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GLENKINCHIE’S NEW STILL MAKES A DRAMATIC ENTRANCE 

A new copper still was yesterday carefully lowered through the roof of Glenkinchie Distillery in East Lothian.  The still took coppersmiths at Alloa six weeks to make and is an exact replica of its predecessor at Glenkinchie Distillery which produces the famous Edinburgh Malt and welcomes 30,000 visitors a year.

Glenkinchie’s parent company, Diageo, is the only Scotch whisky company to have its own coppersmith operation and closely monitors the condition of the stills at each of its 27 malt distilleries. Copper stills typically have a lifespan of 10-15 years depending on the process and type of spirit made in them. 

The craftsmanship behind the creation of the stills is akin to sculpture work, according to Charles King, Operations Manager of Diageo’s Abercrombie coppersmiths.  Mr King, who heads up 25 coppersmiths including six apprentices, said his team take huge pride in what they do. 

“Copper is very malleable and what we do is more like art than metalwork or engineering. The stills play a very important role in the flavour of our whisky and we put a great deal of time and effort into ensuring every replacement still is as near identical to its predecessor as possible.  Even tiny changes in the angle of the lye pipe through which the vaporised spirit leaves the still can impact on flavour,” Mr King said.

FURTHER INDUSTRY EXPANSION PLANS ANNOUNCED

Edrington has announced an ambitious £40m expansion of the Macallan distillery to meet growing demand.  According to newspaper reports, Macallan sales have nearly doubled in the last five years (no doubt helped by the doubling of the core offering with the introduction of the Fine Oak range a few years ago). 

This surge in growth has made Macallan the second-largest single malt brand by value.  The plans include the construction of six new maturation warehouses and the re-opening of an old stillhouse.

Edrington's announcement follows hard on the heels of news that Pernod are set to invest in increased capacity at Glenlivet and the re-opening of Braeval, while Diageo are spending £100m on expansion, with much of that colossal figure being devoted to the building of a new distillery in the Highlands.  Grant's are also planning a new malt distillery at the Girvan complex (site of the ill-fated Ladyburn) and Bruichladdich are set on reviving Port Charlotte.

This all sounds like great news for whisky drinkers, but a note of caution needs to be sounded.

These increased expansion plans are a symptom of the industry's conviction that in the next decade or two there will be a hyper-inflation of demand from the new emerging mega-economies in India and China.   The growth potential for Western spirits in these new markets has triggered a huge scramble for position fuelled by fears of being left behind when the big money starts pouring in from the East.

Eastern economies may be growing at an unprecedented rate, but there are legitimate fears for the far more precarious current financial health of established economies in the West, particularly the fragility of the US dollar, which has led to uncertainty in European markets.  While success in India and China remains the best opportunity for sustainable growth, it is crucial that the domestic health of the companies involved is not put at risk in the struggle for power further afield. 

The expansion plans currently being announced throughout the industry represent a major ongoing financial commitment which could be severely impacted by any further deterioration of the markets in the West.  If the current crisis of confidence domestically was to develop into a full-blown recession - or if the projected demand from the new markets does not materialise on the scale anticipated - the consequences for the industry could be cataclysmic.

It is forty years since the industry last saw expansion on this kind of scale.  In the late 1960s and early 1970s, increased production and the building of new distilleries were predicated on what turned out to be wildly optimistic growth projections.  When demand collapsed in 1980, the resulting oversupply led to a catastrophic whisky glut.  This resulted in the great cull of 1983-85, which saw the permanent closure of around twenty distilleries including Brora, Glenugie, Glenury Royal, Port Ellen and St Magdalene.  In the decade of restructuring that followed, Rosebank was also lost, while Ardbeg fell into ruin and was only saved by a massive investment from Glenmorangie.

The last thing the industry needs is another cycle of boom and bust.  It is to be hoped that avarice for enormous profits in new markets will not blind the whisky industry to the lessons of its recent history.

(TF 04/03/08)