Searching for Single Malt Value
There was a time when we travelled to Scotland primarily in search of individuality. It was ages ago, long in the past—way back in 2011. The Scotch market was dominated by major brands and customers looking for a new adventure longed to try something beyond the standard selection. As a result, my colleague David Othenin-Girard and I began taking an annual trip to the motherland, visiting with smaller distilleries and bottlers, in an attempt to secure interesting exceptions from the norm and bring them back to K&L. We were wildly successful at first, snagging cherry barrels of exquisite, rare, and unheard-of whiskies with price tags that were more than fair in comparison. Then, between 2013 and 2016, something incredible happened: the major whisky companies followed our lead and began releasing interesting alternatives of their own—limited editions, allocated releases, and one-time-only batches of interesting selections that represented their own alternative to the everyday. All of a sudden, our unique K&L selections were watered down by a sea of unique branded selections. There were so many choices!
However, if the average branded single malt at K&L clocks in somewhere between $40-$100, the industry felt that anything truly special should demand a premium—and rightly so! If your normal, everyday edition costs $50 then your ultra-rare, limited edition should cost at least a hundred bucks, right? As we watched the average price continue to creep up over the years, we knew we could recapture our role as niche players by going after that ever-rising price tag. We had deep relationships in Scotland to draw on. We had connections. We knew how to be cost-effective and we knew which whiskies constituted value. Starting in 2016 we had a new mission: bringing the bang-for-your-buck back to the Scotch shelf. We had to start by reworking some of the math on our current selections, and that's exactly what we did. It wasn't about finding the shiny new thing at this point. We wanted the price to be just as exciting as the whisky itself.
We started with the grains. Grain whisky is a style of Scotch whisky that was completely underserved in the American market. Typically blended with single malt to create "blended whisky," the whisky can taste rather ordinary in its youth, but creamy and smooth after several decades in wood. It's often distilled from corn much like Bourbon, but it's aged in used barrels rather than new. Seeing the opportunity to sell 25-27 year old casks of single barrel grain whisky from three of Scotland's premier grain distilleries, we asked ourselves: how does one grab the public's attention when everyone's focused on single malt? Then we discovered the answer: you sell 25-27 year old whiskies for $79.99 (the same price some 10-15 year old Scotch whiskies sell for today) and you let the public decide what they think. Easy peasy. What about on the malt side though? With the average price of branded 18 year old single malt somewhere between $100-$200 these days, we wanted to get in under $100 per bottle if possible for some of our older selections. But single barrel, cask strength whiskies demand a premium. For one, the duties one has to pay are higher because the alcohol percentage is higher, and the undiluted nature of the whisky means it's more concentrated.
Lagavulin's portfolio offers a great example of this phenomenon: the standard 16 year sells for $69.99, but the 12 year old (a younger whisky by four years) sells for $109.99 because it's at natural cask strength. It always puzzles customers that a younger whisky could cost more, but the proof makes a huge difference. One of my favorite casks from this last year was a 17 year old Glenlossie we found, a distillery that primarily makes whisky for Johnnie Walker. It reminded me of the Glenlivet 16 year Nadurra with its rich oak character, a whisky we sell for $69.99. "Let's match that price," I said to my colleagues. "Let's sell an older, richer, single barrel, cask strength whisky of a similar quality, but let's match that seventy dollar price point." Another whisky we decided to rework was the Clynelish 18 year we secured recently. The standard Clynelish 14 sells for $59.99, but the "special release" sells for a whopping $900. Clynelish is one of the most beloved whiskies in the world among insiders and blenders. We wanted something in the middle. The special combination of lemon zest, honey, and beeswax gives it a distinct and elegant flavor. "Let's match the Glenmorangie 18 price of $99.99," I said. "That's a similar whisky in terms of quality, but again ours will be at full proof." So we did. But we needed something big to finish with, something that would grab the attention of the serious collector. "What about that 29 year old Longmorn?" we asked ourselves. This incredibly rare cask we located in a Glasgow warehouse was one of the most impressive we'd found on our last trip—a rich, supple, round, honeyed, butterscotch-laden whisky that had proofed down to a drinkable 51% naturally. "You think we can get away with $199.99?" I asked. For that price, we should turn some heads.