Our ongoing observations about whether the boom has peaked

[kevinbrink]

15 hours ago, The Black Tot said:

I would also add the thought that rum and Scotch sales declines or flattening is very probably more a production problem than a demand one, since Scotch takes so much longer to mature and the stocks have had the stuffing kicked out of them.

 

Most rum matures quickly, but I don't believe the category put as much investment into expansion, and certainly, the mismanagement of CARICOM and the failure to bring honest age statements and accurate labeling to rum has likely hurt the category badly and prevented the advance of its respect as a premium drink.

 

Having said that, even with the decline there is still nearly one bottle of rum sold for every bottle of US whiskey in 2018. So it's still a giant category.

My understanding is that over all scotch volumes are down but sales are up/flat, this being the result of a downward trajectory of Blends and upward trajectory of Single Malts. 

[kevinbrink]

I think Whiskey the whiskey boom in general will flatten out but expensive Luxury bottlings are very much here to stay

[The Black Tot]

3 minutes ago, kevinbrink said:

My understanding is that over all scotch volumes are down but sales are up/flat, this being the result of a downward trajectory of Blends and upward trajectory of Single Malts. 

I still think it's availability. Single malt prices certainly have nearly doubled in the last 5-10yrs. So yes, I believe sales are up.

 

I'd be interested in the blends concept. I still think most people think Johnny Walker is the quintessential scotch. Diageo doesn't exactly slack on the marketing side.

[The Black Tot]

4 minutes ago, kevinbrink said:

I think Whiskey the whiskey boom in general will flatten out but expensive Luxury bottlings are very much here to stay

 

That's absolutely fine, so long as eventually there are more of 'em!

 

Expensive pricing is one thing. Scarcity flipping pricing pressure is another.

 

I don't think many of us have huge issues with MSRPs. But we all have issues with secondary and liquor store gouging. Increased supply fixes THOSE. 

[kevinbrink]

6 minutes ago, The Black Tot said:

I still think it's availability. Single malt prices certainly have nearly doubled in the last 5-10yrs. So yes, I believe sales are up.

 

I'd be interested in the blends concept. I still think most people think Johnny Walker is the quintessential scotch. Diageo doesn't exactly slack on the marketing side.

Michael Kravitz does a good write-up of the SWA's annual report each year, though they don't publish one now so he pieced together something from various other reports, it's always a year behind so the last figures are actually from 2017

https://www.divingforpearlsblog.com/2019/01/scotch-whisky-exports-in-2017-or.html

[ebo]

26 minutes ago, The Black Tot said:

Single malt prices certainly have nearly doubled in the last 5-10yrs. So yes, I believe sales are up.

Which is why I rarely buy Scotch anymore. At the rate Bourbon is going, I will probably have to give that up too.

[kwshannon]

20 minutes ago, kevinbrink said:

Michael Kravitz does a good write-up of the SWA's annual report each year, though they don't publish one now so he pieced together something from various other reports, it's always a year behind so the last figures are actually from 2017

https://www.divingforpearlsblog.com/2019/01/scotch-whisky-exports-in-2017-or.html

Thanks for sharing that article.  I had not read that blogger before.  Very interesting to see the details of sales and exports pulled together.  I'm going to go back and read more of their posts.

[kwshannon]

18 hours ago, The Black Tot said:

It's that time of year, Joe. Shall we do this again? A few weeks ago I already made the jpegs...

 

 

 

Thanks for posting those graphs.  I had not realized Irish had passed Scotch in sales several years ago.,  I knoew it was growing, not that much. 

 

Bourbon is where I spend the most dollars, picking up ones I enjoy, and some of the premium priced releases but not many.  I've found I like Irish single pot still, so buying those also in the last 12 months.

[smokinjoe]

American whiskey hanging another almost 1,400,000 case growth year in ‘18 is very remarkable.  Since this thread started in ‘15, three record years have been recorded.  I stated earlier that I believe the legacies are finally catching up their production to meet demand, but the demand numbers appear to clearly still be very high.  

[kevinbrink]

I've whittled down my follows the last few years, I don't see much point in following any that do strictly American Whiskey as you end up just reading a bunch of takes on the most re ent media samples. The single malt bloggers tend to review more esoteric stuff.

[smokinjoe]

The contrast in the rum and bourbon trajectories since 2002 is really interesting.  Rum shipments were 50% higher than bourbon in 2002 (18.4mm vs. 13.1mm), bourbon reaches that 18+mm level at the same time rum reaches its peak in 2013, and bourbon sales exceed rums by 1.1mm, currently.  Talk about contrasting fortunes!  Paul, whereas I agree there probably are some structural problems in production/supply affecting rums trajectory flattening and subsequent dropping, I’m not sure the lack of promotion of rum as a premium, labeling issues, age statements, etc., has had the impact that you think.  Those issues were not relevant in rums run up, as it has pretty much been seen as a mixer, and I’m unconvinced that the premium sipping rum dialogue is being held anywhere in the US other than the very small enthusiast communities like SB.  Contrastly, looking at the timeline, rums fall began about the same time “good” rum was beginning to be promoted with tasting notes of diesel fuel, road tar, funk, and rotting vegetation...Probably, scared everybody away!  

 

[lcpfratn]

The contrast in the rum and bourbon trajectories since 2002 is really interesting.  Rum shipments were 50% higher than bourbon in 2002 (18.4mm vs. 13.1mm), bourbon reaches that 18+mm level at the same time rum reaches its peak in 2013, and bourbon sales exceed rums by 1.1mm, currently.  Talk about contrasting fortunes!  Paul, whereas I agree there probably are some structural problems in production/supply affecting rums trajectory flattening and subsequent dropping, I’m not sure the lack of promotion of rum as a premium, labeling issues, age statements, etc., has had the impact that you think.  Those issues were not relevant in rums run up, as it has pretty much been seen as a mixer, and I’m unconvinced that the premium sipping rum dialogue is being held anywhere in the US other than the very small enthusiast communities like SB.  Contrastly, looking at the timeline, rums fall began about the same time “good” rum was beginning to be promoted with tasting notes of diesel fuel, road tar, funk, and rotting vegetation...Probably, scared everybody away!  [emoji3]
 

Joe, I’ll have to side with Paul on this, and state that I do think the lack of universal transparency regarding a rum’s composition and truth in age statements has affected the growth in the premium sipping rum category. Those rum distillers that have adopted more transparency and truth in age statements, whether due to regulatory requirements in their country or voluntarily, have been rewarded with increased sales and pricing power. And regarding some of those Rum tasting notes, many highly regarded bottles of Scotch receive similar notes, yet Scotch has still done fairly well in the last few years.

I do agree that most rum is still used as a mixer or enjoyed by those that like the sweetened rums, but I wonder how much of the total and increases each year within the numbers presented in the graphs above are made up of flavored whiskeys?

[smokinjoe]

3 minutes ago, lcpfratn said:

And regarding some of those Rum tasting notes, many highly regarded bottles of Scotch receive similar notes, yet Scotch has still done fairly well in the last few years.
 

Unfortunately, no tongue in cheek emoji...

 

But, I did forget the unexpected throw up in the back of the throat profile...

 

[lcpfratn]

Unfortunately, no tongue in cheek emoji...
 
But, I did forget the unexpected throw up in the back of the throat profile... [emoji6]
 

LOL! [emoji23]

[The Black Tot]

2 hours ago, smokinjoe said:

The contrast in the rum and bourbon trajectories since 2002 is really interesting.  Rum shipments were 50% higher than bourbon in 2002 (18.4mm vs. 13.1mm), bourbon reaches that 18+mm level at the same time rum reaches its peak in 2013, and bourbon sales exceed rums by 1.1mm, currently.  Talk about contrasting fortunes!  Paul, whereas I agree there probably are some structural problems in production/supply affecting rums trajectory flattening and subsequent dropping, I’m not sure the lack of promotion of rum as a premium, labeling issues, age statements, etc., has had the impact that you think.  Those issues were not relevant in rums run up, as it has pretty much been seen as a mixer, and I’m unconvinced that the premium sipping rum dialogue is being held anywhere in the US other than the very small enthusiast communities like SB.  Contrastly, looking at the timeline, rums fall began about the same time “good” rum was beginning to be promoted with tasting notes of diesel fuel, road tar, funk, and rotting vegetation...Probably, scared everybody away!  

 

Mostly agree Joe. Totally agree that the vast majority of rum's volume is the mixer products.

 

The cocktail scene used to feature rums heavily, and those have been replaced by US whiskeys and even the continued building strength of the margarita. That's definitely fashion.

 

Premium sipping rum has probably missed the boat in the US for a long time to come. It got off the ground much better in Europe, particularly in France and Italy.

 

You're again right, it had nothing to do with rum's run up - that was more the "Bacardi by night" type heavy promotion.

 

But I do believe there's a lot of mid-shelf rum volume that would benefit from increased sales if the top of the rum market cleaned up its act and did something to boost its pedigree as a category.

 

Much in the way that in Bourbon, after chasing the BTACs and the Pappys for a while we reach lower in the shelf and explore the AVAILABLE options in the mid-shelf, based on our love of and respect for the category.

 

Finally I love the off-putting verbiage that gets applied to sipping rums - I frankly need most people to be scared away, so that there is enough around for me to buy. The volume of well aged properly made rum is minuscule compared to Scotch, US whiskey, or even Irish!

[Jazz June]

A couple of signs this week that equilibrium may be coming.

 

First, MGPI had a disappointing report: https://www.barrons.com/articles/mgp-ingredients-stock-aged-whiskey-sales-earnings-51564610232

 

In particular, "sales of aged whiskey fell in the past quarter at the distiller MGP Ingredients  —pinching its profit and sending the stock down 26% on Wednesday. Historically a contract distiller for big-name spirits outfits like Diageo, MGP decided to bet on whiskey’s popularity by building up its own aged inventory...  MGP’s bet may have missed the bourbon bubble."

 

Now I can't imagine that well aged MGP bourbon will be too difficult to sell in the marketplace, so I can only assume that the price MGP wants for it has just gotten too high. Is the supply of aged whiskey on the market finally meeting demand and allowing the price to settle? We will see, but this seems like a good sign.

 

A second much smaller sign, VA ABC has put Bird Dog 10yr on sale, dropping the price from $70 to $45.60. A number of other high priced sourced and/or craft products have also seen significant price reductions. Again, is the market finally approaching level? While $45 for a 10yr bourbon is still higher than it should be (compare to ER 10, RR 10, etc.), the fact that it was selling so poorly at $70 suggests the constant rise in prices (at least for normal products) may be tapering off. Maybe consumers are getting more educated, but I'm not sure I would bet on that.

 

Edited August 2, 2019 by Jazz June
Edit: to fix weird formatting nonsense Edit 2: or not? not sure why it appears in strikethrough

[FasterHorses]

56 minutes ago, Jazz June said:

A couple of signs this week that equilibrium may be coming.

 

First, MGPI had a disappointing report: https://www.barrons.com/articles/mgp-ingredients-stock-aged-whiskey-sales-earnings-51564610232

 

In particular, "sales of aged whiskey fell in the past quarter at the distiller MGP Ingredients  —pinching its profit and sending the stock down 26% on Wednesday. Historically a contract distiller for big-name spirits outfits like Diageo, MGP decided to bet on whiskey’s popularity by building up its own aged inventory...  MGP’s bet may have missed the bourbon bubble."

 

Now I can't imagine that well aged MGP bourbon will be too difficult to sell in the marketplace, so I can only assume that the price MGP wants for it has just gotten too high. Is the supply of aged whiskey on the market finally meeting demand and allowing the price to settle? We will see, but this seems like a good sign.

 

A second much smaller sign, VA ABC has put Bird Dog 10yr on sale, dropping the price from $70 to $45.60. A number of other high priced sourced and/or craft products have also seen significant price reductions. Again, is the market finally approaching level? While $45 for a 10yr bourbon is still higher than it should be (compare to ER 10, RR 10, etc.), the fact that it was selling so poorly at $70 suggests the constant rise in prices (at least for normal products) may be tapering off. Maybe consumers are getting more educated, but I'm not sure I would bet on that.

 

Will be very interested to see how this goes for MGP. After reading the article, it sounds like they got a little too greedy. Hope it works in our favor. 

 

[The Black Tot]

6 hours ago, Jazz June said:

MGP decided to bet on whiskey’s popularity by building up its own aged inventory...  

 

Now I can't imagine that well aged MGP bourbon will be too difficult to sell in the marketplace,

 

It depends. A lot of what we love about well aged MGP has to do with who aged it, and where. 

 

MGP are great distillers, but rack house experts? I doubt it. At least based on the nearly universal "meh" reviews for the times when MGP has tried to release their own limited edition products.

 

It's a real shame - all that liquid could be sitting pretty in Smooth Ambler's warehouses right now becoming something awesome, instead of Dickel and other things I don't like as much that SA resorted to when MGP doubled or tripled the cost of their distillate.

[0895]

7 hours ago, The Black Tot said:

 

It depends. A lot of what we love about well aged MGP has to do with who aged it, and where. 

 

MGP are great distillers, but rack house experts? I doubt it. At least based on the nearly universal "meh" reviews for the times when MGP has tried to release their own limited edition products.

 

It's a real shame - all that liquid could be sitting pretty in Smooth Ambler's warehouses right now becoming something awesome, instead of Dickel and other things I don't like as much that SA resorted to when MGP doubled or tripled the cost of their distillate.

While I generally agree with what you say, 

the thing that has crossed my mind is that perhaps mgp doesn’t want to sell their best whiskey under their house brands. 

They probably can’t afford to potentially ruin the relationship they have with their bulk customers, by selling a product deemed superior. 

They did do a great job on the Roseville barrel proof though... perhaps unintentionally. 

[The Black Tot]

[fishnbowljoe]

18 hours ago, FasterHorses said:

Will be very interested to see how this goes for MGP. After reading the article, it sounds like they got a little too greedy. Hope it works in our favor. 

 

I’m kinda wondering if the competition from Bardstown Bourbon Company and Castle & Key might be affecting how MGP is now conducting their business. 

 

Biba! Joe

[smokinjoe]

MGP was simply at the right place at the right time.  They rode the wave of this bourbon boom as they had whiskey to fill private label, private selections, and “special” releases, across many labels while the legacies were tapped out in these areas.  The market eventually realized that it was just mediocre and bland blending whiskey, and not worth the price that its increased pricing was demanding.  And, here we are.  

[PaulO]

MGP could have taken a cue from Smooth Ambler and others.  Bottle single barrel at barrel proof, with a nice age statement.

Instead, MGP's own releases were sporadic, odd, and rather pricey.  I'm talking about stuff like Metze's Select.  It wasn't like they were trying hard to build a brand.

[fishnbowljoe]

Is it possible that MGP might have failed to jump on their own bandwagon in a more timely fashion?   Things that make you go huh.......

 

Biba! Joe

[FasterHorses]

7 minutes ago, fishnbowljoe said:

Is it possible that MGP might have failed to jump on their own bandwagon in a more timely fashion?   Things that make you go huh.......

 

Biba! Joe

Seems like they could have leveraged their position a little more wisely. Maybe partnered with SAOS. Demand could have remained high for MGP SAOS and Im sure it wouldnt be hard to find an agreeable “sweet spot” price that benefitted both parties. 

But.. I dont have a successful spirits company so what do I know?