The Scotch whisky industry is very special in a way. Scotch whisky is a highly regulated product, the current regulations have 41 sections consisting of several thousand words. There is a rule for just about about everything, from ingredients over maturation to labelling. And the Scotch Whisky Association watches very carefully if the regulations are met by the producers.
The number of distilleries is – compared to other spirits – fairly moderate, even if a number of about hundred may look big on first glance. But still there is a huge amount of Scotch whisky on the market whose origins are virtually unknown: Cheap bottom-shelf blends, hundreds of them, all with fancifully meaningless names like Queen Margot, McIntyre, Mac Percy and so on.
Of course it is the nature of blended whisky – apart from very few exceptions – that the composition is kept a secret. Just like Coca Cola, whisky blenders have no intention to share their recipes, Johnnie Walker and Chvias Regal keep them locked in a vault as well. The recipes are the secret of their success, so it is understandable that they don’t want others to know them.
But unlike Coca Cola, major Scotch whisky producers like Diageo or Pernod Ricard are not completely secretive about their blends. Many of them have a ‘home distillery’, a malt that is a prominent constituent of the blend. Examples are Cardhu for Johnnie Walker Red, Strathisla for Chivas Regal or Glenturret for The Famous Grouse. And evidently blends from big conglomerates mainly rely on ‘in house’ ingredients for their blends. After all this bundling of forces is the very reason why the conglomerates exist.
Unfortunately the Scotch whisky industry is a bit more complicated than that. It always has been. To “make” and sell Scotch whisky, you do not need to own a single distillery. You can also buy whisky from other distilleries and sell them under your own brand. Actually this is how the industrialization of whisky started in the frst place. In the mid-19th century grocers and businessmen like John Walker or John Dewar started to blend whisky by buying from distilleries and creating their own brands.
This business philosophy is so deeply rooted in the industry that even today conglomerate-owned distilleries sell whisky to companies who own no distileries. But just why would they do that when they could sell their own whisky for higher prices directly to the consumers?
Welcome to the mysterious world of bulk whisky. The answer is easy. When a distillery sells their spirit right after it has accumulated in the spirits receiver, this means instant cash. No years of waiting until it can be bottled; and if your customer buys it by the tanker, no investments in expensive whisky casks are needed either.
It is this bulk whisky market that supplies the nameless producers of bottom shelf supermarket whisky. Nobody in the industry likes to talk about that ‘seedy’ part of the business. No wonder, because if you have your own expensive, glitzy and trendy single malt or blend brand, you will not be too keen to admit that your whisky may also prominently feature in that €6.59 bottle of rotgut in the supermarket around the corner.
But the distilleries don’t always sell to the producers directly. There is a number of ‘cask brokers’ and and bulk whisky dealers that specialise in whisky wholesale before the bottling stage. Very little is known to the public about their business. Discreetness rules in this part of the industry.
By the way, this bulk trade is also the source for many if not most of independent whisky bottlings that can be of the highest quality. But the bulk of the bulk whisky definitely goes into the cheap stuff, most of it being not much older than the legal minimum of three years.
For a little glimpse into this market, go to a business-to-business platform like alibaba.com and search for “bulk whisky”. (Please don’t search for “whisky” only or you may risk to become depressive). One supplier states:
“Scotch whisky in bulk : grain, blended and pure malt packed in drums, IBC or ISO tanks.
We supply bulk Scotch whisky directly from Scotland as pure grain, blended or malt.
Available packaging is 23,000 litre tankcontainers, 200 litre drums or 1,000 litre IBCs. Minimum order is one 20ft. container.”
Wow, you can even buy blended whisky in a 23,000 litre container. Probably this was not blended by Jim Beveridge, Richard Paterson or Rachel Barrie. Nobody will tell us, but rather likely this blend consists of a very high percentage of three year old grain whisky and a very low percentage of malt whisky from a single distillery, possible belonging to the same conglomerate. And it could well be that not even the bottler knows where the whisky was distilled.
The bulk whisky trade also sheds some more light onto the question why cheap whisky is so cheap. You can buy a tanker load from a distillery. Distilleries may sell their old worn-out casks deemed unfit for refurbishing for a very low price. Just rent some warehouse space and be patient for three long years.