Thursday, December 31, 2009

Diageo Calling



An inevitable side effect of growth in the whisky industry is the acquisition and subsequent merging of many distilleries by large corporations. The number of active distilleries seems to go through repetitive growth and contraction cycles, based on the popularity of whisky as a whole and single malts in particular. As single malts have become more popular (and profitable), companies have purchased and re-opened some previously closed or "silent" distilleries. As part of the purchase, these companies obtain whatever product is aging in the warehouse, so part of the motivation is to gain access to these aged stocks in the hopes of bottling it and selling it quickly. The more shrewd/prescient companies or corporations were able to purchase struggling distilleries in the lean years for a relative song and are now selling bottles of old whisky stock at premium prices.


Even before the single malt boom, large distillers specializing in blended whisky were acquiring smaller distilleries whose products were major contributors to their blends. This served two purposes: 1) Economics, in that they no longer have to purchase the whisky from a third party but can produce it themselves at cost and 2) Stability, keeping production steady in order to maintain the composition of their blend for uniformity of product. It also has the bonus effect of allowing the new owners to limit access of their malts to competitors for use in competing blended whiskies.


Being part of a larger corporation can be a great boon for some small distilleries. If the corporation is interested in promoting their product, injection of capital for marketing and distribution purposes can enhance both the visibility and availability of the whisky. It also allows the distillery managers the opportunity to increase the variety of expressions available to the public, which is demonstrated in the plethora of whiskies available today. So what is the downside? Well, that extra capital comes at a price (literally and figuratively) and that price can be a loss of control at the distillery. Control of production methods and distribution may now rest in the hands of parties that have little interest in tradition or the local influence of a particular brand of whisky.


Diageo PLC is the largest beer, wine and spirits company in the world, formed as a merger of Guinness UDV with the spirits company Grand Metropolitan in 1997. Its brands are highly recognizable in every category of the spirits world: Captain Morgan rum, Smirnoff vodka, Tanqueray gin, Johnnie Walker and Crown Royal whisky, Guinness beer. This is but a small sampling of Diageo's huge brand coverage in the alcoholic beverage industry. The assimilation of Guinness UDV brought with it a collection of Scottish distilleries that used to be known as United Distillers and before that, Distiller's Company, Limited. Six of the more well-known malt whiskies from this collection were selected to become part of a "classic malts" range including representatives from different whisky regions:

Dalwhinnie - Highland

Glenkinchie - Lowland

Cragganmore - Speyside

Oban - Western Highland

Lagavulin - Isle of Islay

Talisker - Isle of Skye

These malts also represent varying styles as well as regions. Dalwhinnie is a very light, honey and heather-like whisky, while Talisker and Lagavulin are very strongly flavoured with smoke and peat, respectively. I've listed them in order of increasing flavour "robustness". These six malts were chosen out of UDV's substantial collection to be their flagship representatives in the burgeoning single malt whisky market. The others continue to exist in relative obscurity, known only to connoisseurs and available almost exclusively in the UK through independent bottlers and Diageo's "flora and fauna" range (so named because they sport relatively unexciting labels which include pictures of local plants and animals). These whiskies continue to be used extensively in blends and there are some real gems in this group.

As the popularity of single malt whisky continues to grow, Diageo has recently added a couple more representatives to its classic malts range. These two were originally dubbed "hidden malts" but after making the latest cut have joined the classics:


Clynelish: Coastal Highland

Caol Ila: Isle of Islay

Before I digress too much, let me explain why I'm outlining Diageo's considerable whisky portfolio. In November of 2008, the following story appeared courtesy of the CBC (Canadian Broadcasting Corporation):




In a nutshell, the story is about Diageo deciding to pull most of its whisky products out of New Brunswick, possibly to sell them in the more lucrative markets of the BRIC countries (specifically Russia, India and China - not sure about Brazil). There was a wide variety of responses, and your blogger posted this comment:


"After all the preaching that customers receive about 'loyalty' to a brand by corporations, here we have an example of a company not being loyal to its customers. I don't blame the individual distilleries, as they would have no say in this decision. This is one of the perils of being part of a conglomerate such as Diageo.
That being said, the power still lies with the consumer. Boycotting Diageo won't hurt them, but we can still transfer our loyalty to local brands (such as Glenora) and smaller companies which would appreciate our patronage. There are plenty of fantastic scotch whiskies out there that are not part of the Diageo empire. Springbank and Bruichladdich are gems that any whisky fan should try, but are not always available in NB. Why not?
If our business isn't good enough for Diageo, then I say let them move to other markets. I strongly urge NBLiquor to support smaller distilleries and companies that want our support and will be loyal to their customers. These don't have to be Scottish brands, as the number of Irish, American and Canadian distilleries making quality product is growing every day.
NB customers aren't good enough for Diageo? I beg to differ."

Let me make a quick point here: I can understand why Diageo is doing this. They can make more money by selling these whiskies for higher prices in some of these developing countries. That makes good business sense, and we're talking about a major multinational corporation - which historically, represent abysmally poor examples of moral judgement concerning individual customers.


Then, after almost a year of living without the classic malts, the following story appeared in the Times-Transcript, a NB newspaper:




So now Diageo products return to the shelves in New Brunswick, and we have sub-prime mortgages, toxic credit default swaps and Lehman Brothers to thank for it. Now if I had to make a guess as to what happened during this whole affair, here's what it would be:

Due to increasing demand in both developed and developing countries, Diageo decides it can make more money by pulling product out of NB and selling it elsewhere. They may have offered NBLiquor the opportunity to purchase stocks of these products at higher prices and perhaps NBLiquor refused. The global economic downturn significantly affects (reduces) demand for many higher priced goods - including single malt Scotch whisky, in many countries. Diageo decides to return some of its products to NB with some slight increases in price.

Am I glad that these products are back? Sure. I like many of the whiskies in the classic malts range, and appreciate the opportunity to buy them even if I feel some are overpriced (Oban). If they want to raise the price due to supply and demand, let them do it and let the customers decide if these whiskies are worth the inflated price. However, I do feel a bit like I've just received a phone call from an ex-girlfriend who thought she could do better, played the field and now realizes she gave up a good thing.

Diageo's prodigious marketing power has done wonders for the single malt and premium whisky markets - providing considerable customer education and attracting enormous interest not only for their brands, but the entire industry. That being said, many customers (including your blogger) will remember how such companies value their patronage and once spurned, may decide not to answer the early morning "booty call".

Friday, December 4, 2009

Mortie's Holiday Whisky-giving Guide

With the holiday season in full swing, it's a great time to review some whiskies for their potential as gifts. Gold, frankincense or myrrh? None of these warm the belly on a cold winter's night like a nice dram. However, before you drop huge coin on an expensive bottle for a friend, here are a few thoughts to keep in mind when making a whisky-related purchase for any aficionado on your list:

1) Gift cards are not bad

2) Don't be afraid of making a mistake

3) Go for value, not just age or price


4) Purchase based on recipient's preferences, not yours


5) Underestimate taste tolerance

Let's start with the gift card thing. I know that these have become more popular lately, but I feel like they still get a bad rap. There is a stigma attached to gift certificates and gift cards that insinuates the giver didn't have the time or energy to find a real gift, so they settled on getting a gift card. Personally, I love getting gift cards. They let me go shopping later for what I really wanted in the first place. It may not be as nice as getting exactly what you desire in a completely spontaneous fashion, but it certainly beats an receiving an ugly sweater. As a whisky-lover, I often use gift cards (from NBLiquor here in New Brunswick) to make a nice bottle that's been tempting me for a long time suddenly seem more affordable.

I've had several friends and family members who have told me they didn't want to buy me a bottle of whisky because they were intimidated and thought they might get something I wouldn't like. I'm always really sad to hear that, because even getting a bottle of something I might not have bought myself is a nice surprise. Sometimes my own bias against a particular brand will prevent me from buying it myself, but I'll be very pleasantly surprised to discover how good it really is after receiving it as a gift. Unless you're very wealthy (or financially reckless), you will experience some measure of guilt when spending 50+ dollars on a bottle of liquor. Gifts are a wonderful way to build your whisky portfolio while maintaining financial health!

Everybody falls into the trap of price and age when buying whisky. If you don't know your Ballantine's from your Balvenies the gut instinct is to go for the old, expensive, and single malt. Unfortunately, there are some really bad, old malts out there that will burn your palate along with your cash. Ask for recommendations and do a little bit of reading to determine which whiskies are good bang for their buck. I received a bottle of Johnnie Walker Blue for my 30th birthday and although it is a good whisky and I was very appreciative, it saddened me to think of other malts I could have gotten for the $200 price tag. The industry has been booming over the last decade or so, resulting in a great many producers trying to sell older stock for premium prices, whether or not it's actually good whisky. Inform yourself before you buy.


Buying whisky for others can be a lot of fun when you're a connoisseur, but it is very easy to forget you're buying for somebody else and not yourself. Hubris can be a real handicap here, if you start to think you know someone else's palate better than they do: "Trust me, you'll really like this!" It's best to be conservative when buying for others and try to find something they will actually enjoy, even if your conditioned tastes might find it somewhat muted or uninspiring. Better to underestimate someone's tolerance to strong flavours than to go over the top. No one wants that nice cask strength bottling or smoky Islay malt to end up like those "super" hot sauces - served as a novelty but never actually enjoyed.
If the ultimate goal is to help the gift recipient enjoy whisky, this will be better served by slowly building their tolerance and palate. Guilting someone into drinking something they don't really enjoy can turn them against that drink altogether (bah, humbug!)

With that all out of the way, here are some great whiskies that will be enjoyed by just about anybody:

Highland Park 12: I'm a big fan of this Scottish island distillery as they make very complex malts with a nice balance of sweet and peat. There's something in this dram for everyone and the price is right. Neophytes or hardcore whisky lovers alike would both enjoy a bottle.

Benromach (no age statement): Gordon and MacPhail of Elgin, Scotland recently re-started production from this distillery and they know their stuff. Another complex speyside malt with some smoke and peat. This time of year they offer gift packs of a 750ml bottles with two Glencairn glasses for about 55$ CDN. That is a steal.

MacAllan 12: Even people who don't like whisky have a hard time disliking the MacAllan. These masters of sherried malts specialize in sweet, buttery whiskies. Loved by connoisseurs but accessible to everyone, this bottle sells for $60 CDN and up, but is a great value under $80.

Dalwhinnie 15: This light, delicate scotch is a great bottle for people just starting to develop a palate for whisky. Try to find it for under $70 CDN.

Buffalo Trace: This Kentucky bourbon is difficult to find, but worth the effort. Bourbons can be very smooth as they often lack the peat and smoke of malt whisky. A stellar example of how good bourbon can be.

Balvenie Doublewood: This sherried speysider is a great value and a regular recommendation by your blogger. Not as sweet as the MacAllan, but great balance and wonderful presentation. This gift won't disappoint (note the empty bottle).

I could go on and create an exhaustive list, but all of these bottles (except Buffalo Trace, sigh) are available in New Brunswick on a regular basis for under $80. In future posts, I'll discuss other value-priced bottles of higher-end stuff that make great gifts for more knowledgeable whisky fans. The bottles discussed here are appropriate for those starting their whisky journeys of discovery, but should also light up the eyes of any seasoned whisky-lover. When given as a gift, the spirit in which it's given is as important as the spirit in the bottle. Enjoy them with friends and remember to drink responsibly.

Happy Holidays!

Tuesday, December 1, 2009

Error in Terroir



"What region of the earth is not full of our calamities?" - Virgil


One of the most interesting aspects of learning about alcoholic beverages from around the world is the extent to which they reflect the cultural heritage and traditions of the people in the regions where they were developed. This is readily apparent in the ingredients used to create these drinks, represented in the use of indigenous flora, including fruit and vegetables: Agave used to create Tequila in Mexico, sugarcane used to make rum in the Caribbean, etc. The cultural aspect also becomes apparent in ceremonies (practices or etiquette) surrounding these drinks. This could include everything from drinking whisky from a quaich to the traditional lemon wedges and salt with Tequila shots. A Canadian-made television series called “The Thirsty Traveler” explores these associations for many well-known drinks and is highly recommended for anyone interested in the historical and cultural context of their liquor. If any readers out there are pursuing sociology or anthropology degrees, this would be a great thesis topic!


As important as the plants which constitute the main ingredients in the production of a particular liquors are, so too are the conditions under which they are grown. Growth conditions will alter the metabolism and therefore result in biochemical changes in the plants, particularly in the carbohydrate (sugar and starch) profiles. Connoisseurs are often able to identify the region which produced a given brand of liquor, based on distinctive elements in the taste. This "geographical" aspect of taste is most often associated with wine, and is referred to in the industry with the French word terroir. If you think about the limited range of growth conditions necessary to produce wine grapes (temperature, quantity of water) it is understandable how much emphasis could be placed on wine regions and the growth conditions of grapes within those regions. How subtle changes in these conditions result in significant changes in aroma and flavour is what makes wine production as much an art as a science.


In the whisky world, terroir has also traditionally been trumpeted as critically important. Most malts advertise exactly where they are being produced, as this provides them with some notoriety or links to particular areas traditionally associated with good whisky, such as the Scottish Highlands. But what is it that sets these regions apart when it comes to producing whisky?


To understand regional distinction in the whisky world, we need to look at the important elements required to make (for example) malt whisky: Barley and water. Instead of grapes, it is the growth and type of barley as well as the availability of fresh, clean water. The speyside region of Scotland is a canonical example of prime conditions for whisky making: Water feeding from various sources into the river Spey is softened as it flows over granite beds, moderate temperatures suited to the growth of barley, and lots of little hills and valleys to hide illicit stills in! These prime conditions help explain why even to this day there is such a cluster of distilleries in this region – more than half of Scotland’s distilleries are considered “speyside”. The speyside “style” is represented by medium-bodied, complex whiskies with lots of malty, bread-like flavours. Many have honey, fruity and flowery notes as well. Prime examples are The Balvenie, Glenfiddich, Cragganmore, and Longmorn.


The peatiness and smokiness of various whiskies can be the result of flavours within the water source (which may be flowing through peat bogs), but they are more strongly associated with methods used to dry the germinated barley. Traditionally, huge ovens called “kilns” are used to generate heat and smoke for drying the barley prior to it being crushed into the powdery grist necessary for fermentation. On Islay, as there are not many trees on the island, blocks of peat were cut from the earth to use as a cheap fuel to fire the kilns instead of wood, charcoal or oil. The smoke generated from these kilns not only dried the barley but infused it with some of the flavours and aromas we associate with Islay malts. Some examples being Ardbeg, Laphroiag, Lagavulin, and Caol Ila.


I’ve offered two examples of “regional” characteristics of some Scotch malt whiskies. Other regions will be discussed in future posts, but the important point here is to realize that there are exceptions to these regional characteristics; ergo you can’t judge a particular malt simply by its country or region of origin. Bunnahabhain is a delicate, fruity Islay malt which goes its own way and doesn’t try to keep up with the Jones’ -- its peaty, smoky neighbours.

Are these regional distinctions still relevant today? Barley can be grown in different places and shipped to anywhere in Scotland. Likewise, the maltings (of the barley) can now be made to order with different levels of peatiness and smokiness, then shipped to any distillery in Scotland. Many scotches are not bottled at the distillery, but elsewhere and therefore use different water sources. For these and other reasons, many single malt whisky experts say that regional distinctions have no real merit anymore. In our modern globalized society, tequila could conceivably be produced in any country of the world capable of importing agave grown in Mexico and simulating the "conditions" of Mexican distilleries indoors. Should it still be called tequila?

Rules and legislation regarding the production and labeling of liquors help to maintain a certain distinction. Champagne, Cognac and Scotch whisky are all great examples of brand control with an emphasis on region. Check Wikipedia for the regulations regarding production of Bourbon. It serves as an example of more strict legislation on not simply the region (in this case the United States), but also the production process. The upside of more stringent regulations is that is promotes a more uniform and sometimes more regionally distinctive product. What’s the downside? You guessed it: More uniform product. The industry has a fine line to tread between advertising itself using regional distinctions based on and protected by regulations, while still allowing distillers room to explore and innovate with new products.


I’m not prepared to throw out regional distinctions altogether, because I think that they offer some rough guidelines and also add some cultural flavour to whisky. The danger lies in passing judgement on the style of a drink simply because of the region it comes from. Exceptions to these “rules” or trends in style are often exceptionally good. This makes it worthwhile to learn about the distilleries and their craft, how the whisky is made and their approach to balancing tradition with more modern production methods.

I often think about the origins of any particular dram I’m enjoying at the time; imagining the people and their environment coalescing in production of the whisky. This inevitable infusion of cultural influence makes the drink (and the work put into making it) that much easier to appreciate.