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    stories features part I


The Scotch whisky industry Part II

Through the 1960s and '70s, every year saw the overall growth of Scotch whisky sales, and sales directors predicted this success would continue for years to come. How wrong they were! They demanded more and more output from the distilleries, and Tomatin, near Inverness, was expanded until it boasted no fewer than 23 stills, capable of producing a staggering 12.3 million litres of alcohol per annum.

But the good times could not last forever, and by the late '70s the whisky industry was bursting at the seams with stocks. 123 distilleries were in operation, and a 'whisky loch' had developed to keep the EEC's wine lakes and butter mountains company. The 'pin-striped brigade' of Scotch whisky had become complacent and inactive. Vodka, gin and white wine was now selling at the expense of whisky, brandy and rum.

Production had to be cut, and rationalisation came thick and fast, firstly from DCL, with no fewer than 23 distillery closures in 1983 and 1985. I remember the famous 1983 headline in a Scottish newspaper - “Scotch on the Rocks!” These words would go on to haunt our industry for many years to come.

The 1980s also saw the rise of the supermarkets, and of whisky company marketing departments - the wonder boys of the 80s with their buzz words and fancy ideas. This was a time of amalgamations and rationalisation. One prime example was when Guinness became the new owners of DCL in April 1986, forming United Distillers the following year. These were painful years. Not only distilleries, but many jobs, were lost. Cooperages, sales teams and whisky brokers went to the wall, including my own father.

   The days of complacency were over, yet globally Scotch was still considered the most 'respectable' of spirits, but it required something new, something fresh, to raise its profile. Innovative packaging began to appear in the market, supported by professional, upbeat presentations, along with sponsorships and sales drives. The Scotch Whisky Association was making its own inimitable contribution by seeking a 'level playing field' for Scotch in many international markets which discriminated
against imported spirits by way of taxation. On the education front, the Wine & Spirit Education Trust and The Institute of Wines & Spirits were doing their fair share to support the industry. The formation of the Keepers of the Quaich and the creation of the Scotch Whisky Heritage Centre in Edinburgh in 1988 (left), helped to raise the image of Scotch whisky even higher.

Slowly but surely the markets began to respond, and as we moved into the later 1990s, although whisky prices were still low in the UK, more foreign investment was beginning to emerge, and the industry showed definite signs of recovery. 1997 was certainly a year to remember, as exports topped 989 million litres of alcohol, valued at £2.394 million. But the underlying trend still showed heavy stock liabilities, and in particular aged stocks, lying in bond in malt distilleries throughout Scotland. However, with the growing global interest in single malt whisky, and thanks also to the energetic whisky writers, whisky publications and whisky festivals around the world, we no longer have whisky lochs. They have become streams of gold. Today, we are much more confident about the future.

Now Scotch is the 'in' thing. As the Scotsman newspaper reported in February, “Scotch Rocks!” This headline related specifically to Diageo's plans for a huge investment of £100 million, creating an entirely new malt distillery at Roseisle on Speyside, and its intention to spend a further £40 million on expansion at its Cameronbridge grain distillery in Fife.

The 2006 figures for Scotch whisky certainly reflect this 'feelgood' factor, with exports up
six per cent. Very significantly, sales of blends grew by 4.2 per cent, while deluxe blends, especially in Asia, have risen by an extremely encouraging 30 per cent. Overall, single malts sales are up by 23.4 per cent.

New distilleries are planned not only by Diageo, but also by William Grant, Islay's Bruichladdich, and the Aberdeenshire-based independent bottler Duncan Taylor. With over 90 per cent of Scotch whisky sales being in export markets, the overseas aspect looks very encouraging. Sales in Central and South America, France, Italy, Portugal, USA, China, Russia and especially India are surely set to rise much higher. The future of Scotch whisky future looks bright.

At last, with whisky stocks severely restricted, it is hoped that realistic prices will allow our branded business to flourish, and perhaps we will finally see a decline in 'own label' bottlings for the first time in many years. However, unless we control production at our distilleries, drink sensibly and avoid anti-alcohol lobbying, we could very well return to those dark, dull years of the '80s. Hopefully we have learnt from our past mistakes and are better equipped to confront any obstacles we face in the future. Only time will tell.

Despite the many changes we have experienced over the last 50 years, one thing is certain. Our commitment to producing Scotch whisky of unsurpassed quality has never diminished. We will always strive to produce the best spirit in the world. And that spirit is Scotch Whisky!

Click here for Part I


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