Distillery revivals and the single malt boom

Only those with hearts of stone would have failed to celebrate the carefully choreographed announcements of Brora’s, Port Ellen’s and Rosebank’s reopenings.

Hearts of stone, or the belief – as spouted on anti-social media – that nothing Diageo ever does can be praised (Ian Macleod is naturally exempt from this). Damned for closing them, damned for not reopening them, damned when they do.

Those embittered naysayers aside, the news has, rightly, been welcomed. It means jobs, and it means a return of whiskies which were either iconic or became elevated to that status.

What, then, does this say about the health of Scotch in a week when the Scotch Whisky Association claimed that tax hikes had directly led to a sales loss of 1m bottles in the UK? Can the market cope with three more distilleries being added to an already rapidly expanding estate? 

The revival of the three sites, I believe, demonstrates the continuing recalibration of an industry whose firms are not all wholly reliant on providing fillings for blends. You can now be a dedicated single malt producer.

This will be a slow readjustment – the volume difference between the two categories is still huge – but, although blends will remain the foundation, there are now clear indications that single malt should be seen as a category operating to its own rules.

Not needed: Port Ellen closed because its spirit wasn’t required for blends

Diageo didn’t decide to reopen its pair because it needed liquid, but because there is a perceived demand for single malt – and single malt of a specific style. It is noticeable that, while the firm has revived two lost plants, it hasn’t gone ahead with the doubling of capacity at Mortlach and Teaninich. It’s optimistic, but cautiously so.

The reopenings are modest – both distilleries will have a maximum capacity of 800,000 litres of pure alcohol (lpa; the same as Oban) – but who is to say that the maximum will be required?

These will be small-scale, profitable units appealing to a changing market and benefiting from an already established reputation. It makes perfect strategic sense, as well as making folk feel all fuzzy and warm.  

Rosebank, too, is a canny move from an extremely canny firm which quietly gets on with the job. Ian Macleod doesn’t spend money unless it knows there is a return, and also knows that whisky is about playing the long game.

Both firms have sufficiently long memories to remember why the stills closed in the first place, although the specific reasons might have been slightly different: Brora only reopened the first time because of short-term requirements; Rosebank closed because of effluent issues and location (if it hadn’t been next to a then disused canal, it would have been a Classic Malt); Port Ellen was surplus to requirements when there was a glut of smoky whisky; all fell silent because of the stock surplus of the late 1970s and early 1980s.

Canny move: Leonard Russell and Ian Macleod are playing a long game with Rosebank

Distilleries closed at that time because their makes weren’t required for blends and because there wasn’t a single malt market to speak of. Size, style, quality, location – all were taken into consideration when the cull took place.

Now, with a new single malt category, what might we expect in terms of style from the trio? We’ve heard that the set-up in each distillery will be the same in terms of equipment, but do you honestly think either firm won’t also apply the learnings from the intervening years?

Although some may wish it, I don’t see these reopenings creating heritage sites manned by folk in period costume using the same barley type, yeast strains and equipment as in the ‘Good Old Days’ to make a spirit which will then be filled into the same (often exhausted) wood.

These aren’t Sleeping Beauty distilleries, waiting for the kiss of Princes Ivan (Menezes) and Lenny (Russell) to reawaken them so they can continue as they were. You can learn from the positives (and, more importantly, the mistakes) of the past, but you can’t go back (ok, the Cabrach distillery might just do that, which would make it academically fascinating, but hardly a commercial venture in the way that Diageo and Ian Macleod envisage their revived three).

What, then, will the rebooted distilleries be facing when their mature whisky appears on the market in a decade or more’s time? Scotch has got better at reading the cyclical nature of the market, but any aged spirit category is always a hostage to fortune.

Brora’s back: But how will the ‘new’ spirit produced differ from the past?

Having old heads who have seen the worst of times in charge is essential. It is not just about having a product to sell, it is being able to anticipate the needs of the market in five, 10, 15 years’ time.

The trio will emerge with mature stock at (roughly) the same time as another 10 or 12 new distilleries. In recent weeks I’ve been round five of them. All are well set-up. All will make excellent whisky. All (bar one) are 100% single malt-oriented.

The question which needs to be asked now is: how do they cut through against 100 other established malt distilleries, plus their contemporaries? Where’s the point of difference?

The rebooted trio have the advantage of being able to draw on an already established reputation. They, I feel, are in a secure place. The rest? There are many options open to new distillers, but the smartest ones better have started wargaming exercises now. The ones who take the long-term view should prosper.

The single malt category is new. We don’t know how the market will change in the next decade. Will we really see Glenfiddich, The Glenlivet and Macallan all sell in excess of 2m cases a year – and, in Macallan’s case, at a price premium?

I’d be more worried about not getting those sums right than about the relatively small amount of spirit coming from the rebooted trio. Three cheers for them, but wise heads are required if the faith that all of the industry has in the projected single malt boom is to be repaid.