Scotch Whisky in the course of time

Everything is in motion

In the mid-19th century, Alfred Barnard visited the Malt Whisky distilleries in the UK. He described his travels in his famous 1887 book 'The Whisky Distilleries of The United Kingdom'. From today's viewpoint, all seemed right with the world back then. Many small Whisky distilleries handcrafted the kind of Malt Whisky we appreciate so much today.

But already during that time, great changes came about. The emerging industrialisation reached even the remotest valley in the Scottish Highlands. The tax on alcohol and Whisky had been established long before, and the law allowed only licensed distilleries to produce Whisky. The time of illicit distilling was over once and for all.

By the end of the 19th century, the concentration process, which had begun with licensing, continued. The rural farms with distillation as a side-line became economically independent companies. The new railway lines explored the farthest corners of Scotland, and the Malt Whisky could be transported into the cities easily, where it was used primarily for blending. The economic boom at that time produced famous blended Whisky brands, such as Johnnie Walker, Dewar's or Chivas Regal. Single Malt Whisky led a shadowy existence and was only valued among the Scots themselves and as a 'spice' for the Blended Whiskies, which were already distributed worldwide.

The big success of the blended Whiskies made the corporations grow until 1914. The brands and their taste were consolidated. Since Malt Whisky is the most important and taste-determining ingredient of Blends, the corporations became dependent on the constant supply of Malt Whisky. They began to secure their 'Whisky sources' and preferably bought those Malt Whisky distilleries that already supplied them with casks for their Blends. They paid in a currency that was equally cheap for the buyers as it was expensive for the sellers: shares. The constant and hard work in the barren highlands and the islands off the coast was rewarded with shares in the growing corporations.

There wasn't really a world economy proper yet at the turn of the 19th century. The Commonwealth with the British crown colonies and the independent United States were the preferred markets for Whisky. America even more so, since only the small ruling upper class could afford Whisky in the colonies.

Since the Scotch Whisky industry depended on exports, World War I led to a drastic decline of the Whisky production. During prohibition from 1919 to 1933, alcohol smuggle to the USA made up for a part of the production, but it didn't reach the pre-war levels again. This led to serious problems for the Whisky companies.

High debt and the first closures subsequently shocked the Scotch Whisky industry. The cards were reshuffled. Prohibition ended in 1933, and Great Britain could repay its war debt to the US in Whisky after 1945, and so the industry recovered again. The Distiller's Company Ltd. was the uncrowned winner and could take over many companies and distilleries, eventually becoming the biggest spirits corporation of the world, Diageo.

After the war, the speed of concentration increased. Out of more than two dozen corporations, only eight have survived today. Global expansion, especially of the USA and the UK, fuelled competition, and the remaining companies either merged or were taken over by the big players.

For 30 years the big corporations haven't been focusing on Whisky alone any more. The whole spirits business is now in focus. The cost advantages are too big when you can distribute Vodka, Gin, Cognac and Rum beside Whisky, using the same infrastructure.

The last two big rounds in this fight for market shares were the breaking-up of the previously biggest spirits corporation in the world, Seagram's, into competitors Diageo and Pernod in 2000 and the takeover of Jim Beam by Suntory in 2014.

This shows, however, that the market has almost come to a standstill at the corporate level. The competition watchdogs in the USA and Europe only accepted the takeovers under strict conditions. The concentration has increased so much that they're afraid that one corporation could gain a dominant position.

While the corporations were busy analysing Asian growth rates and the relations between Whisky, Rum, Vodka, Cognac and Gin, a development beneficial for us connoisseurs set in: At first unnoticed by the big players, Glenfiddich started selling their Whisky on the duty-free market. The success in the 1980s was so big that the Malt Whisky soon followed the travellers into the local supermarkets. When the big players eventually woke up, William Grant & Sons, the owner of Glenfiddich, had occupied the market. Today Glenfiddich is the global market leader in Malt Whisky.

But the giants are on alert now. Meanwhile Pernod Ricard could already gain the title of biggest-selling Whisky brand for one year with their Glenlivet brand.

Beside these 'theatres of war', the Whisky base is broadening. Wherever you look, everywhere in Scotland new small Malt Whisky distilleries are built and opened. About two dozen new distilleries have been established in recent years. It will still take a while until these young Malt Whiskies are launched onto the market, but the supremacy of the big corporations is starting to fade. Who wants to buy the third or fourth bottle of Glenfiddich or Glenlivet when there are so many new, unknown Whiskies to try?

Recently the corporations made it easy for the small distilleries, anyway. Instead of building large stocks of old Whisky with their financial power, they listened to the controllers and reduced capital commitment in the warehouses and produced more and more NAS Whiskies. NAS means 'no age statement'. These Whiskies are often only matured for a few years and then finished in admittedly very good casks.

But the small distilleries use excellent casks, too. They have to, even, since they don't have any stocks of old, well-matured Whisky yet. One man's joy is another man's sorrow. Compared to the NAS Whiskies of the big corporations, the NAS Whiskies of the small newcomers look pretty good. Let's look forward together to what there is to come from distilleries such as Wolfburn, Glenglassaugh, Kingsbarns and all the others.