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By Scott Wright
ONE of Scotland’s most esteemed distillers has declared single malt Scotch whisky is in the midst of a “purple time” – despite the continuing pandemic.
Billy Walker, the biggest shareholder in Speyside’s GlenAllachie Distillery, offered the upbeat verdict after a year during which the industry bounced back from the devastation caused by the first coronavirus lockdowns of 2020, and saw punitive tariffs in its vital US market come to an end.
Results from distillers such as Diageo, Pernod Ricard and Gordon & MacPhail in recent months signalled the recovery of the industry from the lowest points of the pandemic, which saw distilleries shut down, hospitality outlets close and global air travel shut down from March of 2020, though in recent weeks the Omicron variant has brought fresh worry.
Mr Walker said: “Reflecting on what has happened over the last 12 months, the enthusiasm for single malt or Scotch whisky in general has never been higher. We (GlenAllachie) live in a bubble where we are not heavily into the on-trade or indeed at all into travel retail at the moment, so we have not been affected by events in relation to the restrictions that the various administrations have put in place. In fact, we have seen sales increase incredibly, way beyond what our expectation might have been even in a normal year.”
He added: “There is no question [that] this is a pretty purple time for the Scotch whisky industry and single malt in particular. We are living in one of the great periods for Scotch whisky just now.”
Mr Walker has been at the helm of GlenAllachie since agreeing a deal to acquire it from Pernod Ricard with Trisha Savage and Graham Stevenson in 2017.That came after his family and business partners sold BenRiach Distillery Company to Beam Suntory for £285 million the year before.
Expanding on the reasons for GlenAllachie’s strong performance, Mr Walker said it had benefited from consumers having more disposable cash as a result of coronavirus restrictions, which at times have constrained their ability to travel. “There has been surplus cash available and people have been buying in their local off licence, and that’s generally a situation that is replicated across the world.”
While acknowledging GlenAllachie may yet be affected by events relating to coronavirus this year, he declared: “My suspicion is the enthusiasm for single malt and top-end whisky will remain unabated.”
GlenAllachie had a busy year on the new product front in 2021, making a successful foray into rum with the launch of its Exploration brand, and introducing White Heather “super-premium” 21 year old blended Scotch whisky. It sells its products into scores of markets around the world, with Mr Walker stating that the “dynamic in Asia is incredible”.
He said: “South Korea is emerging as a fantastic market for single malt, [which is] no great surprise to me having known the market for a long time, as is China and indeed many parts of Asia. We are big in Europe.
“America is absolutely driving on, considerably, by the removal of these unwelcome whisky tariffs, and long may that continue. There doesn’t appear to be any suggestion that they are going to reintroduce them, and let’s hope that’s the case. It has been a terrific uplift for our activity in the American market.”
William Wemyss, managing director of Wemyss Family Spirits, owner of the Kingsbarns Distillery in Fife, said the lifting of the 25 per cent import tariff on single malt Scotch whisky – for an initial five years – was very important to the industry’s fortunes, although he observed: “Producers still have to find reliable import and distribution partners to represent their brands, which is no mean task.”
Mr Wemyss identified India as the next “biggest opportunity” for the industry if the UK is able to strike a free trade agreement with the country that has the effect of reducing the current 150% tariff on Scotch whisky imports. Scotch currently has a 2% share of the Indian market, which is dominated by locally made spirits.
Mr Wemyss, whose family firm also makes Darnley’s gin in Fife, added: “If the Scottish Government was to join with the UK Government and develop freeports, this might help the industry too as over 90% of Scotch is exported.”
Both Mr Wemyss and Mr Walker highlighted the continuing difficulties brought by global supply chain bottlenecks that emerged during the pandemic, which have made it difficult to access dry goods such as cardboard and glass. Access to transport and containers is also constrained.
Mr Walker, who observed that it is “taking the transport world a bit of time to get themselves back in equilibrium”, described the current challenges as “difficult but not insurmountable”. However, he noted: “I think, in reality, the concept of ‘just in time’ is probably on the back-burner for quite a long time, until the world re-calibrates itself. It’s about good forward planning and being as ambitious as you can be in relation to what you want to achieve in the next 12 to 18 months. If you are tight in terms of your plans you could have a problem or two.”
Mr Wemyss, who predicts that “Brexit-related issues” would continue to challenge the industry this year, said of the supply chain problems: “It has not only put up [the] cost of dry goods, but also the levels of stock producers have to keep in order to account for the longer lead times.”
Mr Walker identified Germany, Denmark, Holland, Belgium, South Korea, Japan, China and Canada as big markets for GlenAllachie. The distillery is “dipping our toe into South America”, though he said it was not the easiest market to sell into. He added that Russia was becoming “exciting” and some “former USSR satellite countries” are starting to emerge.
Mr Walker said: “I think the industry is in very safe hands, in terms of the big boys. But there is unquestionably an amazing enthusiasm for Scotch whisky, and in particular single malt, at the moment. We are living in one of the great periods for Scotch whisky just now.”
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