The Independent Bottlers

Enrichment or Oligopoly

The Whisky market is at a turning point. In the 1980’s, the Blend Whisky producers still dominated the market. Johnnie Walker, Ballantine’s and Chivas Regal were few of the most popular Whisky brands of the world. And they all created Blended Whiskies, with only few exceptions. If you wanted a different Whisky, you found the exception with American Bourbon from Jim Beam.

In the early 1990’s, the rise of the Single Malt Whiskies started. Of course, there were sporadic ones like Glenfiddich, Glenlivet and Glenmorangie. But this segment of the market established itself very slowly in the 60’s. With the release of Classic Malts of Scotland by the market leader Diageo, in the beginning of the 90’s, it became clear to retailers that Malt Whisky was a new branch on the market.

Johnnie Walker Black Label
Johnnie Walker Black Label

The independent bottlers

The small independent bottlers were faster than the big Whisky distilleries. The term ‘Indpendent Bottlers’, which will be referred to IB from now on, means companies who, independently from the producing distillery, fill Malt Whisky into their own bottles. This independence from the distilleries is shown in the labels on the bottles. The largest part of them is showing the name of the bottlers.

The goal of this article is to showcase the many, small bottlers on the market. Where do they get their Whisky from? Is there a difference in the quality? How does the seemingly small industry progress?

Flow of Whisky in the industry

No one is bottling Whisky for the fun of it or of the customers. It’s about money. The existence of companies and the families of the employees are depending on those bottles. If we want to know how the industry is currently doing, we have to follow the stream of Whisky and money. That sounds heavy and has nothing to do with the culinary enjoyment, we all seek in Single Malt Whisky but we’ll not always find. But if we want to find good Whisky, a look behind the curtains is worth it.

Cameron Bridge Distillery
Cameron Bridge Distillery

Whisky exported in 2018

Type of WhiskyLitres exported
Scotch 16m. Litre
Malt Whisky 7.8 m. Litre
Blended Whisky 8m. Litre

For years it has been a known fact that Malt Whisky amounts to a very little percentage of the whole Whisky production. But those times are long gone. Malt Whisky is steadily increasing.

While bottling the contents of the best Single Malt casks used to be sufficient, it’s very different today. For many distilleries each cask, even from the last corner of the warehouse, matters. The demand dictates that they can’t go without even one litre of Malt Whisky from special distilleries. In a few distilleries you can see the trampled on turf ground between the decreasing casks in the warehouses. The recent shortage at Lagavulin, Oban, Cardhu and Macallan showed, how much Malt was being sold as Single Malt those days.

It’s fortunate that big distilleries massively increased the quality of the production and of the casks in the last years. In the past only 10 to 20% of all casks were extraordinary. Today only 10 to 20% are bad casks. Mouldy Malt, bad distillation, casks that were used too often and excessively long fermentation periods – those influences no longer exist today. Only the badly waxed wood of some casks can sometimes bring surprises and result in a bad Malt.

Cardhu Distillery
Cardhu Distillery

Despite of that, the increasing demand of Malt Whisky isn’t really met with the increase of production. The big Whisky industry is said to be slow. That seems to be true. But once a large train is in motion, no one can stop it. Over 100 years the Blend Whisky industry was known for exchanging Malt Whiskies for their many different Blends. But with big fights over acquisitions and the decrease of provider variety we could see in the last years, this practice comes to an end. Almost everyone is producing his whole portfolio by himself now. The peated Malt Whisky used in Johnnie Walker, for example are from the Malt Whisky distillery Caol Ila, which the brand itself owns. Laphroaig is producing for the Blend Ballantine’s, which is coming from Pernod Ricard. Nobody wants to rely on others and be dependent any more.

Even for the Single Malt Whisky distilleries the market rectified. Instead of letting Lagavulin and Caol Ila work on the Blends, Lagavulin focuses on Single Malt and Caol Ila on the Blends. But Cao Ila, which is just as big as Lagavulin, could also simultaneously produce for Malts and Blends. The mentioned 10 to 20% of bad casks or better said, unsuitable casks, are sorted out and are used for the own Blends. It’s easy to recognize the casks with a below-average progress in the first three years.

On the other side, there are secondary distilleries who still haven’t jumped on the Single Malt train (yet). They produce almost exceptionally for the house-made Blends. Only occasionally there are experimentations with new Malts, for example Glen Elgin 12 years or Clynelish 14 years.

The CaoI Ila distillery

Let’s get more into detail and look at the Caol Ila distillery. Without exception the distillery produces peated Single Malt Whisky, which matured in Ex-Bourbon casks. Just before the annual deadline, it was possible for Blend Whisky producers to drive to the distillery with a Truck loaded with 20 or more empty casks, and fill them with peated Malt for a litre price. But this came to an end in the summer of 2002. The owner Diageo has stopped this ‘outlet’. Already existing contracts with Blend Whisky producers still remained, but haven’t been prolonged. More than the amount the contract states is no longer an option. Why?

With the six Pot Stills, the distillery can produce 3 m litre pure alcohol every year. For a medium peated Blend, like for example Johnnie Walker Red, Diageo needs 5 to 10% heavily peated Malt. If we take the international common 0,75 litre bottles and consider the 81,6 m. sold bottles in 2002, the calculation looks like this:

40% alc. * 0,75 l * 7,5% Malt * 81,6 Mio. Bottles = 1,8 Mio litre of pure alcohol.

This would take ca. 60% of the distillation capacity of Caol Ila. If we add Johnnie Walker Black and the other big Blends of Diageo, like J&B, the maximum capacity of Caol Ila is reached. But additionally Caol Ila Hidden Malts with 12 and 18 years, as well as some high percentage bottlings were released on the market. In order to realize the planned increases in sales of those Malts in the next 12 to 18 years, the needed amount of casks has to be constantly stored.

The Coal Ila Distillery
The Coal Ila Distillery

The Big Four

For the forward looking and big Independent Bottlers (IBs) this was nothing new. They build up a big stock of Single Malts from various Malt Whisky distilleries. Four big IB (the Big Four) build up a stock of about 10.000 to 20.000 casks over the years: Gordon & MacPhail’s (G&M) about 17.000 casks, Signatory about 12.000, Douglas Laing (DL) about 15.000 and Ian MacLeod about 20.000.

Only Gordon & MacPhail and Signatory realized the importance of those independent stocks in their full meaning and almost exclusively bottles Single Malt. Douglas Laing is aware of their treasure and therefore no longer use old casks for random Blends, instead they bottle them for the Old Particular. But they still make large profit with Blend Whisky. Only the Ian MacLeod company is still delivering to big Blend Whisky brands and is therefore reducing the great cask stock immensely. But how long can they afford to do that?

The Benevolence of the stored Malt

How does the benevolence of Malt Whisky in those four big stocks look? The stock of a distillery like Caol Ila has an average age of about 1.5 years, since almost no cask is older than 3 years and most of the content is used for Blends. But the Big Four are sitting on significantly older Malts. Although that doesn’t say anything about the overall quality of the Malt. Those Malts were directly filled into the casks of the IBs. But as already mentioned, back then the quality standards of the distillery and the management of the casks were nott as good as today. This means that a certain amount of Malt with less quality is somewhere in the stocks of the big four. As long as they were not used in the Blended Whiskies already and were sold off.

At this point, you can hear the mental outcries of some Malt Whisky lovers. Why should the Malt Whiskies be bad? Aren’t they just different? Do they just have more of the distillery’s character and less cask character?

It’s not as easy as that. Weakened casks, that couldn’t mature a Malt despite of the 20 years storage, is just one side of the medal. On top, there are casks with an unpleasant note of wood, with a taste of sulfur or bitterness and which have build up extreme acids. Some have the smell of urin and vomit and others are lying in the casks, as if they were dead. Those smells aren’t always the first thing you smell. But if you become aware of them once, they are like a red flag for most connoisseurs. For a great Single Malt Whisky there is a certain balance between cask and distillery character.

The Big Four and the small IBs

If we talk about IBs, there are dozens who come to mind, which are not mentioned in this article. But all that glitters is not gold. We don’t want to mention names – it would be favourising and/ or badmouthing companies. Therefore we just mention the Big Four with their own stocks, and not the many small ones.

Here are some of the best bottles of the Big Four:

Ardmore Clan Denny - Bottled by Douglas McGibbon
Ardmore Clan Denny - Bottled by Douglas McGibbon
Auchentoshan 1992 bottled by Signatory Vintage
Auchentoshan 1992 bottled by Signatory Vintage
Macallan bottled by Gordon & MacPhail
Macallan bottled by Gordon & MacPhail
Chieftain's Choice bottled by Ian MacLeod
Chieftain's Choice bottled by Ian MacLeod (no longer available)

A game of hide & seek

Hiding behind those many unmentioned names of the small ones are scam and trickery. Everyone of the Big Four owns at least one other Label besides the popular big ones. This leads customer to believe that there are more market suppliers on the market, than there really are.

But the most popular and largest series under the labels of the small IBs are those second bottlings. Spirit of Scotland = G&M, McGibbon’s = Douglas Laing, Dun Bheagan = Ian MacLeod and Dun Eideen = Signatory. The volume left after those series, is very small.

Douglas Laing Old Particular
Douglas Laing Old Particular
Dun Bheagan Glenallachie
Dun Bheagan Glenallachie

Whisky Brokers

Where are the Malts of the unmentioned small bottlers originating from? And what about the bottlings of the Whisky Associations, Whisky Clubs and private people? Those responsible claim within the labels of the bottles, that every cask is chosen carefully and is made from the finest Malts. But is this true? Speaking the truth – everybody would do that. Aren’t that just marketing claims?

Individual, selected good casks can never be purchased directly from the distilleries, even when some marketing pro is claiming otherwise. This was always impossible. Only the distillery themselves can choose freely between their stocks of top products like Macallan 25 years or Glenrothes 25.

Where are the old casks coming from? In general, there are two sources of those Malts. In the past the distilleries sold their excess Malt Whisky casks through Brokers to many little Blend Whisky producers. And those Brokers put one or the other cask on the side and sold it with a heavy extra charge to the small IBs. Easy Money, as the Brits say.

An Ardbeg casks, filled by Signatory
An Ardbeg casks, filled by Signatory
Bowmore Casks - filled by the distillery itself
Bowmore Casks - filled by the distillery itself

Until now, this was the only option to taste a Malt from the legendary Kininvie distillery. Despite the fact that the producer filled a symbolic amount of different Malt into the very bright Refill Cask to degrade it, it was still bottled as Vatted Malt. How the owner of the Wm. Grant & Sons distillery, who tried to prevent this, reacted to this, should be very obvious.

The second option is the purchase of casks from previous distillery masters, which received a part of their salary in form of Whisky casks. Favourably as bonus at the end of the year. This is the ideal source of top Malts! But those casks are very rare and even rarer to find on the market.

From this and the combined efforts of the big people in the industry, the job of Whisky Brokers decreased heavily. Why should the big industry pay a Broker, if they don’t need him any more?

The remaining Brokers are facing two problems: The numbers of casks declined massively, since the big producers entirely stopped the sale. And with the better negative choice of the distilleries, the average quality of Malt Whisky also weakened. The demand from the customers of the Brokers however, increased heavily. Too many small IBs are on the market, who urgently require those casks.

In this ‘market of the seller’, the Brokers changed the rules in their favour over the last years. They don’t offer Pre-Tastings of the casks for evaluation any more. And it’s no longer possible to buy single casks, which is also called Stock-Picking. Instead, the Brokers bundle together casks into bigger batches and offer those batches to their best customers first. Good, bad, small and big casks of popular and unknown distilleries are thrown together like this. In case the top customers declines the batch, it will be passed down in the market. The ‘No-Tasting’-Rule may look bad at first sight. But it enabled even the smallest IBs to get their hands on a better cask. But only, if the ‘higher ups’ in the chain won’t pay the demanded price.

Because not all of the cask are traded for the price of the Blend resources, but with the higher Single Malt prices, it’s not possible for IBs to mix a blindly bought, bad cask into a Blend. The financial loss would be too high. Therefore the individual casks are handed and sold down through the chain, and are still bottled in the end. Single casks that are moving through the market should be approached with caution as connoisseur. Rumour has it, that the samples of those casks wouldn’t match with the content of the finished bottle. But only enraged buyers told us about this. There is no proof that we know of.

All -Around-Provider

Today the original task of the Brokers is handled by the Big Four themselves. They not only sell casks to the small IBs – they also bottle them. They create labels and packages and store the bottles again, free of taxes. The customs clearance and the delivery is handled exactly when the bottles are demanded in the market. From only being an IBs they transformed into a ‘Full-Service-Provider’ or ‘All-Around-Provider’.

What is left out in the communication by the IBs and the Brokers, is the negative choice of casks, when they are handed down and distributed on the market. Casks that are unsellable in the end, are offered to the private market, the Whisky Clubs and the private people. The rest of that is going abroad and therefore get sent to us. Regularly those offers reach us, but are wandering straight into the recycle bin.

Until now, it did not matter for us that since 1994 there was no more independent Glenfiddich. Even the general lack of Glenmorangie on the market did not disturb us. But if we are going to do without Ardbegs, Caol Ila, Bowmore or Linkwoods in the future, that would be grim.

An Independent Bottling of Glenfiddich from 1994
An Independent Bottling of Glenfiddich from 1994

Are the Malt Whisky Sources drying up for the IBS?

The Big Four have realized that and are trying to get the last out of their stocks. Less substantial casks are filled into new ones, or are finished in special ones. But the general movement of the IBs is distancing themselves from independent bottlings. The Big Four have already bought own distilleries and are trying to become high quality Single Malt Whisky producers. There is no intention to bet everything on independent botllings in the future.

Not all Single Malt Whisky sources dried up. But here is a list of Whisky companies, that already sell no casks any longer (that we know of):

Currently still available are Malt Whiskies from selected distilleries of Pernod Ricard. The more successful this Number 2 is being on the world market, the more the selling of casks to IBs will decrease. Even they will need the casks for themselves in the future.

Outlook

How should we consumers act? What should we buy and what not? Can we even influence the market? What should we look out for?

We don’t want to give certain advice for your shopping, because we don’t know your taste. But despite that, we are still confident to make some claims.

Single Cask Whisky of the Big Four are certainly well picked. But if the distillery is more rare (for example Port Ellen or Imperial) the risk is increasing in terms of taste.

Limited original bottling are extraordinarily good most of the times. This includes the overlapping series of the distilleries, like the Flora & Fauna series.

Caution is advised with unknown independent bottlers. Especially if we talk about light yellow, bright Whiskies, with an age over 12 years. Most of the time those are refilled casks, which were sent to the Blender, due to the lack of cask character. Our advise: Only buy it after you tasted a sample!

Especially caution is advised with bottlings, which are rare already. If someone decides to buy a bottle of Kinclaith or Port Ellen today, he or she should really think about opening the bottle. It will certainly function as a good financial investment.

Even if everything sounds very sad, unfair and oligopolistic, we want to give a positive outlook at the end of the article.

Four Independent Bottlers bought own distilleries in the last years (Gordon & MacPhail’s = Benromach; Signatory = Edradour and Ian MacLeod = Glengoyne) and every year new distilleries start producing (9 opened in 2019) . Additionally there are four more autonomous distilleries: Arran, Speyside, Glenfarclas and Springbank. Even if those distilleries are naturally settling their prices near the prices of the big distilleries, they still count as independent. Glenfarclas has a great storage, with constant releases of new bottlings. Only Springbank is a little bit stalled. But the current 12 to 15 years old bottlings are increasing again. Speyside released its first 18 year old in 2015 and Arran is already offering Malts from 1995.

The Benromach Distillery
The Benromach Distillery

More Bottles:

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