I am convinced that our Swedish whisky can achieve the same level of prestige as the traditional Scotch whisky industry.
From our northern perspective, with a domestic market that is one of the best malt whisky markets in the world on a per capita basis, this has been obvious to us right from that day ten years ago when we decided to start up Mackmyra Svensk Whisky. The conditions for producing high-quality malt whisky in Sweden are just as good as in the traditional countries. We have high-quality malt, pure water, good yeast,a wonderful environment and plenty of Swedes with an interest in whisky - an interest that we are convinced is on the increase, globally as well, not least because more and more people are now able to spend their money on the good things in life.
Ho-cheng Yao, Keeper of the Quaich and founder of Taiwan Single Malt Whisky Tasting Association, Taiwan
World whisky demand has grown much faster than anybody could imagine in the past few years but I believe the demand from the "new world" regions has just begun.
As there are more and more whisky drinkers, there will be more local whisky makers competing for the business. I can foresee that local whisky makers will definitely make their move to adjust the taste of the whisky to take them to the market quickly.
It is certainly not new - current Scotch producers have done similar things in the past. I have seen many producers make exclusive bottles for our market in Taiwan and these bottles tends to be heavily sherried, with an intense caramel taste. This makes sense as most whisky is consumed with Chinese food which tends to be quite heavy in taste.
If the Scotch industry is really nervous about local whiskies, it should work to educate people about whisky, and work with local governments to set very clear definitions about whisky.
David Williamson, Public Affairs Manager, Scotch Whisky Association
Scotch whisky has built up its international reputation for quality and authenticity over many years - including in countries that make whisky locally. That other countries want to produce whisky is testament to Scotch's success. And while some fine whiskies are made outside Scotland, the real story in the world whisky industry today is Scotch whisky's international renaissance.
There is real optimism among Scottish distillers at the moment as demand increases in both traditionally important markets and in new emerging markets, such as China, India and Russia. This has resulted in a visible vote of confidence in Scotch whisky as distilleries are opened, expanded, and brought back into production - in excess of £500m new capital investment has been made across the industry over the last 18 months. As a result, malt whisky consumers can look forward to some exciting times ahead.
From little acorns
The cask and its provenance are so important that several whisky makers now make their own casks using wood from their own forests. For instance, Glenmorangie owns an oak forest in Missouri's Ozark mountains, and uses the wood from it to make barrels that are then used by the bourbon industry before being shipped to Scotland. Highland Park makes its own casks in Spain where they are used to hold sherry for a time before making the journey north for their ultimate task of maturing Scotch whisky.
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