In celebration of World Whisky Day on the 21st May, we are taking a trip around the world, to look at all the different national expressions of whisky, in order to understand the key differences and similarities between them. Furthermore we will examine the value of these whiskies to cask whisky investors. In later articles we will delve more in depth into each region as there is far too much to cover:
The first stop on our tour is probably the most famous. Scotch whisky stretches back to the 1400s with the first records of it being distilled from monks who moved over from Ireland. In total there are over 130 distilleries across the country, producing over 700 million litres of whisky per year.
In fact scotch makes up 22% of all UK food and drink exports, this has meant that the UK government is extremely protective of the whisky industry. Whisky casks have to be stored in HMRC bonded warehouses while they mature, with individual cask numbers tracked and stored to prevent counterfeits.
Meanwhile Scotland’s climate is perfectly set to produce a wide range of expressions and types of whisky. The rolling hills of the Lowlands region gives distilleries easy access to barley and grain, while the bogs found in the Highlands enable a ready supply of peat. The mild climate also reduces the rate of evaporation while the cask matures, with the Angel’s Share only taking 1-2% per annum.
Overall these features combine to make scotch one of the best whiskies to invest in due to its regulated nature, incredible global reach and varied climate.
While debated, most scholars believe that whiskey (whisky vs whiskey) originated in Ireland. The earliest mention of the spirit was attributed to an Irish chieftain dying after a heavy binge at Christmas in 1405. The oldest licensed distillery in the world is the Old Bushmills Distillery in Northern Ireland, hailing back to 1608.
Despite being potentially a century older than scotch, the modern Irish whiskey industry is far smaller. At one point, Irish Whiskey was the most consumed spirit in the world, although the Irish War of Independence and the US Prohibition meant that distillers struggled to export their products. Meanwhile, Irish Whiskey gained a reputation as a poorer quality spirit due to a small amount of unscrupulous distillers. This led to scotch taking its place as the more popular of the two, by the 1990s only three distilleries were remaining in Ireland.
Irish whisky exports are rapidly resurging in certain regions of the world, particularly the US, but it remains to be seen whether it can challenge scotch in the prestige spirit markets of Asia. At present there are 32 operational distilleries, producing 100 million litres a year. However, most of these distilleries were founded in the 2010s and lack the market penetration and global recognition that scotch has. Many of these distilleries are yet to offer their first product so there is no precedent to their market performance, making people who are interested in irish whiskey as an investment wary. For drinking, Irish whiskey is a delight. The triple distillation process many of them use creates a beautifully smooth experience.
United States of America
There are a wide variety of whiskies produced in the continental United States, ranging from bourbon to rye whiskies, with single malts beginning to emerge. The tradition of whiskey distillation was brought over to the US by Irish immigrants throughout the nation’s early history.
There are over 2,000 whiskey distilleries across the 50 states, in 2018 477 million litres of whiskey were distilled in the US. While there may be more distilleries than in Scotland, the vast majority of US distilleries are small independent operations unlike the enormous industrial facilities that produce scotch.
American whiskey is far more varied than Scotch and Irish Whiskey due to the wide variety of resources and climates available. Maize and rye based whiskies are far more prevalent with bourbons in particular noted for their sweeter notes. Others such as corn whiskey are unaged and according to some are essentially a legalised form of moonshine.
The two largest whiskey producing states are Tennessee and Kentucky, with brands such as Jack Daniels, Jim Beam, Maker’s Mark and Wild Turkey being the most popular globally. Outside of these select few names most American whiskey struggles against scotch and Japanese whiskies due to their more prestigious perceptions.
The warmer climate of Tennessee and Kentucky contributes to a much faster rate of evaporation than in Scotland and Ireland, preventing these whiskies from achieving the older age statements.
For anyone interested in American whisky investment, it is a fascinating market, but the vast majority of casks are far more speculative independent makes. Also the US has a byzantine labyrinth of laws relating to the sale of alcohol that varies heavily in each state, meaning that international investors have to tread carefully to avoid fines and confiscation of their casks. For enjoyment though, US whiskies offer some of the most diverse and exciting offerings around!
The story of Japan’s whisky industry begins in the Scottish Highlands. Having studied in Scotland, pioneers such as Taketsuru of Nikka Whisky fame, brought scotch distilling techniques to Japan in the 1920s. Such great lengths were taken to emulate the processes that Taketsuru chose Yoichi in Hokkaidō, as the site of his first whisky distillery, due to the region having a similar climate to Scotland.
For most of its history, the consumption of Japanese whisky was entirely domestic, until 2001 where Nikka's 10-year Yoichi single malt surprised everyone and won "Best of the Best" at Whisky Magazine's awards. Further victories by Hibiki, Yamazaki and Karuizawa at various spirits festivals cemented Japanese whisky as a force to be reckoned with.
Unlike in Scotland, Japanese distillers do not share casks between companies and their methodology is far more secretive. This has led to casks of Japanese whisky being far rarer on the secondary market, making Japanese casks all the more tempting in the whisky investment world. While they have not managed to have as many record breakers like Springbank and Macallan, it may not be long until Japanese whisky begins to be auctioned for enormous figures.
In 2024, Japanese government regulations will come into effect that bring in rules surrounding Japanese whisky. Much like in Scotland, the spirit has to be fermented, aged, and distilled within the country while sourcing its water from Japanese rivers. While all of this is extremely enticing for people who wish to invest in whisky, the cost of these casks is too high for the average investor. In our offices we always keep a few older bottles of Hibiki and Yamazaki for visiting clients who wish for an exotic alternative.
Rye whisky is the most common type distilled in Canada, with it being largely corn based with a small amount of rye grain added to give it that sweeter flavour. Overall Canadian whiskies tend to be lighter and smoother than other nations’ offerings, with the majority being blends.
There are over 300 distilleries across Canada, but much like in the US these tend to be independent craft operations. The first whisky distillery in Canada opened in 1801, just in time for the Napoleonic Wars to disrupt the supply of other premium spirits such as brandy and wine to England, allowing Canadian whisky to step in. Thirty years later the American Civil War disrupted the export of bourbon, allowing Canadian whisky to once again fill the void. By 1890, recognising the need to regulate the spirit and avoid the mistakes made by Irish and Scottish distillers, the Canadian government was the first in the world to enforce a minimum maturation time of two years.
During the US prohibition, Canadian whisky became ubiquitous with counterculture as bootleggers smuggled crates across the border. The government regulations in place from decades earlier, meant that Canadian whisky was a safer alternative to the moonshine that was illicitly being distilled within the US. Many modern brands of Canadian whisky owe their popularity to the speakeasies across the US during this period.
Much like American whiskey, Canadian whisky is not as powerful a tool for whisky investment. The large number of craft distilleries means that the market is flooded with many more speculative casks, meanwhile the global demand is smaller than that of scotch and Japanese whiskies. In terms of taste though, Canadian whisky is a treat to explore!
Unlike the US, Australian whisky is rooted far more in the scotch tradition. Many of the early European settlers came from Scotland and brought their distilling techniques with them. Australian whisky is far more rebellious than its scotch counterpart as there are no strict customs on what grains and distillation techniques can be used. This has led to over 333 registered distilleries operating across Australia, with most of them arising in the 1990s.
What might be surprising is that most of the distilleries are based on the island of Tasmania, with the first Australian whisky distillery being founded there in 1822. Tasmania has a uniquely temperate climate, unlike the tropical heat of the mainland, reducing losses from the Angel’s Share.
Much like the US and Canada, the largest and most well established distilleries have very few or no casks on the secondary market. Many of the independent distilleries, while producing excellent whisky, are ill suited for international whisky cask investors. Outside of Australia these whiskies have little market adoption and many are new enough that they haven’t even bottled their first expressions. Time will tell as to the growth in popularity of Australian whiskies, however the positive critical receptions at various awards has highlighted it as a region of experimentation.
The largest whisky consuming nation in the world, India should come as no surprise to having a large domestic whisky industry. Although India does not have any rules or regulations governing what the term whisky actually means, with many brands being more akin to rum due to the use of molasses and lack of any cereal requirements.
Scotch whisky has long been extremely popular in India, and in the 1980s the first trials of Indian malted whiskies began. Amrut was the first, by securing barley from Haryana to utilise in production. Rather than the usual three years to mature it takes in more temperate climates, the first batch of blended Amrut whisky was ready in just 18 months! The master blender of Amrut, Surinder Kumar, would go on to state that due to the warm climate: one year in India is equivalent to three years maturation in Scotland.
Due to the tariffs on imported scotch whisky being at 150%, there is a strong demand for high quality single malt whisky. Amrut was the first in 2004 to launch their own single malt, but was eventually followed by others such as John Distilleries in 2008.
Ultimately whisky investment in India is not as feasible due to the lack of casks available among premium whiskies. Also the fast maturation rates means that a cask investor cannot hold their whisky for long periods of time as their investment will rapidly evaporate in the warehouse. We’re excited to see the growth in Indian whisky over the next decade, and in terms of flavour the single malts are worth picking up if you are ever in the country.
Being the third largest consumer of single malt scotch, the Taiwanese market is a unique case study. Unlike in Western markets, whisky is very much a drink to be consumed in bars and nightclubs often taking the place of other ‘party’ spirits such as vodka and gin. Whisky bars are a common sight on the streets of Taipei, even more so than pubs in London.
The domestic whisky market is dominated by one distillery, Kavalan. Up until the 2002 liberalisation, alcohol was only produced by the government monopoly, the Taiwan Tobacco and Liquor Corporation. After this numerous distilleries began to appear across the island.
Kavalan stormed onto the world stage in 2011 when its whisky cleared the stage, beating three different scotches at the Burn’s Night Festival. Noted for its tropical fruity flavours and creamy aspect, Kavalan quickly became a must try for critics.
The domestic market is often described as well established and sophisticated, being the only place in the world where single malts outsell blended whiskies. The lack of cask availability means that most retail investors are blocked from adding such casks to their portfolios. The sub-tropical climate also prevents holding casks for longer periods, although this is not as much of a problem as in India and Australia. Whisky in Taiwan has an exciting future and is being keenly watched by analysts.
Whisky since the turn of the millennium has blossomed globally and is rapidly growing in strength. Due to its status as a premium spirit whisky is well positioned to enjoy further growth in popularity as the purchasing power of populations in Asia and Africa expands.
There are many other whisky producing nations that were not covered in the article, such as Finland, Germany, France and England which all distil their own unique and wonderful offerings. In later articles we will delve into greater depth the various different global whiskies.
At Hackstons through our collective years of experience in the physical assets investing ecosystem we have found scotch to be one of the best in terms of cask whisky investment. The wide range of distilleries offer a range of different expressions to suit varying tastes, while the prestigious nature and long history of whisky means that these casks offer some of the greatest returns.
If you wish to find out more about investing in whisky, contact us today.