Scottish lessons from a Saffer-Scot about Scotch

Business

A WEE DRAM

Scottish lessons from a Saffer-Scot about Scotch

Our correspondent samples the business end of whisky

Chris Gilmour

Because this column is titled A Wee Dram, it gives me licence to indeed write about exactly that, and particularly after spending some time in my home country, sampling local craft beers and visiting various distilleries.
The Scotch Whisky industry is thought to be worth around £5-billion a year to the British economy, with 80% of that value being exported.  Around 40,000 jobs across the value chain rely on the delicious amber nectar and 7,000 of those are in the very sparsely populated Highlands of Scotland. Along with tourism, agriculture and fishing, these sectors are the lifeblood of this far north region, without which further depopulation would be inevitable.Having visited and savoured the output from three excellent northeast Highland distilleries – Glenmorangie, Balblair and Dalmore – I began wondering who or what is the force behind this huge industry.
Surprisingly, only about a quarter of all Scotch whisky producers in Scotland are Scottish-owned. London-listed Diageo is the main producer, with a 36% market share. It also owns the well-known Johnnie Walker brand of blended Scotch whiskies, very popular in the US and South Africa.Twenty years ago, Diageo created some marketing “magic” by creating the so-called “classic malts” of Scotland, being Talisker from Skye, Lagavulin from Islay, Dalwhinnie, Cragganmore, Glenkinchie and Oban. These were designed to capture the diverse types of malt whisky, ranging from the heavily-peated Islay malts to the subtler Highland malts and everything in between.
France’s Pernod Ricard is in second place among the heavyweight Scotch producers with an estimated 19%. It owns Chivas Regal blended whisky, which is similarly popular in the US and South Africa, as well as The Glenlivet and Aberlour Speyside single malts.
In third place is the only Scottish-owned company among the large producers, William Grant & Sons. This company’s main claim to fame is ownership of Glenfiddich, the world’s biggest-selling single malt; and it also owns the excellent Balvenie single malt brand as well as Kininvie and Ailsa Bay.
Bacardi, more famous for its white rum, has been in the Scottish whisky industry for 20 years, ever since it bought Dewar’s whisky, the best-selling blended whisky in the US, from Diageo. It also produces a couple of less well-known single malts and has a market share of 6%.
Japanese-American producer Beam Suntory, the owner of Jim Beam bourbon whiskey, has a 3% market share and owns the well-known Teacher’s blend whisky. It also owns the Islay single malt Laphroaig, which is very much an acquired taste owing to its heavily peated flavour. Frankly, I find it almost indistinguishable from a sore throat antiseptic treatment.A couple of heavy hitters with very small shares include Brown Forman of Jack Daniels fame; and LVMH, the French luxury goods company that owns Glenmorangie (which by the way rhymes with “orangey”, the emphasis being on the first syllable}. Glenmorangie has an extensive lineup of single malt whiskies, many of which are aged in a variety of casks, such as bourbon, sherry, port and sauternes, each one carefully chosen to impart a distinctive flavour and appearance to the final product.
South African drinks giant Distell has its own share of Scotch whisky via its purchase of Burn Stewart, which owns a number of brands, most notably the Islay single malt Bunnahabhain and the blended Black Bottle.  Other participants include owners from Thailand and the Philippines. Scotch whisky is no longer limited to the Scots.
Despite being a Scotsman, I have avoided whisky all my life, put off by the peatiness that is often associated with its character. Peat is a fossil fuel used to heat the malt which is then dried out, and its heavy smoky flavour gets imparted. But my interest was recently piqued on tasting the Glenmorangie 12-year Lasanta, a rich dark whisky, aged for two years in sherry casks. A thimble of this in my morning porridge oats is just the thing.
Chris Gilmour is an investment analyst.

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