18 Nov
2003
Water of life's secrets sold off
IT HAS been Scotland’s number one indigenous export since Friar John Cor first appeared in the Exchequer Rolls with eight bolls of malt in 1494. But now the £2 billion whisky industry is not only exporting the water of life but also the means and materials to make it.

It may appear that the nation’s family silver is being sold off, but whisky manufacturers remained bullish on hearing the news, confident they are up to the challenge.

Richard Forsyth, the managing director of the Speyside based Forsyth Group, which builds and manufactures whisky distilleries, says he has seen a marked upsurge in the number of orders from abroad.

In the past year the Forsyth Group has built distilleries in Sweden and Finland, and is currently taking orders from Australia, California and China.

"The market is definitely growing," said Mr Forsyth. "Everyone is trying it. In the past ten years we have built distilleries all over the world in Japan, Korea and Taiwan and have shipped pieces to South America, Venezuela and Uruguay. But the market at the moment is very buoyant and from all the evidence we have I think it will grow."

The distilleries that are being built are what the industry terms "micro", producing around 100,000 litres of malt whisky a year. It is aimed at the premium end of the market and competes directly against Scotland’s home-produced malts such as Macallan 25-year-old, Chivas Royal Salute and Bowmore 40-year-old.

"These are all customers who are not trying to emulate Scotch whisky as such, they want to produce their own," said Mr Forsyth.

"In the last ten years there has been a sea change in the industry. The larger companies have been busy buying up each other and perhaps now the tide is turning towards smaller producers."

Foreign-made whisky is not a new development. But Michael Jackson, author of the Malt Whisky Companion, says the expansion of whisky distilleries across the world has developed in the past ten years on the back of the growth of single malt whisky which has breathed new life into the industry.

Latest figures published by the Scotch Whisky Association show that in 2002, £2.3 billion worth of whisky was shipped to more than 200 countries. But the real growth sector was in single malts.

Last year, single malt whisky increased its export volume by 9.3 per cent to 46.5 million bottles, with value growing 11 per cent to £268 million.

Mr Jackson argues that the demand for "boutique" malt whisky in the United States could emulate the American demand for independently brewed beer. In the 80s and 90s the number of independent breweries in the US increased from about 50 to nearly 2,000.

Mr Jackson said: "The hotbed of new whisky distilleries is in the north half of the West coast of the US which is where the micro brewing beer movement started."

Old Potrero Single Malt from San Francisco is a case in point. Bright deep orange in colour with a nutty oak and orange marmalade in the aroma, it is a hugely powerful whisky that retails in the UK for around the £100 mark. Earlier this year Suntory, Japan’s biggest drinks company, launched Hakashu 12-year-old single malt on the UK market. Distilled in a mountain wilderness, with spring water, it retails for about £39.95 a bottle and is sold in Edinburgh’s Royal Mile Whiskies.

Arthur Motley of the Scotch Malt Whisky Society admitted that he had not tasted many foreign made whiskies because they were too young, but said that if the whisky was good enough, as a progressive society, they would list it.

" I would be very surprised if we ever reached a situation where Scotland’s industry was threatened by foreign imports," he said.

Mr Jackson agreed: "I don’t think it is a threat, on the contrary, the proliferation of small distilleries breathes new life into the industry. People wanting to produce and drink whisky is a good thing."

The major advantage the Scotch whisky industry has is time. Mr Forsyth said that on average its costs £1 million to build a distillery from scratch, but that is before the costs of grain, materials and labour and a time span of nearly eight years before any real cash flow.

As Mr Jackson says: "The big difficulty in producing a whisky in the classic understanding of the Scottish way, is that it is a drink that is matured for some years, therefore the cash flow is very difficult."

David Williamson of the Scotch Whisky Society said: "To put this into context, Scotch whisky outsells its nearest rival whisky by more than four times."

Mark Reynier, the managing director of Bruichladdich, the independent Islay distillery said: "Good luck to them. Anyone that makes the effort to produce an individually crafted product that raises the quality of whisky should be applauded."
Article Courtesy of The Scotsman

scotsman.com