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Inside the Secret World of High-Net-Worth Scotch Drinkers

Recently, I tasted six newly released whiskies. While this wasn’t an unusual occurrence, the difference was that their accumulated age was 312 years: a Glendronach 27-year-old, a Caol Ila 50-year-old, a Glenlivet 64-year-old, a Glen Grant 70-year-old, and two Macallans, one a stripling at a mere 29 years old and the other having lain in cask for 72 years—the oldest official bottling ever from the distillery. The cost of this set would have been $112,000. To be fair, the 72-year-old Macallan alone goes for $60,000.

They were truly remarkable. And so they should be you might respond. It’s hard, I realized, for a humble hack like myself to try and enter the mindset of the person who’ll actual buy these rarities. Both the whisky and the purchaser exist in a different realm than the one I inhabit. One where the notion of value takes on a new meaning, if it even exists.

At the risk of appearing curmudgeonly, it wasn’t always like this. I’m backed up on this point by Stephen Rankin, director of prestige at storied independent bottler, Gordon & MacPhail (which bottled the Caol Ila, the Glen Grant and the Glenlivet I tasted).

“We’ve played in single malt for a long time, and always thought long-term,” he said. “My grandfather was seen as unusual for filling distilleries’ spirit into his own casks, but the philosophy was to bring to market whiskies of superb quality.”

But, of course, the top-end bottlings didn’t carry five-figure price tags back then. “When my uncle David [Urquhart] retired after 40 years, we found a price list from when he started. Blends were £1.50 to £2.20, single malts were £4, and there was a 35-year-old 1937 Macallan for £4.54.”

“The market has changed,” he continues. “People are more affluent and education about whisky is greater. From the early 2000s people started seeing ‘single malt’ as a term meaning luxury and sophisticated. Today’s consumer is interested in context, provenance, and heritage. There’s a consequent desire for single malt.”

The elision of “single malt” and “luxury” has not only convinced brands to release ever older whiskies, but has created a new customer base of high-net-worth individuals [HNWI] and exclusive opportunities geared to them.

Macallan’s En Primeur campaign offers the chance to select a cask and fill it with spirit distilled from Macallan’s estate-grown barley. Rival Diageo’s Casks of Distinction program offers a select number of rare casks to a select number of clients. Most of the major brands operate similar programs, but this private client business is shrouded in secrecy. The buyers may have the money, but they don’t believe in conspicuous consumption.

“We’ve been releasing old whiskies for a long time,” says Kirsten Grant Meikle, U.S. commercial strategy director for William Grant & Sons. “I created the prestige team in the UK in 2014 when it became clear that the traditional channels, which included everyone from discount retailers to Harrods was not the way forward. It didn’t make sense that the person that was selling you Grant’s was also offering Glenfiddich 50-Year-Old.”

The development of the prestige market rankles the sensibilities of many drinkers. After all, the price of a bottle of the Macallan 72-year-old Lalique could, according to CNBC, see you living comfortably for a year in Atlanta, Louisville (ideal for the whiskey lover), or even Cleveland. You could buy a house in Akron or Wichita Falls, or splurge on a second home (in need of some work) in France, Italy, or Spain. I suspect, though, that isn’t the mindset of the people who buy these pricy bottles.

But this irritation goes deeper and is often rooted in the belief that single malt is increasingly becoming unattainable. This opinion ignores the fact that most single malt Scotch is still underpriced considering how long it ages, but still, I understand that this focus on prestige can be painful to witness. The love affair has ended and your former partner has shacked up with a billionaire.

So how are those astronomical prices set after all? “We consider a wide range of variables,” says Macallan’s marketing director Glen Gribbon. “Scarcity of the stock is one consideration. Our recent 52-year-old was 250 bottles from a single cask. Once these are gone, we have no more. The pricing will reflect this.”

For Grant Meikle, it came down to rarity and scarcity. “There isn’t a lot of the older whiskies around,” she says. “We have a very good inventory, but it’s not infinite. It needs careful custodianship to ensure continuing supply.”

The rapid development of prestige Scotch and often dramatic price hikes for more common 18- to 20-year-old single malts prompts the question, has whisky taken leave of its senses, or come to them?

“Heads can get turned by high-profile auctions and events,” says Gribbon. “In reality, there’s been strong growth in prestige Scotch for many years. What’s encouraging is this growth is fueled as much by consumption, as collecting and gifting.”

“Coming to senses?,” asks Rankin, “Absolutely!”

But what are these high-net-worth drinkers doing with these rare malts? “Over the last five years, we’ve seen many more ‘investors’ enter the market,” observes Grant Meikle. “We’re often approached by ‘syndicates’ and investor groups who are buying solely to make money. My personal feeling is, this is effectively commodity trading. I’m really not keen to sell our rare and precious liquid for this kind of transactional purpose. A lot of time and effort from committed people goes into these products. I’d prefer to sell them to people who loved the product, and actually might drink it one day. This is what it is for!”

The “it’s for drinking” line is oft-repeated, but the secondary market is booming. Last year, a bottle of Macallan 1926 sold for £1 million ($1.28 million), one of a number of record-breaking auction prices that year. In 2001, the same vintage Macallan sold for just $21,874. And it was only in 2016, that the $100,000 mark was broached by a Yamazaki 50-year-old.

“The secondary market is an important route to HNWI consumers,” says Gribbon. “I think the industry has a huge amount to learn from [auction houses’] success in other luxury categories, particularly wine. My sense is there is still a long way to go in terms of growth. Managed in the right way, prestige Scotch can rightly take its place beside wine.”

Macallan, in his view, is now no longer just a single malt (often in a lovely bottle) but part of a “prestige whisky experience.”

“There are two important customer groups,” he adds. “HNWIs and a group seeking high-quality products that deliver a unique experience. They both want prestige whisky experiences, which they can share and recommend. Our new distillery, visitor experience and the wider Macallan Estate is the perfect embodiment of this. If we focus only on the actual product and not the broader experience, I think the opportunity within prestige Scotch will be limited.”

Today, a conversation with a Macallan executive is as likely to include a discussion on what Ferrari is doing as the strategies of rival whisky firms. In their eyes, the competitive set has shifted.

But don’t count out drinkers yet. “There are a lot of people purchasing high-end whisky because they’re fanatical about it,” says Grant Meikle. “The common misconception is that people who buy expensive whisky are HNWIs (a term I dislike). It’s simply not the case. Many people who spend higher than average on our products are enthusiasts and collectors who may save up to buy something they have their eye on.”

Has the allure and promises of prestige blinded distillers to the reality that single malt brands are built on the back of considerably younger (and significantly lower-priced) offerings?

As a recent profile of Victoria Beckham in The Guardian pointed out, “successful luxury businesses are not built on the market for silk day dresses at £1,500 a pop…but on the halo effect that catwalk glamour has on sales of underwear (see Calvin Klein) or lipsticks (Chanel), wallets (Paul Smith) and stationery (Kate Spade).” That, of course, makes 12-year-old Scotch the Calvin Klein briefs of the liquor industry.

“Luxury Scotch creates a powerful halo,” says Gribbon. “This has a greater value to the brand overall than the commercial value and underpins some of the most important elements of brand image, in particular quality.”

Today, prestige is taken to mean quality. Its original meaning, though, was illusion, a term which poked fun at those deceived by glamour’s glitter. Prestige was no more than a conjuring trick. As Scotch’s boundaries shift it would do well to remember that.