The next whisky bubble burst/downturn

[lowlander]

As we move into 2020 and into a new decade, I got thinking about the amount, quality and availability of whisky I could buy back in 2010 compared to now. If I had known then how much certain whiskies would be worth now, I would have stockpiled my collection back then and save some money, and more importantly, have more whisky to drink!

But it also got me thinking about the next so called whisky bubble bursting/down turn. Having spoken to a few people who work in the industry/bars/avid whisky drinkiners over the years, a lot of them have been adamant "its coming" or "its going to happen in the next few years" yet prices have gone up, older age statements increasingly become more and more expensive and outwith the grasp of poor peasants like me. Of course not forgetting the trend over the last number of years of doing away with age statements as well.

I begin to wonder if this whisky bubble will ever burst and if it does happen this decade, what will the lay of the land look potentially like for us whisky drinkers?

[DillyT]

It maybe happing now.... if you look at some of the prices on the Whisky Auctioneer they are way down to what they where in the summer and even last year!

[lincoln imp]

[Uncle Bobby]

[Cuba]

Would the 20% tariffs imposed by the US on whisky coming into the US have effected auction sale prices in recent times?

[davidbe]

[Timp]

From a production standpoint there will clearly be a rub down of the new batch of distilleries and maybe the odd one changing hands or being put on hold.

Starting to happen already I think.

Are the big players looking to reduce production or are they all still banging it out to cask for the future? Particularly since age statments seem to be coming back into fashion.

We know Glenfarclas carried on production through the lean years knowing the industry is cyclical however they weren't beholden to shareholders, stock prices etc and they had a reputation or brand that would help carry them through.

I know this is just one end of it but it does drive the price of most of the bottles.

What annoys me is the claim of exclusivity in the light of thousands of bottles in order to gain the cash.

Any business that runs beyond or has the potential to run beyond, the lifespan of those running it, has risks associated with those people making decisions that benefit themselves over the business. Mergers, aquisitions, expansion, loans.. bring it on.

Very interesting times and alot more complex than my little rant..

Cheers

[TheMaster]

To understand any forthcoming bust, we really need to understand the cause of the boom.

I'm not pretending to fully understand this, but in my very limited view it seems to have kicked off due to sudden increase in demand and the lack of dynamic ability inherent in the industry; you can't just magic up 12 year old Scotch, it takes 12 years to make it and when current 12 year old Scotch was made it was made with views on "normal" growth. If there is a sudden demand surge, over a period of a few years, that was unforeseen, then you need to do something else to meet the demand - that thing was to remove age statements and put the whisky out to market. This, in turn, made age stated whiskies more desirable and more expensive. And we're talking a simple 12 year old here, the mainstay of entry level whisky. Forget anything in it's 20's.

Of course, once the surge in demand passes, the bubble has been created and will continue to self-perpetuate; people see whisky as even more desirable and a way to "invest", so more people jump in and it accelerates.


As with any market, there is a buy-in saturation point - how much are people really willing to pay. Customers are getting very disenfranchised with the industry, additional stock that was massively over produced to meet the demand, that has now possibly gone and other spirits getting more popular and you'll get a bust.

The distilleries did over produce. The initial demand surge has gone. There will be over stocking of aged whiskies, this is why age statements are coming back, not out of the goodness of the hearts of the distilleries, but because they've got too much juice lying around!

I don't want a repeat of 1983. It'd be very sad for distilleries to close at a high rate, and I don't think it'll come to that, but in the not to distant future prices of aged whisky will fall. When it's sitting around in bottles, not selling and costing them money, the producers always (always) cut prices - it's better to make a little than make nothing.

......eyes should be squarely on other spirits. I've seen some (quite frankly) ridiculous auction prices for another spirit I collect recently. 10x original retail price for stuff that didn't even sell out for ages when it was first released. And even bottles of "very good and limited, closed distillery" stuff that originally sold for under £100 going for over £1000 - and it's not whisky.....

[eelbrook]

In the longer-term, I think that the prices of very old vintages (from the Fifties, Sixties & Seventies) will rise. Fewer and fewer bottles make it to the marketplace each year. And more and more collectors are out there searching for them.

I do think the bubble will burst though for much younger 'limited' releases. You know the ones. The NAS or teenage whiskies in the posh boxes.

[Jd345]

[quote="TheMaster"]...eyes should be squarely on other spirits. I've seen some (quite frankly) ridiculous auction prices for another spirit I collect recently. 10x original retail price for stuff that didn't even sell out for ages when it was first released. And even bottles of "very good and limited, closed distillery" stuff that originally sold for under £100 going for over £1000 - and it's not whisky.....[/quote]

Rum by any chance? New rums are popping up like Gin did and seem to be taking a bit of the spotlight away. Seen lots of 'connoiseur' rum tastings featuring at events, accompanied by all the required marketing of provenance (origin, ageing, spices etc). Pusser's rum for me and a good mixer.

[Uncle Bobby]

[Balvenie21]

[blackcipher]

Pernod are ramping up production across all their distilleries this year.

[MattS]

I wonder if there will be failures at the smaller end of the market. Will they all be able to justify they 'high craft prices'?

In Booth's recently I saw Glasgow's 1770 whisky, a box the size for 700ml bottle but only containing a 500ml bottle. The price would have been high for a young 700ml but had I bought it without spotting the reduced size I would have been very annoyed once home.

[MattS]

A further example of high pricing from a new producer came before Christmas when I stopped at Border's Distillery. They wanted £50 for 700ml of new make at 64%ABV. Now I appreciate the duty is a fair part at that level. However, Kilkerran heavily peated aged 3yrs+ with near that level of alcohol is £40, their recent 8 yrs old, again high ABV was £50 and the Glenlivet Nadurra's also high ABV are often £40 on Amazon.