July saw Macallan’s 55 year old Lalique decanter set a new UK record price for the whole brand. Whisky-Online Auctions took a mighty £25,100 for this 55 year old ‘Macallan in Lalique’ second release. Back in 2010, the price of this was £5,400. As recently as 2012 one sold for £7,800. As the sixth and final Lalique decanter has now been announced and this series is complete, we should expect values to remain firm. This is also the most expensive bottle at auction in the UK since the £27,200 Springbank 1919 which sold in March 2015 (again by heavyweight price-busters Whisky-Online Auctions).
Laphroaig’s 30 year old Cairdeas managed £1,200, it’s first time through the £1,000 price point. With a 2010 record low of £345, this is further evidence that older age statements remain in exceptionally strong demand.
A few days earlier, Scotch Whisky Auctions took a bottle of 50 year old Glenury Royal to a new record of £4,300. Until as recently as 2012, this Diageo Special Release had failed to top £1,000; a seemingly distant price in light of the current market. The last twelve UK auction sales are listed under the image and, while somewhat spiky, the trend is very definitely going one way.
That up-trend continues across most silent stills with values towards the top end or above recent trade. While short term gains are imminently possible, especially in today’s market, we still maintain whisky should be viewed as a 10 to 20 year investment. Scotch Whisky Auctions £500 hammer price for a 1966 Connoisseurs Choice 20 year old showed that 100% gains are achievable in one year! May 2015 saw this bottle fetch £250, exactly half of its sale value earlier this month. Amazing.
Lagavulin’s first 21 year old 2007 Special Release managed to achieve a new record of £920. This could make the £800 ask for the new 25 year old, soon to be released, 200th anniversary bottle look like good value providing the liquid is exemplary. Just don’t expect overnight gains, it’s taken the 21 year old almost ten years to get to this level.
McTears haven’t featured heavily in these pages recently, but their July auction had one particular star performer. The second 1994 release (not the first release as originally mentioned) of the original Black Bowmore’s managed a tremendous £6,000 on the nose. Its previous best was £4,800 earlier this year and in 2010 it was still selling for £1,600. This highlights the almost mythical allure these bottles conjure among admirers. Charting the performance of the first three Black Bowmore releases over just the last three years shows a 97.7% increase in value.
Throughout the vast, frequently eclectic, world of whisky, there have been certain constants. Reminders that no-matter what else is going on there are some things you can turn to in wide eyed expectation and get a warm fuzzy feeling. Lagavulin 16 year old is one of those things, the consistently great Aberlour A’Bunadh is another and Macallan 18 year old carrying a vintage year of distillation is another.
Since the 1983 bottling of the 1965 vintage, the Macallan 18 year old was to become one of the most spectacularly sought after vintage vertical collections. Prior to the inception of the 18 year old as part of Macallan’s core offering, the often referred to ‘gold label’ bottles can be sourced all the way back to 1940’s vintages.
These vintages are one of the most extensive historical lenses to how a brand has changed in both its flavour and it image over the last fifty or so years. Birthday’s, death-day’s, weddings anniversaries and more special occasions than one can shake an Elchies Estate stick at have been marked by these iconic bottles.
… But no more.
2015 saw the final ‘vintage’ Macallan 18. That was the 1997 (technically still not a single vintage but we’ll let that slide for posterity). From this year many will have already noticed a change. Date distilled now becomes year of release. This in effect leaves an 18 year gap where no special occasions can be referenced by date (1998 – 2015 inclusive). This subtle change sees the vintage-stated Macallan 18 year olds pass into history…
So this –
Becomes this –
Interestingly, the death of this longstanding vintage vertical brings with it certain opportunities for collectors. Firstly, make sure the final 1997 vintage is snapped up if a full collection is the aim. Secondly, now vintage bottles are dead, prices should start to move for the more recent purple box variants when stagnation has previously been the trend. Couple the cessation of one bottling type with the fact that 2016 is the first ‘Annual Release’ 18 year old and we all know what happens to first release prices. A real shame, and the end of an era on one hand, but an exciting annual release programme on the other.
We often talk about price and value as being very separate animals.
Price is whatever anyone wants to ask for a ‘thing’. An asking price can be as wholly realistic or as flamboyantly outlandish as the seller of that particular thing decides. If the price is right, the thing sells – if the price is low, the thing sells fast – but if the price is too high, the poor thing sits on a shelf gathering dust. Value, on the other hand, is what the thing is actually worth.
That’s part of the beauty of the secondary (auction) market; it highlights true value and provides an open market test of worth.
Take, for instance, the relatively recent release of the revised Mortlach range. A controversial 50cl bottle size and ambitious pricing raised eyebrows. The 25 year old range topper costs £600 per bottle, or £840 per 70cl equivalent. For a new-start luxury malt brand to position itself above the combined prowess of the mighty Macallan (£680 per 70cl 25 yr old) and Dalmore (£600 per 70cl 25 yr old) takes some confidence.
It was interesting to see where the open market priced the Mortlach in the recent Whisky Auctioneer sale. Its retail price might be viewed as a little ‘toppy’, so how does its true open market value compare to the 25 year old Macallan and Dalmore?
The Macallan 25 sells for £600 per bottle at auction.
The Dalmore 25 sells for £410 per bottle at auction.
The Mortlach achieved £275 (£385 per 70cl equivalent).
From a sellers perspective, that places the Mortlach 25 into a very rare group of bottles indeed. Those who lose >50% in value when switched from the primary to the secondary market. We highlighted a recent Glenturret which saw a massive loss too, the Mortlach is almost on the same level. Taking into account sellers fees and VAT yields a 59.7% primary-to-secondary market loss. Not one for the collector/investors. That said, we do still see older OB and IB Mortlach performing exceptionally well. A trend we expect to continue if not accelerate.
Loss making primary market bottles aside; the recent Whisky Auctioneer sale would be best described as a continuation of a (mainly) very positive theme. In many cases demand for the usual suspects took to new highs while other bottles continued to fall.
The Port Ellen official releases performed amazingly well with new records for the 5th, 6th and 8th releases. £950, £1,150 and £945 (respectively) took these bottles soaring past respective low values of £150, £140 and £170 in 2009. While average Indie per-bottle prices are still some way under the OB’s, massive demand took many IB’s to new heights. Both the Signatory port wood finishes hit new records with the first edition hitting £480 (£90 low point in 2008) and the second edition taking £575 (£80 low point in 2008).
Bottles from silent siblings Millburn and Glen Flagler also fetched impressive numbers. A Douglas Laing bottled 1969 36 year old Millburn achieved £425 and a 1974 31 year old from Cadenheads took £345. Signatory’s 1970 23 year old Glen Flagler made £600, up from a previous £420 best.
Continuing a different theme; Karuizawa values softened further. Good examples of this swift descent from previous peaks as high as Mount Asama itself were –
1977 (from cask 7026) sold for £2,100 down from a June peak of £2,900.
1981 (from cask 8461) ‘en soi’ sold for £2,000 down from a £2,600 peak in April.
1981 (from cask 152) sold for £1,800 down from its £2,400 peak in September.
Again, taken from their original retail prices, these sale values are far from catastrophic; however, bottles purchased at auction earlier this year look like losses will be further extended.
Our final distillery this week is Glenfarclas. Producers of some of the best spirit on earth; ‘probably Speysides finest’ as they have been known (who the hell am I to disagree to be fair) look like a long due upshift in values is on the cards. More recent contemporary releases are remaining relatively stable, however, values for older vintages are hardening. A bottle of Signatory bottled 40 year old from 1958 achieved £1,260 up significantly on its 2014 high of £800. A bottle of the OB 1959 vintage fetched £850, again, a significant uplift on its previous £600 record.
Compare values for similar old vintages from other well-known distilleries and it’s not difficult to see why interest is now shifting to Glenfarclas. Prices in the current market look very favourable from a quality and age perspective.
December promises the highest ever number of bottles to hit the open market. As widely discussed, the end of 2014 had a supply led slowdown in values. Right now, this year looks to be bucking the trend.
In what is set to be the biggest whisky auctioneering month on record, can demand continue to outpace supply?
“Where do I start?… How do I begin to build a whisky collection with one eye on it being an investment?” This is the single most frequent question we get asked. One day, maybe we’ll get the time to publish something a little more comprehensive for those new to the wonderful, delicious, often daunting world of the whisky collector.
Until then, taking a detailed look at one of the most buoyant auctions we’ve seen this year gives some clear direction of where target acquisitions should be focussed in the current market. Scotch Whisky Auctions September sale showed values for the right bottles are climbing… in some cases, rather rapidly.
So what are the themes and trends?
Forget ‘flavour led propositions’, ‘blank canvass allowing creativity’ and the rest of the NAS sales/marketing messages around old being UN-important. At the non-collectable end of the market, we get all that, the industry needs to continue and it can’t throw big ages around willy-nilly anymore. Elsewhere, age matters and it matters more than ever; so does vintage (date distilled) with older being better… From a collector/investor perspective these two dynamics are crucial. Some NAS bottles have been proved popular, and profitable, for collectors but their numbers are small.
Taking a look at some of the bottles from last weeks SWA, specifically from Gordon & MacPhail, and the results are impressive.
Bottles distilled in 1954, 1955 and 1956 flew to new heights with a 1954/2003 Strathisla achieving £640 (£220 in 2010), the 1955/2005 Secret Stills Talisker topped £1,000 for the first time at £1,150 (again, just £220 in 2010) and the 1956/2006 Glen Grant nailed £600 up from an all-time low of £190 in 2013. At these prices for bottles at c48-50 years old, we still see legs in buying.
Older indie Springbanks also had a good auction with two notable bottles – The 1965 34 year old by Murray McDavid sold for £1,250, making its 2011 price of £300 look tiny. A Signatory bottled 1969, again 34 years old, made £620… With a 2011 price of £120, that’s some up-shift.
For balance and showing every coin has a flip side, the big-fail with a big-age was the Glenfarclas 60-year-old which didn’t hit reserve. Expectations can sometimes become a little too stretching…
ICONIC COLLECTABLES FROM ICONIC DISTILLERIES.
Not necessarily with vast old ages, or vintages stretching back to the 1950’s, iconic limited releases from the most iconic of distilleries offer serious targets for collectors and drinkers with deep pockets. Current less valuable releases from Ardbeg, while almost traded to death, show nothing like the gains of older discontinued bottles –
A bottle of single cask Ardbeg Feis 2010, 1995 vintage (cask 2761) sold for £490 up from its previous £430 sale. Moving the vintage further back, a bottle of 1976 Ardbeg (cask 2392) achieved £1,750 up from £1,400 in May. The now almost legendary Ardbeg 1974 Provenance (4th release) hit £1,650 up from £1,300. Showing the increasing importance and value placed on indie bottles, a Douglas Laing bottled 1973 29-year-old Ardbeg fetched a massive £1,700 up from £540 in April 2014.
Following August’s 2.17% increase in the Port Ellen Index, the OB’s appear to be on the move again in September. The third release was the only OB to fetch a new record price when it burst through the £1,000 barrier and settled on £1,100. The rest of the pack performed towards the top end of their trading range further recouping losses after tumbling from 2014 highs.
Combining a massive age statement and a silent still was more than enough to propel the Glenury Royal 50-year-old through a previous best of £3,000 to settle on £3,300. £820 took this bottle at its lowest in 2012.
Staying silent but changing continents, Karuizawa does look to be softening as previously reported, particularly for more frequently traded bottles. A bottle of the 1983 30-year-old (cask 8606) sold for £1,750 down from £2,400, a Geisha label 1983 vintage (cask 2656) managed £2,400, easing down from £2,800 and a bottle of cask strength 3rd release came down from £450 to £410… Let’s be fair though, taken in perspective, it’s still no disaster!
Aside from the above softening, prices still remain generally high for Karuizawa. Certain rarer bottles did experience gains with some of the infrequently seen NOH and Samurai bottles leading any significant increases.
The whole secondary market remains exceptionally active. 2014 saw the last three months of the year flatten out. September doesn’t look like the beginning of an early year-end re-trace for 2015, far from it, values appear to be firming up. But as Q4 approaches should we be bracing for a dip?
The 21st (really? Almost two years!) Whiskyauctioneer sale ended last week and brought with it a whole host of record prices, some were particularly strong. Amid solid demand, the secondary rare whisky market (for the right bottles), looked well and truly governed by the bulls.
The first-release phenomena stood out with the sale of a full set of An Cnoc Peter Arkle bottles. The first release (fourth bottle along in the image) achieved £138, it’s first time over £100 but the rest of the collection dipped.
Tipped as ‘buys’ previously, many independently bottled Ardbeg values drifted further north. As LVMH continue their strict cask control regime (I’ve tried to buy some, it didn’t work out well!) the number of remaining casks in the market out-with LVMH control continues to wither on the vine. Diminishing supply and no let-up from an army of keen fans should see these bottles continue to perform.
Our local distillery and frequent source of great juice, Balblair, saw the first release 1989 vintage peak at £127 (first release standing out again). Just £25 took this at auction in 2010.
Surfing on Atlantic wave sized peaks and troughs, as is now common with the distillery, Bruichladdich had an interesting set of results. The trilogy of Blacker Still, Redder Still and Golder Still saw Blacker selling for £370; way under its record £600. Redder sold for £350, just off its previous best £410 and Golder advanced significantly to sell for a heady £330. In 2011 Golder sold for a mere £78, well under its original retail price.
Previously one of the most sought after collectable Bruichladdich’s was ‘The Rocket’ or WMDI – Whisky of Mass Distinction (followed by the far more common WMDII – Yellow Submarine). As far back as 2008 WMDI was selling for £180 – £200; more recent sales have been as much as £270 and £310. In common with Bruichladdichs yo-yo-esque auction performance one sold for an all-time low of £175 (it also subsequently sold for less than that but more on that next week). Unless Bruichladdich is being bought as a drink or as a collectable, we’re advising to wait on the side-lines as an investment; certainly until values stabilise and this extreme volatility settles.
Silent Stills proved yet again they’re still attracting some serious competition.
Released in 2003, the Glen Flagler / Killyloch pairing performed impresively. As the only official bottling from Killyloch, this 1967 vintage sailed through its previous £1,550 record and sold for £1,850. While the Glen Flagler failed to achieve an outright new record, (£1,150 was bid in September 2013) it out-performed its current £550 – £750 trading range and set a second best price of £1,000.
Other record silent still sales were achieved by –
Cadenheads 1978 vintage Coleburn which sold for £305 (£75 low-point in 2011).
Cadenheads 1977 vintage Pittyvaich which sold for £450 (£220 low-point in 2013).
Signatory 1990 vintage Rosebank which sold for £260 (£125 low-point in 2014).
Against The Grain 1982 vintage Glen Mhor sold for £133 (£52 low-point in 2009).
Featured almost every week now, recent increased demand for Highland Park saw one of the Bicentenary Repatriation bottles achieve £799, sailing past current trading range of £350 – £450. A very respectable gain over its £250 original retail price.
Lagavulin’s 2007 released 21-year-old just pipped its previous best of £880 when one sold for £893.
While the volume end of the market continues to falter (but provides opportunities for missed bottles to be picked up at fair prices) the rarer end of the market maintains its buoyancy.
Scotch Whisky Auctions (SWA) first sale of quarter three 2015 highlighted a particularly revealing trend. For some time now we’ve had it in mind that the number of bottles appearing at auction from silent distilleries is in decline. Until now It’s been more of an anecdotal thought; as usual, we’ve tried to put some numbers behind the hypothesis. Individual bottle values seem to be increasing for most, if not all, silent distilleries. So before we come onto the usual winners and not-so-winners from the recent SWA we take a look at open market supply for silent stills.
The charts below illustrate some single month analysis over the last three years for the number of bottles from silent stills hitting the hammer. This is purely from Scotch Whisky Auctions and shows full-sized bottles (and 50cl) only, so excludes 20cl and miniatures.
We suspected a decline would be evident; however, we had no idea it would be so severe. Over a two-year period the % of bottles from silent stills compared to ‘all lots sold’ has fallen from almost 5.8% in July 2013 to almost 3.7% in July 2015. I find that quite staggering… more than 1% per year. In part, this goes some way to highlighting why bottles from silent stills feature record prices so frequently.
The question is – Are they being kept/collected or are they being consumed?
If they are being preserved to be re-sold in future months/years, once prices reach a certain level, we may see this trend reverse (at least stabilise). If they’re being drunk, effectively reducing the target pool of available stock, values should continue to increase… in some cases that increase could be somewhat rapid.
Demand continues at all-time highs, so with stock levels exiting the market at this rate, now might just be the time to buy those missing bottles from one’s collection. Official Port Ellen and Brora prices have remained relatively static for some time and have re-traced from previous high points… but for how long?
Silence, it appears, is indeed golden!
The recent SWA sale had many new records for bottles from both open and closed distilleries.
The recent up-trend for older discontinued bottles of Macallan accelerated as we saw a bottle of 1968 vintage 18-year-old break £1,000 for the first time. £1,150 took the bottle past its previous high of £950 and left its 2008 low-point of £240 way in the distance. The red-label US export Cask Strength bottling managed to squeeze £400 for the first time, some £60 over its previous high and a highland-mile away from its £120 low in 2010.
There was no let-up in demand for Macallan’s halo bottles as the 1951 (one of 632 bottles released – NOT the Fine and Rare bottle it’s frequently confused with) fetched £8,600. While this is an equal record, the bottle hasn’t seen that kind of price since February 2014. With a 2011 all-time low of £1,600, a clear £7000 increase in value is somewhat impressive. The 1961 (again NOT the Fine and Rare bottle it’s frequently confused with) managed £7,000, its second best ever.
More modern contemporary Macallan saw some small but none the less important rises with the 2011 Royal Marriage taking £1,100 – £1,200 and the Coronation twin set managing £780 – Have we now tested the bottom for the Royal trilogy? Unfortunately, other limited editions fared less favourably with both Ghillies Dram and the Burns decanter selling well under recent trading levels.
Rarities took some of the limelight with older aged/vintage bottles remaining gilt-edged. Dalmore’s 45 year old Aurora achieved a new record £3,900. If this was bought as a ‘drinker’ it’s utterly sublime; one of the few whiskies which is scorched into my memory…. At £3,900 it’s not cheap… and nor should it be!
Ardbeg’s 1975 single cask (1375) sold for £1,250 and £1,150, both new record prices. £400 would have taken this bottle at its lowest price way back in 2008.
The often overlooked Glenturret saw a doubling in value for its 1980’s bottled 21-year-old crystal decanter. A little over a year ago it sold for £200 which now looks good value next to the £400 it fetched here.
Circling back to silent stills, a bottle of Banff 1976/2008 Connoisseurs Choice fetched £220 which is more than three times its 2010 price of £60. Again, from Gordon and MacPhail, a bottle of 1968/2006 Glenlochy hit £320, £100 ahead of its last UK sale price in 2013.
Not everything flew to heady new heights.
It’s always interesting when a completely new bottle hits the market, especially one with no obvious previous retail price history (gifts etc). A bottle of Hazelburn ‘Warehouse Dinner’ 17 yr old sat resolute with a stiff reserve of £250… There it sat for the duration…and remained unsold. I would imagine the reason for that is one sold a few days earlier for a scant £75, clearly setting pricing well below that required from the vendor.
Some of the well known past collectables seemed to languish further. Relatively recently, the Royal Lochnagar Roseisle Maltings bottle could command as much as £400 at auction. Recent years have seen the value of this bottle continually erode .
While the most recent bottle at this SWA sale had someones signature on it, it still only managed £135. That’s a 66% drop in value since 2011.
From our perspective, this clearly shows new and existing buyers are focused on different types of collectables.
Polarisation of the market continues…
All bottle images courtesy of Scotch Whisky Auctions.
If one looks at a map of the ‘lost’ distilleries of Scotland it may seem that the Scottish islands have escaped relatively unscathed. This is, of course, in part due to the fact that there were never too many distilleries there in the first place, and secondly, much of the distilling that was carried on in island communities took place without the tiresome formalities of licences and documentation.
Two islands which would appear to have acquired their first licensed distilleries in relatively recent times are Arran in the Inner Hebrides and Lewis in the Outer Hebrides. A distillery opened for business at Lochranza on Arran in 1993, and has gone on to establish a reputation for seriously good whisky, while the jury is still out on the comparatively youthful spirit of Lewis’ Abhainn Dearg distillery, which opened in 2008.
Yet both islands once boasted licensed distilleries, with Lagg in the south of Arran being the last of three legal distilleries on the island, operating between 1825 and 1837, though it has been reported that some 50 illicit distilleries were working on Arran during the early 19th century!
Lewis was also renowned for its illicit distilling tradition, which some say has not entirely died out in the more remote parts of the island, but a licensed distillery operated in the capital of Stornoway from 1825 until 1840. Both it and Lagg were clearly established in the optimistic years following the 1823 Excise Act, which incentivised legitimate whisky-making.
Three significant island distilleries were lost during the economically harsh years between the two world wars, namely Stromness on Orkney, in the north, and Lochindaal and Port Ellen on the ‘whisky island’ of Islay, though Port Ellen was to enjoy a second role of the dice between 1967 and 1983.
Today Orkney is well-known for is Highland Park and Scapa distilleries, close to the island capital of Kirkwall, but apart from these two survivors, there were as many as six licensed distilleries in and around Kirkwall during the 1820s and two distilleries in Orkney’s second-largest town of Stromness. One of the Stromness pair only operated from 1825 until 1831, but the principal Stromness distillery lasted from its establishment in 1817 until 1928.
It was located close to the harbour, and was initially licensed to John Crookshanks, and though named Stromness distillery, the whisky it produced was sold for many years as Man O’Hoy, after one of Orkney’s most distinctive landmarks, the red sandstone sea stack off the island of Hoy.
Stromness was in the hands of no fewer than six individuals before closing in 1867, but 1878 saw it restored to use by the Macpherson brothers, who renamed the distillery itself Man O’Hoy and marketed its whisky as Old Orkney, or ‘OO’.
The Macphersons ran Stromness distillery until it was acquired somewhere between 1900 and 1910 by Belfast-based J&J McConnell Ltd, who operated it through their McConnell’s Distillery Ltd, London subsidiary. However, the harsh economic climate of the inter-war years forced its closure in 1928. It was subsequently owned for a time by Booths Distilleries, but the distillery buildings were demolished during the 1940s, and ultimately replaced by local authority housing.
When he visited during the mid-1880s, journalist and author Alfred Barnard, whose book Whisky Distilleries of the United Kingdom was published in 1887, described Stromness as “The most remote Distillery in the Kingdom,” He added that “In the little old-fashioned Still House are to be seen two of the ‘sma’ old Pot Stills,’ each holding 300 gallons. One of these, a veritable smuggler’s Still of a peculiar shape, is the quaintest we have seen in our travels, and was formerly the property of a noted law evader; its body is shaped like a pumpkin, and is surmounted by a similarly shaped chamber one fourth the size, to prevent the goods boiling over, through which the neck passes to the head of the Still.”
Barnard continued by noting that “The Whisky, which is Highland Malt, is principally sold in Scotland, where there is a good demand for it, and the annual output is 7,000 gallons.” To get a sense of just how ‘boutique’ the enterprise really was, it is worth noting that Barnard records 50,000 gallons being distilled per annum at Highland Park.
Islay has long been home to more licensed distilleries than any other Scottish island, and Alfred Barnard visited nine licensed facilities when his travels took him there. Today Islay boasts eight distilleries, with another in the shape of Gartbreck currently under construction near Bowmore.
Of Islay’s ‘lost’ distilleries, Lochindaal distillery was founded during 1829 in Port Charlotte village, on the shores of Loch Indaal, initially operating under the name Port Charlotte Distillery. The facility was making 128,000 gallons of spirit per annum during Barnard’s visit, which compared with Lagavulin’s 75,000 gallons and the 250,000 gallons being produced by Ardbeg at the time.
In 1920, Lochindaal’s owners JF Sheriff & Co were bought out by Benmore Distilleries Ltd, and nine years later they suffered the same fate as many struggling distillery ventures during the prevailing economic depression, being purchased by the Distillers Company Limited (DCL), which immediately closed Lochindaal.
The plant was subsequently removed, but some of the buildings continued to be utilised by the now defunct Islay Creamery until the 1990s, while others were taken over by a garage business and by Islay Youth Hostel. Two substantial, stone-built warehouses have remained in use for the maturation of spirit.
In the south of the island Port Ellen distillery was established in 1825. Port Ellen has a number of claims to fame, not least as the location where Septimus Fox’s spirit safe was tested and refined during the early 1820s. At the invitation of owner John Ramsay, both Aeneas Coffey and Robert Stein also carried out research work at Port Ellen, aiding the development of the continuous still.
Port Ellen distillery remained in the Ramsay family until 1920, when it was acquired by the major blending companies of James Buchanan & Co Ltd and John Dewar & Sons Ltd. Port Ellen passed to DCL when Buchanan and Dewar merged with that organisation in 1925 and in 1930 the distillery closed, having been transferred to the DCL subsidiary Scottish Malt Distillers.
Unlike so many of its counterparts, however, Port Ellen was granted a second lease of life in 1967, when the distillery underwent an 18 months-long, £400,000 rebuilding programme, during which the plant changed quite dramatically, both internally and externally. It finally became operational one again in April 1967.
Six years later, the village of Port Ellen was transformed by the construction of a vast new mechanised maltings plant beside the distillery, and as a result, the old floor maltings at DCL’s three Islay distilleries of Port Ellen, Lagavulin and Caol Ila subsequently closed.
Sadly, it was only a decade later that Port Ellen distillery fell silent once again. Port Ellen was probably selected as the most expendable of DCL’s Islay distilleries because its make was less popular with the blending trade than either Lagavulin or Caol Ila. In the early 1980s, Islays were very much blending whiskies, and it would have taken a remarkable crystal ball to foresee that one day Islay single malts would enjoy international cult status.
In 2005 owners Diageo demolished the sections of Port Ellen distillery dating from the 1960s rebuild, leaving the maltings and two early pagoda kiln roofs in place, along with a sea-front range of stone warehouses, which serve as a reminder of Port Ellen distillery’s productive days.
While the existence of Lochindaal and Port Ellen distilleries is familiar to many whisky aficionados, more obscure is the story of Malt Mill, whisky from which features prominently in director Ken Loach’s 2012 movie The Angels’ Share.
In the early 1900s, Lagavulin, some two and a half miles east of Port Ellen along the southern Islay shore, was owned by Mackie & Co (Distillers) Ltd, whose company produced the best-selling White Horse blended Scotch whisky. White Horse’s Peter Mackie also acted as sales agent for nearby Laphroaig, and when he lost this role due to a disagreement over water rights, Mackie decided to make his own version of Laphroaig by way of retaliation. Accordingly, he constructed a small distillery named Malt Mill within the Lagavulin site during 1908.
Despite Mackie’s efforts, Malt Mill never seriously rivalled Laphroaig, but the distillery survived until 1960, when production ceased, and two years later the plant was dismantled and its pair of pear-shaped stills were transferred to the Lagavulin still house, where they saw another seven years of service. The site of Malt Mill is now occupied by the Lagavulin visitor centre.
Islay is also noted for a proliferation of farm-based distilleries, many of which had their origins in illicit operations. A number of these small-scale distilleries were established, or legalised, in the wake of the 1816 Small Stills Act, which encouraged legal distillation.
The now lost distilleries of Ardmore (later absorbed into Lagavulin), Ballygrant, Bridgend, Octovullin, Octomore, Newton, Scarabus and Tallant all dated from the years following the Small Stills Act, while the 1823 Excise Act once again led to a spate of new Islay distilleries. These included Glenavullen, Lossit and Mulindry as well as the larger Port Ellen and Lochindaal distilleries, along with Ardenistiel, which was ultimately incorporated into the Laphroaig site.
The tradition of small-scale, farm-based traditional Islay distilleries was given a boost by the creation of Kilchoman distillery, which commenced production in 2005 at Rockside Farm, not far from Bruichladdich.
Gartbreck distillery promises to follow in the same footsteps, even boasting that distillation will be carried out using a live flame – something to warm the hearts of old-time distillers all over the islands of Scotland.
One of the more recently established whisky auction houses has been generating a high level of interest bringing some exciting bottles to the open market. Perth based Whiskyauctioneer has been trading for just over 12 months and appears to be a firm fixture in the monthly auction calendar. Their recent sale included a number of exceptional high end bottles with a balance of attractive prices for both buyers and sellers.
The star of the show was a bottle of the more recently released Black Bowmore along with siblings White and Gold Bowmore. Previous prices for the trilogy have been static at £12,500 for some time. £16,000 took the prize on this occasion showing demand is still high for these top end rarities. This also follows Bowmore’s general increasing trend for older bottles.
Staying with the aforementioned Bowmore, a bottle of 1968 vintage, 37 year old, sold for £1,455. As recently as December 2013 a bottle slipped through the net, achieving just £450. The previous record was £1,060 in December 2014.
Balvenie had another good auction with constantly increasing demand pushing values higher. A bottle of Sherry Oak 17 year old sold for a record £200, way past its lowest sale vale of £62 in 2012. ‘The Cooper’ performed well again; a bottle lacking the paper surround for the card tube sold for £440.
Diageo’s 2014 Brora Special release had its first UK auction outing and sold for £950. Not disastrous by any stretch, however, this shows the market value perception for the Special Releases has changed dramatically over recent years. Take off 5% sellers premium plus VAT and that leaves net proceeds of £893, a 25.6% loss over the £1,200 RRP. The question is, will the market catch up in future years or have the Special Releases had their day (from a collectors/investors perspective)? To some degree I do suspect the market will catch up, however, when you take account for sellers premium etc it could be a good three years plus to see any sort of break-even at current retail prices (I’m purely talking Brora here, not the rest of the pack, many of which are solid drinkers and nothing more).
Bruichladdich looked a little more buoyant than of late, especially at the top end (relatively standard limited releases continued to languish). The 40 year old sold for a record £1,400, edging past its previous best of £1,250… In 2009 a bottle sold for £360. This bottle also becomes the single most expensive Bruichladdich ever sold at auction in the UK.
Matching Bruichladdich in age, a bottle of 1966 distilled 40 year old Dalmore sold for £1,800. Not an outright record but a record for a bottle which is unsigned by Richard Paterson. At the other end of the trading range, the Dalmore 25 year old was back down to £400, a significant loss against its £600 retail price.
Broad based Macallan values shifted very slightly north which was pleasing to see. The 15 year old Easter Elchies Seasonal Selection hit a new high of £375 and the 1841 Replica achieved £260, its best price yet. In common with other recent auctions, contemporary high value Macallan NAS bottles failed to sell. Two ‘M’ Decanters and one of the two ‘Reflexion’ bottles remained unsold. Does high value NAS actually mean Not Actually Sold (at auction anyway)?!
Port Ellen values look stable at current levels with the 4th release achieving a new record £1,650.
At the other end of the scale, the old ‘pre-Flora & Fauna’ bottle of Aberfeldy 15 year old sold for £130, its lowest recorded sale yet. With a high-point of £280 in 2012, recent times have seen a gradual slip in value yielding a 53.6% loss from peak to current trough.
The final interesting observation from this particular auction was the general lack of bottles from silent stills. There were the usual Port Ellen culprits and, a couple of Brora’s and a light dusting of Rosebanks but other than that, consignments from closed distilleries were pretty thin on the ground. A sign of things to come? Get them while you can…?
Exports of blended Scotch to the USA were a major contributor to the renewed health of the Scotch whisky business in the years following the Second World War, and between 1959 and 1966 grain production in Scotland rose from just over 41 million gallons (186 million litres) to almost 90 million gallons (409 million litres).
The malt sector’s on-going expansion also continued, with output growing from 29 million proof gallons (131.8 million litres) in 1963 to 51 million proof gallons (231.8 million litres) in 1967, and new capacity was created in a diverse range of geographical locations.
Despite all the individual distillery creations and expansions, a significant part of the overall increase in malt capacity during the 1960s was due to the Distillers Company Ltd (DCL), which embarked on a programme to augment output at many of its existing distilleries. Indeed, between 1959 and 1967 DCL increased the number of stills in its distilleries by more than 50 per cent, with major reconstruction projects being undertaken in some cases.
Overall, the 1960s was a decade of growth for Scotch whisky not seen since the heady days of the late-Victorian era, with the malt sector doubling its output. As Moss & Hume (The Making of Scotch Whisky) explain, “The reasons for the rapid growth of distilling in the 1960s lie in the relaxation of restrictions on production. The United States market, which had taken the bulk of exports since the end of the war, showed a phenomenal rate of expansion, reflected, for example, in the great success of Dewars, Cutty Sark and J&B Rare blends. In 1960, American imports were 12,000,000 proof gallons [54,000,000 litres]); by 1968 they were 33,000,000 [150,000,000 litres].”
However, economics difficulties began to develop as a result of the Arab-Israeli war in October 1973, which caused a major rise in oil prices the following year. The global economy faltered as a result, with US demand for Scotch fluctuating wildly during the next few years.
Once again, enthusiastic expansion had caused supply to outstrip demand, and the press dubbed this surplus stock ‘The Whisky Loch.’ The Distillers Company Ltd was particularly hard hit, closing nine malt and one grain plant in 1983, followed two years later by a further 10 malt distilleries.
Malt whisky output had peaked at 207.660 million litres in 1978, falling to 93.383 million litres in 1983 – its lowest level since 1964. This “crash” in production helps explain the very tight supply for aged malts from the 1980s now affecting the 25 and 30 years old sector.
The economic policies of the UK’s Conservative Government headed by Margaret Thatcher from 1979 led to a fall in inflation and greater business confidence, and globally the situation was also improving. As a result, output of malt spirit rose from 264.947 million litres in 1986 to 428.762 million litres during 1990, and Scotch began to find new markets in countries such as Brazil, Russia, India and China.
Return to growth
The impetus of growth through the past decade has seemed unstoppable, and having spent £40 million establishing the vast Roseisle distillery near Elgin during 2009/10, in April 2013, Diageo announced an additional £30 million of investment in Speyside, including a doubling of capacity at Mortlach.
At the time, a Diageo spokesperson noted that “These developments build on recent Diageo investments in Speyside totalling in excess of £40 million, including distillery expansion and upgrade projects at Linkwood, Mannochmore, Glendullan, Dailuaine, Benrinnes, Inchgower, Cragganmore, Glen Elgin and new bio-energy plants at Dailuaine and Glenlossie.”
Meanwhile, Chivas Brothers, having increased capacity at The Glenlivet by 75 per cent in 2010 with the creation of a new distillation unit, went on to enhance potential output at at Glenallachie, Longmorn, Glentauchers and Tormore distilleries in 2012, as well as re-opening the silent Glen Keith plant during April 2013. Overall, Chivas has committed £40 million annual capital expenditure on its whisky operations, the bulk of which is being spent on Speyside, most notably with the creation of a ‘super-distillery’ named Dalmunach, destined to rival Diageo’s Roseisle on the former Imperial distillery site.
An end to boom?
However, after Scotch whisky exports hit a record £4.3 billion in 2012 – an increase of 87 per cent in 10 years – the trend began to reverse, with a decline in sales, and the first half of 2014 saw a slump of 11 per cent, or £220 million in terms of value.
The Scotch Whisky Association (SWA) blamed new anti-extravagance drives in China, the stronger pound and an economic slowdown in some markets for the decline in Asia and the Americas, previously two of Scotch whisky’s fastest-growing regions.
Overall, the downturn principally concerns blended Scotch, with malts continuing to perform well. In 2013 malts sold more than eight million nine-litre cases for the first time, and in the USA, the volume of the malts market grew by 12.9 per cent.
The USA and Asia Pacific are becoming increasingly significant malt territories, while there is an ongoing premiumisation of malts in France. Over a 10 year period, the global ‘Super premium plus’ malts sector has grown by 10.2 per cent Compound Annual Growth (CAGR), compared to an overall malts growth figure of 4.3 per cent CAGR.
‘Premiumisation’ is the key term here, as both malts and blends in what is termed the ‘Premium plus’ segment have outgrown the Scotch whisky category as a whole, increasing by 4.9 per cent CAGR in the last decade, compared to a sector rise of 1.8 per cent CAGR.
Such statistics provide some comfort for the Scotch whisky industry, but by far the bulk of its sales are of ‘standard’ blends, and Diageo has blinked first in the face of headline figures, halting construction of a proposed £50 million malt whisky distillery at Teaninich, north of Inverness, as well as a £30m expansion of Clynelish distillery, construction of a bio-energy plant at Glendullan, and the planned £18m expansion of Mortlach distillery in Dufftown.
To date the situation has really only caused the sound of quite muted alarm bells. What should, in theory at least, prevent too much pain for the Scotch whisky industry this time around is the sheer geographical spread of its spheres of operation.
However, the current dip in Scotch whisky’s fortunes serves as a timely reminder that ‘boom’ cannot last forever, and there is always a reckoning of sorts…
Kicking off January’s whisky sales, Scotch Whisky Auctions saw a buoyant start to 2015 for many bottles.
As was common for many distilleries, Ardbeg values faltered at the end of 2014 amid ever increasing supply. It was pleasing to see something of a return to form for many of the relatively voluminous limited releases. New records were established for Alligator Committee at £250, ‘Almost There’ at £150 and Supernova Stellar at £270.
Again, following a fairly flat trading period, Brora values started to pick up yet again. The 2008 release 25 year old achieved a new record £680 and the 2010 30 year old release hit £700. The interesting thing to note about bottles from Brora is thenumber of bottles being sold on the open market is declining in relation to the broader market increases…. Are they being hoarded or are they being drunk? If they’re being hoarded there’s always a risk that the market becomes flooded in the future pushing prices back.
Managers Drams in general had a good auction with many seeing new record prices – £340 took the Aberfeldy and £155 took the Mannochmore (with a good fill level). An index showing the value of a full set of managers Drams peaked at 157.14 in June 2013 (Index start was 100 on the 31st Dec 2008). Latterly the set declined 23.46% to a 3 year low of 120.27 in October 2014 before recovering slightly to see a current value of 126.78.
A wide variety of Silent Stills showed good momentum – Many bottles achieved record prices.
Ignoring bottles from the Scotch Malt Whisky Society for a moment, Gordon and MacPhail led the way from an independent bottlers perspective. Many Connoisseurs Choice bottles attracted stiff competition. Millburn 1976/2004 sold for £175 up from its previous best of £140 in September 2014. Rosebank 1983/1995 sold for £170 up from £130 in July 2014. St Magdalene 1981/1997 achieved £200 up from £110 in May 2014. The same vintage St Magdalene but bottled in 1999 achieved £180 up from £155 in September 2014. Staying with Gordon and MacPhail but moving to the Rare & Old series rather than Connoisseurs Choice, a 1975/2008 Convalmore hit £310 up from £230 in November 2013.
Impressive Silent Stills records from other bottlers included – Douglas Laings Rosebank Old Malt Cask 1974 30 year old hit an impressive £490, up from £280 in June 2014. A Duncan Taylor bottled 1981 26 year old Glenesk achieved £390 more than doubling its previous sale of £140 in 2012. Murray McDavids St Magdalene 1982 24 year old sold for £190 just passing its previous best of £180 in September 2014 and significantly ahead of it £65 low in 2011.
Moving back to the aforementioned Scotch Malt Whisky Society (SMWS) bottles – SMWS have seen something of a momentous change in their frequency of appearance at auction.
The chart below shows the number of bottles sold at auction in the UK over a 5 year period from 2010 to 2014. By means of comparison, Gordon and Macphail have also been included. While the overall number of bottles seen from Gordon and MacPhail remains significantly ahead of SMWS (1515 bottles sold in 2014 compared to 782 from SMWS), the rate of increase from SMWS is staggering at 1,121.88% compared to just 448.91% from G&M. As bottles from SMWS become more widely recognised could now be the time to pick up any remaining bargains from certain distilleries?
More research is needed to see which indie bottler has shown the most rapid growth from a volume perspective… and also crucially from a value perspective. There’ll be another time for that.
Back to some of the SMWS star performers – Rosebank was popular with a bottle from cask 25.69 (1991 23 year old yielding just 35 bottles) hitting £350. A bottle of Bowmore from cask 3.222 (a 13 year old) achieved a new high of £110.
A bottle of 33.64 (a 9 year old Ardbeg) sold for £165 showing that relative youngsters should not be discounted. Two bottles from cask 99.8 (Glenugie 24 year old) hit £400 (these were just £95 in 2010). Along with a good array from open distilleries there was strong representation from many silent stills with St Magdalene, Millburn, Convalmore and Glen Albyn in the mix.
With too many other records to mention, the continuation of another key trend was prominent – Older vintages remain hugely sought after, almost irrespective of distillery. A bottle of Linkwood 1946 by G&M sold for £500, way ahead of its £280 low in 2010.
While the auction was generally buoyant, polarisation continued with less sought after collectables almost disappearing into a mire of cast aside liquid and crystallised losses. One of the best examples was a Signatory bottled Glenkinchie 1978 19 year old which sold for £80. Its previous sale was £200 just last year. Polarisation in Extremes.
Following a more general stabilisation (or a fall in many cases for many distilleries) towards the last quarter of 2014, early 2015 signs look positive.
The recent Whisky-Online Auctions (W-OA) sale perfectly illustrated the polarisation of the rare whisky market right now. The hugely rare ‘centre-stage’ bottles bore witness to significant demand and in some cases equally significant increases in price.
For others the story is somewhat different…
The recent October Market-Watch highlighted Bruichladdich as experiencing a significant and protracted re-trace in values. That trend looks to be continuing and, if anything, accelerating as we start to see prices cooling rapidly. The show stopper from a % loss perspective was the single cask release ‘Wee Ruari’. At its UK auction premier, just over 12 months ago, this bottle achieved a huge £580; since then it’s seen value erosion like few others. At this months W-OA sale, Wee Ruari hit an all-time low of £165, yielding an exceptional 71.5% loss… in a little over a year.
Other significant falls were seen for Highland Park’s ‘Eunsons Legacy’ (sold for £210, down 50% from its 2010 peak of £420) and virtually everything from Knockando. Knockando have never been the most sought after of collectables, but a gradual appreciation (of values) has seen some of the older vintages become increasingly desirable. With so much supply on the open market, it was only really a matter of time until some of the second and third tier ‘collectables’ were cut loose in favour of others.
Ardbeg’s ‘bling’ press release bottle of Auriverdes sold for £2,590 at its peak in May this year. Six months later and a 59.5% drop left it languishing at £1,050. Loss aside, that’s still not a bad Christmas bonus for a free bottle.
From a positive perspective there were some exceptional results for many high end collectables and bottles from (again) silent stills.
Rare Bowmore values continued their bull-run: The second Black Bowmore release fetched £4,200. In 2008 these were selling for a little over £1,500 but a lack of current stock continues to propel prices higher. The 30 year old ceramic ‘Sea Dragon’ bottle breached the £1,000 mark for the second time ever as the hammer fell on a record £1,050.
In December 2012 Macallan’s 57 year old Lalique Decanter sold for £6,801 (again at W-OA), less than two years later and a record £15,100 was paid for a bottle. An increase in value of 122% gives clear evidence of continued strong demand for Macallan rarities.
Dalmore’s Candela sold for £10,600 showing a 51% increase in value over its June 2013 sale price of £7,000. Many lower value Dalmore bottles have shown diminishing prices recently with older vintages and high-end rarities leading what would otherwise be a stagnant auction performance.
Older Laphroaig bottles firmed up once more as one of the 1980 27 year old ‘Oloroso Cask Matured’ (972 bottles released) broke through £1,000 for the first time (£1,050). £775 was just £5 off the current record for a bottle of the 30 year old Cairdeas and £825 set a new benchmark sale price for the standard 30 year old.
Virtually all the old Cadenheads dumpies have performed exceptionally well over recent years. Older vintages from silent stills remain among the most popular. A bottle of 1959 vintage Glenugie tipped the till at £700 showing huge upside against its 2010 price of £220. A bottle of 1964 vintage St Magdalene fetched £625, significantly outstripping its 2010 price of £380. Dallas Dhu’s 1962 vintage bottle sold for £450, more than doubling its 2009 price of £200.
All told, another well balanced auction from W-OA with plenty of good value drinkers at more than fair prices – but, yet again, the higher end was where the keenly fought action was.
Until next week.
All images courtesy of Whisky-Online Auctions
Cutting to the heart of the Scotch Whisky industry.