Whisky - Is it over priced?

[albo]

Afternoon, I started this musing in the thread about the new compassbox New York thing, but I think it probably merits a thread of it's own right.

Simple question, which I'll try and put some context around, but do you think that whisky is over priced at the moment?

I'm talking in general terms here, yes I know supermarkets have offers on which make things for easier to handle, but on the whole away from a core handful of malts which are on offer, the price of whisky is going through the roof at the moment.

I understand there are some of us here who would give their left leg to have the prices I'm complaining about here in Scotland (I'm looking at you Quaich), but if the prices in Scotland go up, then I'm sure the prices over in Canada / America / the far east etc will go up and probably more so, so I think this debate impacts us all.

So is the price too high?

The reasons I can see for prices being high are as follows. . .

1) The duty cost on alcohol, adds a fair amount to the cost of a bottle
2) Thing about the time it takes to get a return on whisky, at least 10 years from laying down a cask, to seeing any sort of return, makes for a lot of 'cash' being tied up for a long period of time.
3) Marketing, more and more companies now are spending more and more on marketing, this all adds to the bottom line that we pay for a bottle
4) Popularity, whisky is booming in terms of popularity at the moment, increased demand give distilleries and companies a great reason to push up prices. See Ardbeg and Macallan.
5) Profiteering, I'm not expecting distilleries to push out their whisky at cost, nor retail outlets to sell on at cost, but I do wonder what price a bottle leaves the distillery and what price it arrives out of my wallet.

But taking all this into account, we are currently all suffering from a down turn in the global economy, money is tight and getting tighter, bills are going up and pay isn't. So is the whisky industry in risk of pricing it's self out of the common mans grasp?

[bifter]

I was just drafting a new topic in response to your mump on William's thread along these lines.

The price of many of our favourite malts has been going up. Some of this must be attributable to the rising costs of materials and the incremental escalator of duty (has this had an impact recently though?). However there are a lot of marketing makeovers and repositioning of brands going on (most recently Macallan and Glen Scotia come to mind) and international demand has been going up, until recently:

http://www.scotchmaltwhisky.co.uk/forum/viewtopic.php?t=2760

There have also been a lot of articles lately documenting the soar-away prices of premium whiskies at auction. Until last week that is:

http://www.bloomberg.com/news/2012-10-28/bowmore-whisky-from-1957-fails-to-get-160-000-reserve.html

Is this the first tremor of a 'tulip mania' bubble, the market pausing for breath or simply Bowmore trying to push its brand power just a little too far?

I was going to title my topic as a question, is the bubble close to bursting any time soon? There are a couple of signs that we are at least beginning to reach a bit of a plateau.
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"Whisky is liquid sunshine."
[George Bernard Shaw]

[Quaich1]

[Quaich1]

[Mark]

Whisky has been sold worldwide now in large volume for well over 100 years so the industry is not new to surges and slumps in sales. Today however is very new times for whisky with the enormous new markets opening up in places like Russia, China, Brazil and the far east where not that long ago they barely had a toe in the door. Even if the growth of sales in these new markets is slowing the fact is the new markets still exist where they didnt 10 or so years ago. In fact if it wasnt for these enormous new markets the whisky industry would perhaps be in a bit of a slump given the state of the economies of its traditional established markets such as Europe.

The one new thing today which the whisky industry hasnt seen in the past is the huge increase in popularity of premium single malts and blends.

Personally i think the reason the price of single malt whisky and premium blends is going up so much is not so much the costs to produce it or taxes but simply because the producers know there are enough consumers willing and able to pay the prices they are asking. There is only a limited availability of premium single malts and blends and the popularity in the last decade of these whiskies has multplied meaning they are enough people willing to pay more and the whisky companies are easily selling there stock.

bifter the marketing makeovers and repositioning of brands you mention really p's me off, i wont be buying the new Macallans unless i see them with a very big discount

[Big Mac]

I would love to see a list of prices from even just a few years ago compared to now as i dont recall such big price increases in all my years drinking whisky as i have seen in the past few years.

[drPete]

Sadly I don't have such a list but as a regular buyer of the Diageo specials I can tell you the increases bear no relation to inflation, the cost of oil, barley production or solar activity but to bear a close relationship to profiteering.....
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Talisker 18 - the rest are just details

[albo]

This was all my kind of thinking.

I understand that popularity brings with it it's own positives, more distilleries trying more different things and that has to be a good thing, but I'm just worried that prices go too far, the industry goes flat. That could bring about another positive for the consumer in as much as there is likely to be a pretty large stock of Whisky and lower demand, which should redress the price balance. Economy 101.

But then what damage to the industry? More of the older, less efficient distilleries get closed or mothballed?

The whisky industry to me is a very fragile thing, it can't be a reactive industry due to the length of time required to produce a product, there is no point laying down thousands of cases now because demand is high, that should have been done back in '02, there needs to be some excellent forward forecasting as to what the industry is going to look like in '22 to know what needs to be done now. The only thing the industry can do in the 'now' is to play about with prices, don't have much stock left? Raise prices. Have too much stock? Lower prices. Are we seeing the result of planning back in '02 being wrong and that's why prices are on the rise?

[bifter]

[Genuine Risk]

[Kava]

I had noticed quite a while ago that the 16, 18, 21 year old expressions were getting expensive for regular drinking but the entry level malts are now following and i personally dont think all the increases are justified by the increases in cost and taxes.

It certainly makes me more carefull/choosy when i select a malt whisky as i wont pay big money for just an average malt where before i liked exploring the variety available and would happily buy whiskies i knew were not going to blow me away.

[albo]

Kava, you raise an interesting point, I wonder if more and more people will be put off trying different malts becasue of prices, will it make people cautious and stick to what they know?

[drPete]

[albo]

[Blakey]

I for one will stay away from any that drop age statements and raise prices