Is Cooley Having Trouble To Cope With Demand?

by Oliver Klimek on April 12, 2012

An interesting news report just came in from the Irish Independent. Lord Henry Mountcharles, owner of Slane Castle has been sourcing whisky from Cooley for his own independent bottling range named after his castle. Now Cooley – owned by Beam after a takeover in late 2011 – told him they will not supply whisky to him anymore.

In the Independent article, Beam official and former Cooley director Willie McArthur explained that demand for Irish Whiskey had skyrocketed in a way that the company now needed every drop of their whiskey for their own business. For this reason no Cooley whiskey will be sold to independent bottlers anymore. Of course this is a legitimate business decision, and as sad as it may be for bottlers having relied on the supply by Cooley in the past, this move by Cooley/Beam is understandable from their perspective.

But one statment from Willie McArthur caught my interest in particular:

“We aim to create another Jameson — we are thinking at that kind of level. We have to make sure we do not run out of whiskey in three years’ time.”

They need their whiskey in three years time to compete against Jameson. Very interesting indeed, especially in the light of my August 2010 head to head comparison of the old and new Kilbeggan expressions when I noticed a significant drop in quality. Back then I suspected a raised content of grain whisky to be the culprit. But perhaps reducing the age to the legal minmum of three years may have been the reason. Or a combination of both.

If Jameson is the target, then not fancy brands like Connemara, Greenore or Tyrconnell can lead the battle. It’s the regular Kilbeggan that has to command the attack. The basic bottles make up the bulk of the sales. The competition is won in pubs, bars and supermarkets, not by convincing a few geeks of the quality of their higher end bottles.

The old Kilbeggan has beaten the regular Jameson hands down, such a great affordable dram it was. The new barely legal expression may still be on eye level from a quality perspective, but the battle can not be fought on the quality level anymore. So the battlefields will rather be volume and marketing. Good luck with that, Cooley. Taking on the market leader is a tough task.

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{ 6 comments… read them below or add one }

Sku April 12, 2012 at 7:25 pm

Goodbye last independent Irish distillery with your focus on innovation and quality, hello Jim Beam with an Irish accent.

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Florin April 13, 2012 at 5:56 am

It was pretty clear from the moment of the Jim Beam acquisition that this was the direction that the things were going to take. Jim Beam brought Cooley instant access to a gazillion of store shelves around the world. Cooley’s prior business model was to sell their whiskey under other people’s labels, and it only makes sense that with Jim Beam they don’t need to do that: skip the middleman and pocket the difference. The delicious Trader Joe’s bottles of Cooley whiskey (for lucky us in California) will have been a one-off deal. I guess this leaves room now for the next Cooley-like maverick…

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Frodo April 13, 2012 at 9:01 am

Given that Irish Whiskey (and Jameson in particular) has been growing in popularity and that the Beam acquisition was done to improve distribution and sales, I’m afraid the writing was on the wall for this one. Cooley needs to make sure they have the whiskey to sell to match their sales forecasts. Independent bottlers will get squeezed out. This has been happening for some time within the Scotch whisky industry and now we’re seeing it here too.

Note to independents: if you don’t have a contract with your suppliers get one now or risk having this happen to you as well. Yes this will cost you – price of doing business in this market with demand for whisk(e)y going up. Or wait for the forecasted bourbon surplus to arrive and get that at a more reasonable price.

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Keith April 14, 2012 at 10:06 am

There’s a discussion about this over on the Irish Whiskey Forum so I gave a link to this article, but they generally see it as a positive move where Cooley, sorry Beam, are preferring to keep more stock for ageing ……. I’m not so sure and tend to agree with Oliver here.

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Oliver Klimek April 14, 2012 at 12:03 pm

To clarify my position on this issue: As I wrote, I understand Beam’s decision to keep their stock to themselves, and I don’t want to criticize that part of the news. And if this was for PROPER aging, I would even tend to see this as positive. My real gripe here is about the “three years” statement, hinting to a ‘volume over quality’ approach. I would have preferred to see a long-time strategy of building up enough properly aged stock to be able to take on Jameson with a better product at sufficient volume. This process would of course be slower but also more sustainable in my opinion

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David April 14, 2012 at 1:56 pm

We have seen a lot of cheap Irish whiskey blends appear in the last few years, particularly in the US. We can plausibly assume they are 4yo Cooleys and guess how they taste. Cooley makes good whiskey, but not at 4 years old.

So I expect an improvement in the industry-wide quality of Irish whiskey because a bunch of inferior whiskeys are about to disappear. I don’t think Beam is going to hold back its malt till it’s 10 years old. You are right, I’m sure, that the released capacity will go into Kilbeggan.

I don’t read too much into the 3-year time frame mentioned by Willie McCarter. The meaning of the comment wouldn’t have changed if he had said 2 years or 5 years. Growing sales of their own brands mean they can use all the stock they have currently laid down. Just filling the Beam distribution pipeline must have put a fair dent in the warehouse.

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