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A Closer Look At Whisky Inflation

by Oliver Klimek on November 5, 2012

Lamenting about rising whisky prices has become a regular pastime in whisky blogging circles, and this place is no exception. So I think it is time to have a closer look at how much prices have actually increased over the last years.

Whisky becoming more expensive has two reasons. Firstly there is the obvious price increase of standard bottlings over time, as can be expected because of the general inflation which is currently meandering around a rate of 2% per year. Increases of excise duty also have an effect on whisky prices, naturally.

The second type of whisky inflation is much trickier: Replacing old bottlings with new and different ones that don’t allow you to do direct comparisons. A very recent example is the new Macallan Gold that is replacing the 10 year old Sherry and Fine Oak expressions. Psychogically such moves can have a definite impact, as can be seen in the discussions that usually evolve after such a new bottling has been released.

Quantitative comparisons are only possible with bottlings that have not changed over the years or only marginally, for instance with a change of ABV. Wouldn’t it be nice to time-travel ten years into the past and see the whisky prices as they were back then? Too bad we can’t really travel back and buy cheap whisky to take back home into the present.

But there is an internet equivalent of a time machine: The Wayback Machine of the Internet Archive. It has saved snapshots of millions of websites, refreshed at certain intervals, a herculean task indeed. Of course not all content changes of any site are documented, but for our purposes this is more than enough.

In the following table I have compared today’s prices of The Whisky Exchange with their prices from late 2002 for a range of standard bottlings. The third column is the expected 2012 price calculated from the 2002 price with cumulated UK inflation (pretty exactly 25% over ten years) and the increase in UK excise duty (approximated to £2 for drinking strength and £3  for cask strength). The fourth and fifth columns indicate the difference of the actual 2012 price to the expected price in pounds sterling and percent.

  TWE 2002 TWE 2012 Infl./Excise Diff £ Diff %
           
Aberlour 10 16,99 23,95 23,24 0,71 3,07
Aberlour A’bunadh 26,00 35,49 35,50 -0,01 -0,03
Ardbeg 10 21,98 35,95 29,48 6,48 21,97
Balvenie Doublewood 25,00 28,95 33,25 -4,3 -12,93
Balvenie 21 Port Wood 42,50 86,95 55,13 31,83 57,73
Benrinnes 15 F&F 29,75 40,49 39,19 1,3 3,32
Blair Athol 12 F&F 27,50 40,25 36,38 3,88 10,65
Bunnahabhain 12 * 21,98 33,95 29,48 4,48 15,18
Cardhu 12 24,99 30,75 33,24 -2,49 -7,48
Dalmore 12 23,50 35,95 31,38 4,58 14,58
Edradour 10 27,50 30,49 36,38 -5,89 -16,18
Glendronach 15 23,50 39,49 31,38 8,12 25,86
Glenfarclas 15 28,51 39,95 37,64 2,31 6,14
Glenfarclas 21 35,00 59,95 45,75 14,2 31,04
Glenfarclas 25 75,00 90,95 95,75 -4,8 -5,01
Glenfarclas 30 75,00 123,00 95,75 27,25 28,46
Glenfiddich 15 23,99 31,95 31,99 -0,04 -0,12
Glenfiddich 30 119,99 254,00 151,99 102,01 67,12
Glenlivet 12 21,00 25,45 28,25 -2,8 -9,91
Glenlivet 18 26,99 37,95 35,74 2,21 6,19
Glenmorangie 10 22,00 27,25 29,50 -2,25 -7,63
Glenmorangie 18 39,50 79,95 51,38 28,58 55,62
Highland Park 12 19,99 24,49 26,99 -2,5 -9,25
Highland Park 18 39,99 56,95 51,99 4,96 9,55
Lagavulin 16 35,99 44,95 46,99 -2,04 -4,34
Lagavulin DE 42,50 63,49 55,13 8,37 15,17
Laphroaig 10 18,99 29,95 25,74 4,21 16,37
Laphroaig 10 CS 29,99 49,95 40,49 9,46 23,37
Macallan 10 Sherry 19,99 28,25 26,99 1,26 4,68
Macallan 18 Sherry 48,99 97,94 63,24 34,7 54,88
Mortlach 16 F&F 28,99 44,75 38,24 6,51 17,03
Springbank 10 22,49 34,49 30,11 4,38 14,54
Strathisla 12 21,00 29,49 28,25 1,24 4,39
Talisker 10 26,00 32,49 34,50 -2,01 -5,83
Talisker DE 36,00 51,49 47,00 4,49 9,55
Chivas Regal 18 38,00 48,49 49,50 -1,01 -2,04
Johnnie Walker Gold Label 49,94 58,49 64,43 -5,94 -9,21
Johnnie Walker Blue Label 129,00 139,00 163,25 -24,25 -14,85

* Bunnahabhain 12 was changed from 40 to 46.3% ABV in 2011.

As we can see, the picture is pretty mixed. Roughly half of the bottlings are more expensive now than could be expected after inflation and excise duty increase while the rest is actually cheaper than projected.

One trend is clearly visible though: Entry level bottlings have been rising less than special or older bottlings, often they are less expensive now than expected. Laphroaig and Ardbeg are significantly more expensive now while the Johnnie Walker blends have been quite modest in their price development. Blends are a cutthroat market, so big price increases are out of question.

Ownership changes can have different effects. Edradour has become relatively cheaper after the takeover by Signatory while Glendronach has become rather expensive now.

The biggest price hikes are seen for older expressions like Balvenie 21, Glenfiddich 30 or Macallan 18. These prices cannot be explained by rising fuel or grain costs. It is supply and demand that are the driving forces behind them. The industry has been testing just how expensive they can make their old bottles while still selling them while keeping the entry level bottles at reasonable prices in order not to deter the casual drinker.

This trend is in full swing now, and only if the speculative bubble on the secondary market will burst or deflate – and I am convinced it will, just when is the question… –  we may see it easing up. As long as collectors or investors pay crazy prices at whisky auctions, the industry – logically – will continue to push the bar for the high end single malts.

{ 5 comments… read them below or add one }

Tim F November 5, 2012 at 5:05 pm

Fascinating article Oli – great work. Confirms what I was thinking, that a lot of entry-level whisky is cheaper in real terms than it was when I started – but the older stuff is much more expensive.

Reply

Oliver Klimek November 5, 2012 at 5:18 pm

I was just pointed to a small methodological error. The 2002 duty is already inflated in the expected price caclucation. Duty has increased by more than 25%, but it means the adjustment is a bit too high.

Reply

Ryan November 6, 2012 at 2:49 am

Oliver, great post and thanks for taking the time to put it together. Interesting that prices of entry-level bottles have remained more or less inflation-adjusted-constant. I don’t feel like it because where I live, single malt prices have all gone up by an average of about 10% (many are more than that) this past year… and that’s a lot when you barely felt comfortable paying $50 for a bottle, then all of a sudden it’s $57 and there are few bottles under $50 that are worth the money. Every couple months there are another round of price increases. I can’t say how steady the prices were in the years preceding, however, so maybe they’re just catching up, but it seems like they’re racing ahead of inflation.

Reply

kallaskander November 6, 2012 at 11:07 am

Hi there,

Highland Park 18yo was at

48.95 € = 100.0% (baserate in 2007) in Germany.

That was so for a long time when 2007 the Higland Park 15yo was released at

44.95 € = 91.8%

that meant it was only 8.2% below the Highland Park 18yo in price.

The span had to be increased so the Highland Park 18yo rose to

54.95 € = 112.2%

Within 3 months of the release of the 15yo the 18yo was now 12.2% more expensive than before.

That was still not enough. So in late 2011 the Highland Park 18yo vanished from the German market.

When it was re-introduced in Spring 2012 the price had risen to

62.75 € = + 128.1%

That price was here to stay.

The Highland Park 15yo is no longer available. At least at the moment. It might reappear in the priceslot of the 18yo of 2011 – or it might not.

Greetings
kallaskander

Reply

lapin_rouge April 23, 2014 at 11:02 pm

OK – nice article but how about the following:

The emerging markets in China and the far East have real money – naturally developing a taste for Fine Whiskey, and there are a LOT of consumers out there. The canny Scots thinking goes: Demand up, price up.

So folks: price hike will continue for next 20 years or so until the new super distilleries by Diego etc. get up to match.

Buy a few bottles now – they will only cost more if you wait.

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