If you survey the abundance of internet reviewers, bloggers and commentators, you are certain to find 10 years’ worth of complaints about price hikes. The passionate whisky hobbyist’s budget is stretched thinner and thinner. Those lucky to have hoarded whisky from years ago are in a very fortunate position. Many are hoarding today to protect against future price rises.
Nevertheless, I have heard it said on occasion that whisky in the UK is undervalued, or too cheap. It’s claimed that whisky makers are failing to make any profit. They are squeezed by increasing costs and crippling taxes that, in the UK, can account for up to 70% of the shelf price. This may be more relevant for the lower end whiskies, where supermarkets control access to the retail space and drive hard wholesale bargains to allow for periodic deep discounting.
At the more premium end of the spectrum, the products are far removed from the initial costs of production. Take Talisker 18, which will largely have been distilled in 2002-2003 at much lower prices. Warehousing is a relatively small cost; bottling, packaging, and marketing are at 2021-2022 levels. I can’t personally break down the cost of well-aged whisky based on overhead and find any narrow margins.
Looking at Diageo’s own 2021 preliminary results, we can see them report an operating profit of £3.7 billion, up by +75% year-over-year. The report goes on to describe broad growth across Scotch, tequila and Chinese white spirits. They are increasing the dividend to investors and aiming to return 10-year annualised total shareholder return to 13%. In fact, most investment pundits identify Diageo as a great investment opportunity in 2022, given the return to on-sales by the general public and continued consumer demand going forward.
Whisky retailers generally have a tough time, carrying huge inventory and making minimal margins. The instant sell-out bottles from any given outturn are outnumbered by those more likely to gather dust. Certainly, the retailers’ margins do not seem to be increasing… although I do know of a few cruising around in Lamborghinis, so let’s not dwell too long on their plight.
Perhaps you thought all of this success celebrated in Diageo’s results will be shared with the consumer? Maybe you hoped prices would be held at 2021 levels into 2022? Well, think again. Obviously, Diageo’s only duty is to their shareholders; therefore, from February 2022 you can expect -in the UK at least – the following price increases for your favorite Diageo products:
Lagavulin 16 will increase by +42%. This first age statement release from Lagavulin has been recognised as a value-for-money whisky with a relatively high age statement and relatively accessible price. Not any longer.
Mortlach 16 is going up +39%. This is one distillery that has had wild price swings over recent years, having first been “premiumised” with face lift branding and huge price hikes before being adjusted down to more accessible prices when that premiumisation experiment failed to win favour with consumers.
Oban 14 going up +92%. This low strength easy sipper has a fan base, however I would struggle to justify paying any more than current shelf-price.
Talisker 25 is going up +67%. This release is the least approachable for most consumers currently selling at around £300 a bottle. I expect that those who can already afford this whisky may well be able to afford this adjustment in price if they desire it.
Talisker 18 will going up +194.5%. When news of this broke in the whisky world there was a flurry of purchasing to stockpile a great dram at an accessible price. Interestingly, the new price of the Talisker 18 will be around £250, which is just under the retail price for Macallan 18. Might this move be motivated more by premiumisation of Talisker, with an eye on the successful Macallan brand, than driven by supply-chain cost increases?
These figures have been independently verified by two independent UK retailers. If and when in February these price rises will land? Currently Diageo’s own website has the prices at 2021 levels but may of these bottles are now showing as out of stock [at 08/02/2021].
Naturally, there may be some sort of reasonable explanation. I reached out to Diageo to help explain what’s happening. A Diageo spokesperson said, “We don’t comment on the confidential details of our commercial terms with our customers.”
Predictions about the demise the whisky enthusiast, priced out by collectors and speculators, have been around for over a decade… and yet, here we still are, drinking and enjoying Scotch. The whisky Loch of the 1980s is dry, and well-aged whisky is now a scarcity for which we must pay a high price. I truly hope that asking questions of Diageo’s PR and publishing articles like this encourages these producers to look beyond the income statement and consider the importance and value of a loyal customer base. If not, drinking Diageo whisky instead of investing in their stocks will look like a mug’s game.
I don’t enjoy writing doom and gloom, so it’s great news that there are still bargains to be had. The Wine Society released a 30 year old unnamed Islay single malt scotch recently for just £140. Well-aged Tormore still gets released at under £150, but these sorts of treats do seem to be becoming more of a rarity.
Talisker 18 Years Old – Review
45.8% ABV. £80.49.
On the nose: Rich toffee, gentle wind-blown smoke, rich juicy cantaloupe melon, bruised apple, some dry ash, more butter toffee, showing a great balance between youthful vigour and aged grace. Peach clafoutis, a pinch of salt.
In the mouth: Medium body, a little hot at first, smoke dropping away to slated toffee apple crumble and some spicy wood notes. This has a really great midpalate that takes quite some time to develop and evolve across the course of the dram it’s slightly sour with hints of dunnage then becoming quite elegant, finally some spicey wood notes, lingering peat smoke gives a final lick of umami.
If the Talisker 2021 Special Release was raw storm-bound Skye with the wind and sea spray howling in your face, then this Talisker 18 is more fond memories of warm summer’s day rock pooling followed by a BBQ.
At £80 I would have to agree with Diageo that this seems under-priced. At £125 it would be more in line with similar products from other producers such as the Bunnahabhain 18 or Balblair 18. A rise to £150 would seem cheeky, but perhaps would not interfere with my stride, such is the way of whisky these days. At £250 it’s outrageous and I would immediately deduct 2 points from this score. But for now, at £80 this is great, and perhaps worth a further point if I was drinking it on a beach in Skye.
Talisker The Distiller’s Edition 2013 – Review
48.8% ABV. Perhaps around £50 at the time of release. 2002-2013; double matured in Amoroso Casks. This is a bonus dram I found on the dram list from Fisherman’s Retreat when I was purchasing the 18 year old.
Colour: Rose gold.
On the nose: Sweet peat, strawberry jelly, smoked raspberries, freshly sliced red chilli pepper, liquorice, salted fennel seeds, Calpol cough medicine, cherry Jolly Ranchers.
In the mouth: Sweet, difficult to define initially, medium weight, developing into cherry notes, a bit juicy, boldly smoky, the sweetness drops away toward the end and the wine and peat combine for a very drying slaty medium length finish that has lingering cough medicine going on.
Talisker fans are a particular crowd. Most of them raved about the 2021 Special Releases bottle for presenting the more forceful side of the distillery, whereas I was unmoved. I imagine those same fans would enjoy this fruity take on the distillery output. Its success is not in doubt, as the 2020 Distillers Edition was also in Amoroso casks and priced at a fantastic £66.49, now sadly out of stock. This is nice whisky, but I would not want a whole bottle.
Talisker 18 and Distiller’s Edition photos courtesy of The Whisky Exchange.