1

4 MARKET REPORT 2018/2019

Ladies and Gentlemen, It is our great pleasure to present the fourth edition of whisky market report. 2018 was a special year. For the first time the barrier of one million pounds was exceeded at auction for a bottle of whisky. It was a limited edition of Macallan 1926 in a one of a kind bottle painted by an Irish artist, Michael Dillon.

One of the indexes tracking whisky price at auctions – Knight Frank Rare Whisky 100 index – achieved a growth of 40 per cent during the year, outperforming other alternative investments, such as rare coins, wine, works of art or watches.

Investors from Asia who use direct flights between and Beijing to invest in the most exclusive whisky on the market, have an undeniable influence on it.

A growing interest in Scotch leads to numerous investments. New Scotch distilleries are being opened (in the previous year, there were 10) and corporations dedicate increasingly greater funds not only to the production, but also to tourism. For instance, announced that this year it is going to allocate USD 240 million for the extension of tourist attractions connected with .

At the same time, we are dealing with an increased scale of frauds on the whisky market. Companies are conducting research on new technologies which would determine the age of the whisky in the bottle. Asian and American markets are chasing their elder colleague from and also record growths.

You can read about this and much more in this year’s edition of the report, which I strongly encourage you to read.

Sláinte Krzysztof Maruszewski Foto Olga Kharina

5 WHISKY MARKET REPORT 2018/2019

Table of contents

6 WHISKY MARKET REPORT 2018/2019

8 What is Scotch whisky

10 Map of Scotch distilleries

12 Types of whisky

20 Scotch whisky export in 2018 (SWA)

30 Millionaires’ Club – global whisky sale

32 American market

48 Japanese market

58 Investing in bottles

80 Investing in casks

86 Whisky festivals in the world and in Poland

88 Limited whisky editions – Diageo Special Releases

90 Whisky tourism

92 Counterfeits in the whisky market

98 Forecasts

7 WHISKY MARKET REPORT 2018/2019

What is Scotch whisky?

In the 1880s Ireland had 28 distilleries, while Scotland had more than 170.

8 WHISKY MARKET REPORT 2018/2019

At the end of the 15th century, whisky was mentioned for the first time by a friar from . In 1494, he purchased over a ton of malt, from which the golden beverage was supposed to be created. However, the beginnings of the whisky market date back to 1831, when its production on an industrial scale became possible. The sector was developing rapidly. Production breakdown took place in 1919, when prohibition began in the United States which influenced sharp decrease in sales. After 13 years, with the end of the prohibition, whisky started its second childhood. Nowadays, as illustrated by sales and export results, its popularity in the world is systematically growing.

9 WHISKY MARKET REPORT 2018/2019

ORKNEY 38 38 49 49 Kirkwall HIGHLAND Cape Wrath 57

HIGHLAND MALT John Thurso o'Groats

13 LEWIS 12. ABERFELDY John Dewar & Sons R Stornoway 13. ABHAINN DEARG Abhainn Dearg Distillery Wick 45 14. ARBIKIE Arbikie Distilling HARRIS Lochinver 15. ARDMORE Beam 16. ARDNAMURCHAN Adelphi Distillery 17. Isle of Arran Distillers 37 Brora 21 Ullapool 18. BALBLAIR Bonar Bridge 25 18 19. BEN NEVIS NORTH UIST 22 94 20. BLAIR ATHOL Diageo 52 Tain 33 85 93 SPEYSIDE 36 Invergordon 99 84 65 21. CLYNELISH Diageo 67 89 Torridon 31 22. DALMORE Whyte & Mackay Dingwall 47 60 82 42 Portree 46 Banff Fraserburgh 23. DALWHINNIE Diageo Forres 78 61 SOUTH 34 Nairn 100 76 97 96 Macduff 24. DEANSTON Distell International UIST 51 91 92 29 81 88 102 25. DORNOCH Dornoch Distillery Co. Kyleof Lochalsh 69 SKYE 72 86 64 103 107 30 26. EDRADOUR Signatory Vintage Ness Huntly h 80 90 c 58 59 Fort Augustus o 104 63 87 27. FETTERCAIRN Whyte & Mackay L 54 74 55 83 77 41 70 62 98 95 Oldmeldrum 28. GLENCADAM Angus Distillers plc SpeyAviemore 106 68 Mallaig 75 71 73 Inverurie 29. GLENDRONACH, THE Brown-Forman 105 66 15 Kingussie ABERDEEN 79 30. GLEN GARIOCH 19 101 31. GLENGLASSAUGH Brown-Forman 16 Ballater Fort William 23 Banchory Ben Nevis LochEricht 32. GLENGOYNE Ian Macleod Distillers 43 1343 m Stonehaven 48 33. GLENMORANGIE Glenmorangie Co. Tobermory 26 Glen Coe 27 34. GLEN ORD Diageo 53 Loch Rannoch Pitlochry 20 35. GLENTURRET Edrington 28 Aberfeldy MULL Montrose Blairgowrie 36. GLENWYVIS GlenWyvis Distillery Ltd Oban 12 37. HARRIS Isle of Harris Distillers Loch Tay 35 Arbroath 14 Carnoustie 38. HIGHLAND PARK Edrington 44 Loch Awe Perth Dundee 50 Crieff 39. ISLE OF JURA Whyte & Mackay Inveraray 56 121 istillery Co. Auchterarder 40. LOCH LOMOND Loch Lomond Group Callander 116 Dunblane Loch St Andrews 41. LONE WOLF BrewDog 5 Lomond Kinross 2 Lochgilphead Stirling 6 24 Glenrothes 120 42. MACDUFF John Dewar & Sons Helensburgh 7 JURA Falkirk 108 43. NCN’EAN Drimnin Distillery Company Greenock 115 39 Tarber Dumbarton Diageo 4 40 119 44. OBAN North 118 Berwick 45. PULTENEY Inver House Distillers 1 17 EDINBURGH 3 32 46. RAASAY R&B Distillers 8 111 47. ROYAL BRACKLA John Dewar & Sons 9 East Kilbride ISLAY Malt 117 48. ROYAL LOCHNAGAR Diageo 10 ARRAN Kilmarnock Campbeltown 114 Troon 49. SCAPA Chivas Brothers Biggar 1. ARDBEG Glenmorangie Co Ltd Prestwick Melrose Ayr 50. STRATHEARN Strathearn Distillery 2. ARDNAHOE Hunter Laing & Co. 12 LOWLAND 51. TALISKER Diageo 11 3. Beam Suntory 109 52. TEANINICH Diageo Hawick 4. BRUICHLADDICH Company Moffat 53. TOBERMORY Distell International 5. Burn Stewart Distillers plc 54. The Co. 6. CAOL ILA Diageo 113 55. TORABHAIG Mossburn Distillers 7. Co Ltd Dumfries 56. TULLIBARDINE Tullibardine Ltd 8. Diageo Stranraer Annan 57. WOLFBURN Aurora Castle Douglas 9. LAPHROAIG Beam Suntory Wigtown

110 112 10 ORKNEY

38 49 Kirkwall

Cape Wrath

John Thurso o'Groats LEWIS R Stornoway Wick

HARRIS Lochinver

Brora Ullapool Bonar Bridge NORTH UIST Tain

Invergordon RAPORT Z RYNKU WHISKY 2018/2019

99 Torridon 67 85 65 Dingwall 97 93 89 84 94 76 The world Portree 78 60 82 Banff Fraserburgh Forres Nairn Forres 96 61 SOUTH 92 86 81 Macduff 100 of Scotch UIST 69 107 58 95 87 88 INVERNESS 102 91 Kyleof Lochalsh 72 77 SKYE 79 64 70 103 whisky 90 104 73 80 HuntlyHuntly Ness 63 66 h 98 71 c 74 o 59 Fort Augustus L 62 LOWLAND MALT 83 68 108. ABERARGIE The Perth Distilling Company 75 106 105 Oldmeldrum SPEYSIDE 109. AILSA BAY Wm Grant & Sons SpeyAviemore 110. ANNANDALE Annandale Distillery Company Ltd Mallaig Inverurie 111. AUCHENTOSHAN Beam Suntory SPEYSIDE MALT 112. BLADNOCH Bladnoch Distillery Kingussie 113. BORDERS The Three Stills Company ABERDEEN 114. CLYDESIDE Morrison Glasgow Distillers 58. ABERLOUR Chivas Brothers 83. GLENLIVET, THE Chivas Brothers 115. DAFTMILL The Cuthbert Family 59. ALLT A’BHAINNE Chivas Brothers 84. GLENLOSSIE Diageo 116. EDEN MILL Eden Mill 60. AUCHROISK Diageo 85. GLEN MORAY Glen Turner Distillery 117. GLASGOW Glasgow Distillery Company 61. AULTMORE John Dewar & Sons 86. GLENROTHES Edrington Ballater 118. GLENKINCHIE Diageo 62. BALLINDALLOCH Ballindalloch Distillery 87. GLEN SPEY Diageo Banchory 119. INCHDAIRNIE John Fergus & Co. Fort William 63. BALMENACH Inver House Distillers 88. GLENTAUCHERS Chivas Brothers Ben Nevis LochEricht 120. KINGSBARNS The Kingsbarns Company of Distillers 64. BALVENIE, THE Wm Grant & Sons 89. INCHGOWER Diageo 1343 m 121. Lindores Distilling Co. 65. BENRIACH Brown-Forman 90. KININVIE Wm Grant & Sons 66. BENRINNES Diageo 91. KNOCKANDO Diageo Stonehaven 67. BENROMACH Gordon & MacPhail 92. KNOCKDHU Inver House Distillers CAMPBELTOWN MALT Tobermory 68. BRAEVAL Chivas Brothers Ltd 93. LINKWOOD Diageo Glen Coe 69. CARDHU Diageo 94. LONGMORN Chivas Brothers Ltd 9. GLENGYLE J & A Mitchell & Co Ltd 70. CRAGGANMORE Diageo 95. MACALLAN, THE Edrington 10. GLEN SCOTIA Loch Lomond Group Loch 71. CRAIGELLACHIE John Dewar & Sons 96. MANNOCHMORE Diageo 11. SPRINGBANK J & A Mitchell & Co Ltd 72. DAILUAINE Diageo 97. MILTONDUFF Chivas Brothers Rannoch Pitlochry 73. DALMUNACH Chivas Brothers 98. MORTLACH Diageo 74. DUFFTOWN Diageo 99. ROSEISLE Diageo Aberfeldy 75. GLENALLACHIE Chivas Brothers 100. SPEYBURN Inver House Distillers MULL 76. GLENBURGIE Chivas Brothers 101. SPEYSIDE MontroseSpeyside Distillers Co 122. CAMERONBRIDGE Diageo 77. GLENDULLAN DiageoBlairgowrie 102. STRATHISLA Chivas Brothers 123. GIRVAN Wm Grant & Sons Oban 78. GLEN ELGIN Diageo 103. Diageo 124. INVERGORDON Whyte & Mackay 79. GLENFARCLAS J & G Grant 104. TAMDHU Ian Macleod Distillers 125. LOCH LOMOND Loch Lomond Group 80 Wm Grant & Sons 105. TAMNAVULINArbroath Whyte & Mackay 126. NORTH BRITISH The Co. Loch Tay 81. GLEN GRANT Co 106. TOMINTOUL Angus Dundee Distillers 127. STARLAW Glen Turner Distillery 82. Chivas Brothers Carnoustie107. TORMORE Chivas Brothers 128. STRATHCLYDE Chivas Brothers Loch Awe Perth Dundee 11 Inveraray Crieff istillery Co. Auchterarder Callander Dunblane Loch St Andrews Lomond Kinross Lochgilphead Stirling Glenrothes Helensburgh JURA Falkirk Greenock Port Askaig Tarber Dumbarton North Berwick EDINBURGH GLASGOW Port Ellen

Brodick East Kilbride ARRAN Kilmarnock Campbeltown Troon Biggar Prestwick Melrose Ayr

Hawick Moffat

Dumfries

Stranraer Annan Castle Douglas Wigtown 12 WHISKY MARKET REPORT 2018/2019

Scotch whisky Royal Salute Examples of distilleries with division to regions Ballantine’s Isle of Jura Scapa PERNOD Deanston RICARD Ben Nevis

Talisker Arran ISLANDS Black and White Talisker Pulteney

HIGHLAND Highland Park J&B BLENDED

Loch Lomond Glenfarclas Mortlach SINGLE Glenfiddich Glengoyne Oban MALT SPEYSIDE DIAGEO

The Glenlivet EDRINGTON Ardbeg Bruichladdich

Longrow The Macallan Campbeltown Bowmore Kilchoman Famous Grouse Cutty Sark ISLAY Glenkinchie Cameronbridge Girvan Ardnahoe Caol Ila LOWLAND CAMPBELTOWN Bunnahabhain Laphroaig Bladnoch Lagavulin GRAIN

Auchentoshan Glen Scotia Springbank Dalmuir Invergordon

13 RAPORT Z RYNKU WHISKY 2018/2019

What is whisky made of?

Grain is the basic ingredient of whisky. Most often barley is used; however, wheat, rye and corn are also used. In order for whisky to be suitable for sale, it must mature at least 3 years in casks. The process of whisky creation is divided into the following stages: malting, mashing, fermentation. distilla- tion. maturation, blending, bottling. Taking care of each stage provides better flavour and improves the quality of the spirit.

14 WHISKY MARKET REPORT 2018/2019

STEEPING MALTING MALT HOUSE

BARLEY CULTIVATION AND STORAGE PREPARATION OF MALT

WASHBACK MASH TUN WATER HEATING MALT CONTAINER GRINDING

FIRST DISTILLATION SECOND DISTILLATION BLENDING POURING TO CASKS MATURATION

15 WHISKY MARKET REPORT 2018/2019

As a general rule, in countries such as Scotland, Ireland or Japan, casks that have been already filled are used for maturation of whisky. If they bear the term “first fill”, this means that the casks have not been used for whisky maturation so far, which is not equivalent to the fact that they were not used, for instance, for maturation of other alcohols such as sherry or port. First fill casks work more intensively with alcohol than the casks which are filled for the second or subsequent time (refill) in which case with each subsequent fill, there is a decrease of the influence of oak on the flavour of the spirit, and finally, on the flavour of the whisky.

16 WHISKY MARKET REPORT 2018/2019

17 Types of whisky

Single Malt

Single Malt is a whisky made at just one single distillery and is made using malted barley, yeast and water. It may be made up of several different casks from that one distillery. It may be made anywhere in the world but if it is not from Scotland it cannot be called Scotch . Within the category you also have ‘single cask single malt whisky’, which is whisky from just one cask, and ‘cask strength single malt whisky’ which is bottled at the strength when it comes out of the cask, normal- ly much higher than a normal bottling strength.

18 Blended whisky Grain whisky

Blended whisky is the most popular type of whisky on the Grain whisky is produced from a mix of various grains such market, and it dominates Scotch whisky sales. It is a mixture as wheat, rye and even corn. In Scotland it is used mainly for of single malt from a number of distilleries mixed blended whisky and is less frequently bottled as pure grain with grain whisky - whisky produced from a column still using whisky. other grains to barley. Blended malt whisky - sometimes called ‘pure malt’ though this term is outlawed by the Scotch Whisky Association - is a mixture of malt whiskies from different distilleries, but it does not contain grain whisky.

19 Another record year

20 WHISKY MARKET REPORT 2018/2019

In 2018, export of£4,700.000.000 Scotch whisky reached a record level both Export to , Singapore, the (UAE) and in terms of size as well as value. Referring to data from HM Mexico have significantly increased. More Scotch whisky has Revenue and Customs (HMRC), the Scotch Whisky Association also been sent to Taiwan, Latvia and Brazil. Latvia is a leading stated that the value of export of Scotch whisky in the supplier of Scotch whisky to Russia. previous year reached the level of £4.7 billion, which constitutes Karen Petts, the president of the Scotch Whisky Association a growth by 7.8 per cent in comparison to 2017. (SWA), while discussing the results of the previous year, stated Meanwhile, the equivalent of 1.28 billion of 0.7 litre bottles of that 2018 was another year of strong growth in export of Scotch Scotch whisky have been sent abroad, which means a growth whisky. At the same time, she repeated the call to the British by 3.6 % in comparison to the previous year. Government to avoid Brexit by Great Britain without a deal, In 2018, the largest importer of Scotch whisky was the United because the SWA does not believe the whisky sector can take States. For the first time, the value of export to this country a steady increase for granted. The producers of Scotch whisky exceeded a billion pounds. Yet, the countries of the European operate in a competitive global market. Therefore an appropriate Union still remain the largest recipient. Thirty per cent value business environment in Scotland and entire Great Britain is of and 36 per cent volume of export of Scotch whisky fall to the key importance for the success of Scotch whisky. European Union. Among the EU countries, France has been holding a leading position for many years.

21 RAPORT Z RYNKU WHISKY 2018/2019

Export of Scotch whisky in numbers

2017 175 £4,332,000,000 countries 2018 Scotch whisky is exported to 175 countries across £4,700,000,000 the entire world which amounts to almost £4.7 billion The value of Scotch whisky exports in 2018 amounted almost to 4.7 billion pounds, that is 338 million pounds more in comparison to 2017

7 021 0 0 0 0 0 0

In terms of quantity, the equivalent of approximately 1.27 billion 70cl bottles was sent abroad in 2018, that is

3.6 % more than in 2017

The Scotch whisky sector employs directly 10,000 people in Scotland, including 7000 in rural In 2018, 41 bottles of Scotch whisky were sent areas. Further 30,000 people are employed every second indirectly in Great Britain.

22 WHISKY MARKET REPORT 2018/2019

10 largest importers of Scotch whisky in terms of value of export counted in million pounds

Country 2018 2017 change in %

1 United States 1039.5 911.7 +12.8% 2 France 442.1 443.6 +2.0% 3 Singapur 319.9 297.7 +10% 4 Germany 173.9 183.7 -5.3% 5 Spain 170.4 174.9 -2.6% 6 Taiwan 168.4 160.3 +5.0% 7 United Arab Emirates 146.9 129.8 +13.2% 8 India 138.8 103.5 +34.1% 9 Mexico 131.5 111.1 +18.5% 10 Latvia 129.8 120.4 +7.9%

10 largest importers of Scotch whisky in terms of amount counted in millions of bottles of 700 ml

Country 2018 2017 change in %

1 France 187.8 178.4 +5.3 % 2 United States 136.8 127.5 +7.4 % 3 India 112.6 89.5 +25.9% 4 Mexico 59.8 53.4 +11.9% 5 Spain 55.0 60.8 -9.5% 6 Japan 50.5 33.8 +49.5% 7 Germany 45.6 55.8 -18.3% 8 Singapur 44.5 46.6 -4.5% 9 South 41.8 52.0 -19.5% 10 Brazil 38.9 36.2 +7.5%

23 WHISKY MARKET REPORT 2018/2019

5.0%

4.0%

3.0% +4.0%

2.0% +2.6% 1.0%

Scotch +1.6% 0.0%

-1.0% whisky -5.2% -3.0% -2.8% -2.0%

-3.0% export -4.0%

-5.0%

-6.0%

2012 2013 2014 2015 2016 2017

Since 2011 Scotch whisky exports have not been consistent. In 2017 the exports in terms of quantity was still 0.7 per cent below the level of 2013 and 3.1 per cent below the figure for 2011.

24 WHISKY MARKET REPORT 2018/2019

Meanwhile, in terms of quality, the result was 3.3 per cent Three other factors have significantly influenced money prof- above the total for 2011. In this way, the price of a single bottle its on the whisky export market: inflation, export to the United of exported Scotch whisky has increased enough to compen- States and sales of single malt. sate quantitative drops of the sold whisky.

Scotch whisky export in terms of quantity and quality and price per litre

500.00%

400.00%

300.00%

200.00%

100.00%

0.0%

-100.00%

1981 1983 1987 1991 1992 1993 1997 2011 1980 1982 1984 1985 1986 1988 1989 1990 1994 1995 1996 1998 1999 200020012002 2003 200420052006200720082009 2010 2012 2013 2014 2015 2016 2017

Export quantitative growth Export qualitative growth GBP growth per litre

25 WHISKY MARKET REPORT 2018/2019

Growth of export in correlation to inflation

60.00%

50.00%

40.00%

30.00%

20.00%

10.00%

0.0%

-10.00%

-20.00% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Value growth since 2007 GBP/litre growth since 2007 GBP/litre growth in correlation to inflation (2007) Value growth in correlation to inflation (2007)

26 WHISKY MARKET REPORT 2018/2019

Growth of export of Scotch whisky to the USA

160.00%

140.00%

120.00%

100.00%

80.00%

60.00%

40.00%

20.00%

0.0%

-20.00%

-40.00% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Export to the USA, quantitative growth Export to the USA, value growth Export to the USA, GBP/litre growth

While analysing tables and considering inflation data, a factual The United States is the largest export market in terms of sales growth took place, although smaller than could be value, and not quantity. This ratio results from the fact that the expected. One of the growth driving factors is the best valued United States is the largest recipient of single malt whisky in export market of the Scotch whisky – the USA. the world, and the added value of single malts over blended Between 2008-2017, the value of Scotch export to the USA malts has helped raise the overall value of the sector. increased almost by 150 per cent, while the export market outside the USA recorded growth by 28 per cent.

27 WHISKY MARKET REPORT 2018/2019

Single malt and blended whisky export since 2008

100.00%

80.00%

60.00%

40.00%

20.00%

0.0%

-20.00% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Single malt whisky export +/- since 2008 Blended whisky export +/- since 2008

28 WHISKY MARKET REPORT 2018/2019

Single malt and blended whisky export since 2008

140.00%

120.00%

100.00%

80.00%

60.00%

40.00%

20.00%

0.0%

-20.00% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Single malt whisky export +/- since 2008 Blended whisky export +/- since 2008

29 WHISKY MARKET REPORT 2018/2019

SCOTLAND JAPAN

MYANMAR USA IRELAND INDIA

CANADA

Millionaire’s Club Global whisky sales

Millionaire’s Club is a ranking of the best-selling strong alcohols in the world prepared by Drinks International magazine. It reflects sales by quantity, not by value. Therefore, it includes numerous brands unknown in Europe.

30 WHISKY MARKET REPORT 2018/2019

The best-selling whisky in terms of amount of 9-litre cases

BRAND COUNTRY OWNER SALES

Officer’s Choice India Allied Blenders and Distillers 31,510.1

McDowell’s India Diageo 26,338.2

Imperial Blue India 18,847.7

Royal Stag Whisky India Pernod Ricard 18,700

Johnnie Walker Scotand Diageo 18,300

Jack Daniel’s Whiskey USA Brown Forman Corporation 12,900 The data in the table covers 2017. Original Choice India John Distilleries Pvt Ltd 10,300 As per 2017 report, the market remained Hayward’s Fine India Diageo 8,900 under strong influence of Indian brands. In Jim Beam USA Beam Suntory 8,900 the category of the fastest growing spirits

Old Tavern India Diageo 7,400 saleswise, the first four brands come from India. An Indian brand Officer’s Choice 8 PM Whisky India 7,000 remained an unquestionable leader with Canada Diageo 7,000 the sales of almost 31.5 million of 9-litre Grand Royal Myanmar Whisky Myanmar Thai Beverage 7,000 bottles. McDowell’s, belonging to Diageo, Ballantine’s Scotland Pernod Ricard 6,900 was not far behind, achieving the sales

Jameson’s Ireland Pernod Ricard 6,900 of more than 26 million bottles. The third and fourth places belong to Pernod Ricard Blender’s Pride India Pernod Ricard 6,400 and Imperial Blue and Royal Stag brands. India Diageo 6,000

Fireball Cinnamon Shot Canada Sazerac 4,900

Royal Challenge India Diageo 4,500

Grant’s Scotland William Grant & Sons 4,500

Director’s Special India Diageo 4,200

Chivas Regal Scotland Pernod Ricard 4,200

Bangalore Malt Whisky India John Distilleries Pvt Ltd 3,500

Suntory Whisky Japan Beam Suntory 3,400

J&B Scotand Diageo 3,400

31 American market WHISKY MARKET REPORT 2018/2019Z

It seems that for the producers of American whiskey the year 2019 will go down in history as boom and further records will be beaten. Revenues in the whiskey sector in the USA amount to USD 10,706 m. In 2019, the market is supposed to grow by 2.4 per cent per year (CAGR 2019-2023). $10,706 m In global comparison, the majority of revenues is generated in India (USD 53,229 m in 2019). Anticipated average whiskey consumption per citizen remains on a stable level of 1.5 litre in 2019. In the past year in the USA, 37 million of 9-litre packages of whiskey were produced, of which 23 million comprised Jack Daniels and Jim Beam. According to American organisation, the Distilled Spirits Council, Poland has recently joined the group of the most dynamic whisky importers in Europe, after England, Germany, France and Italy. Increasing duties was of great importance for American whisky. On 22 June, the Euro- pean Union introduced duty of 25% of the value of products on American whisky import. Brown Forman was the first of the manufacturers to react, announcing an increase in prices of its brands in Europe by 10 per cent. These are mainly: Jack Daniels as well as Woodford Reserve and Old Forester. Nevertheless, the sector notes continuous increase of sales and investment. Recently, Beam Suntory company announced that it is going to allocate $101.7 m for expansion of two Jim Beam distilleries – establishments in Clermont and Boston.

33 WHISKY MARKET REPORT 2018/2019

American Revenues in whisky sector (in USD m) market 12,500 11 722

10,000 11 511 11 301 11 063 10 706 10,314 9,897 9,539

7,500 9,137 8,991 8,798 8,512 8,151 7,637

5,000

2,500

0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Sales (in m litres)

600

500 495,1 491,9 498,3 495,2 485,6 400 477,7 468,1 463,8 457,4 465,0 462,4 460,0 458,6 453,9

300

200

100

0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

34 WHISKY MARKET REPORT 2018/2019

Comparison of markets in the scope of the sales volume

INDIA FRANCE $ 53,229 m USA $ 2,150 m $ 10,706 m BRAZIL THAILAND $ 4,891 m $ 5,756 m

35 WHISKY MARKET REPORT 2018/2019

American market Scotch whisky in the USA

Average price of a whisky bottle in the USA by age (in USD)

2,500.00

2 136.63

2,000.00

1,500.00

1,000.00

676.38

500.00

235.93 160.09 70.96 57.82 61.19 86.29 50.00 NAS 8-10 11-13 14-16 17-19 20-24 25-29 30-40 years years years years years years years

36 WHISKY MARKET REPORT 2018/2019

Average price by age category, including years

NAS 8-10 11-13 14-16 17-19 20-24 25-29 30-40 years years years years years years years

2,500.00

2,000.00

1,500.00

1,000.00

500.00

50.00 2007 2011 2013 2016 2017 2019

37 WHISKY MARKET REPORT 2018/2019

American market Prices of Scotch whisky in the USA

No Age Statement (NAS) category enjoys the greatest popularity in the USA. The main reason is their low price.

Owner Distillery Product JAN JAN JAN JAN JAN JAN 2016-2019 Total Notes 2007 2011 2013 2016 2017 2019 price change price price price price price price change in %

1 Bacardi Aberfeldy 12 year old $41 $41 $41 $40 $41 $42 5,00% 2,44%

2 Bacardi Aberfeldy 21 year old $158 $159 $164 $158 $163 $164 3,80% 3,80%

3 Pernod Ricard Aberlour 12 year old $57 $45 $47 $52 $54 $54 3,85% -5,26% Double Cask

4 Pernod Ricard Aberlour 12 year old $60 $67 $71 $67 0,00% 11,67% Non chill-filtered

5 Pernod Ricard Aberlour 16 year old $57 $62 $66 $73 $78 $86 17,81% 50,88%

6 Pernod Ricard Aberlour 18 year old $95 $93 $98 $107 $140 42,86% 47,37%

7 Pernod Ricard Aberlour NAS $61 $65 $71 $81 $88 $93 14,81% 52,46% A’bunadh

8 LVMH Ardbeg 10 year old $45 $54 $54 $55 $55 $54 -1,82% 20,00%

9 LVMH Ardbeg NAS $87 $83 $76 $78 $82 $81 3,85% -6,90% Uigeadail

10 LVMH Ardbeg NAS $85 $84 $87 $92 $92 5,75% 8,24% Corryvreckan

11 Suntory Ardmore NAS $48 $47 $46 $48 $42 -8,70% -12,50% Traditional Cask

12 Arran Distillers Arran 10 year old $47 $48 $46 $49 $51 $52 6,12% 10,64%

13 Arran Distillers Arran 12 year old $65 $68 $70 7,69% Cask Strength

14 Arran Distillers Arran 14 year old $80 $70 $73 $74 $78 6,85% -2,50%

15 Suntory Auchentoshan 12 year old $36 $46 $46 $49 $49 $49 0,00% 36,11%

16 Suntory Auchentoshan 18 year old $102 $117 $124 $128 $131 5,65% 28,43%

17 Suntory Auchentoshan 21 year old $118 $138 $164 $181 $184 $200 10,50% 69,49%

18 Suntory Auchentoshan NAS $53 $60 $65 $68 $71 $69 1,47% 30,19% Three Wood

19 Suntory Auchentoshan NAS $32 $33 $36 $34 6,25% Classic

20 Signatory 10 year old $78 $83 $78 0,00% 0,00%

21 William Grant Balvenie 12 year old $45 $48 $54 $58 $60 $59 1,72% 31,11% Doublewood

38 WHISKY MARKET REPORT 2018/2019

Owner Distillery Product JAN JAN JAN JAN JAN JAN 2016-2019 Total Notes 2007 2011 2013 2016 2017 2019 price change price price price price price price change in %

22 William Grant Balvenie 12 year old $78 $80 $77 -1,28% -1,28% Single Barrel

23 William Grant Balvenie 14 year old $60 $63 $73 $74 $74 1,37% 23,33% Caribbean cask

24 William Grant Balvenie 15 year old $59 $65 $77 $107 $115 $119 11,21% 94,92% Single Barrel

25 William Grant Balvenie 17 year old $134 $149 $151 $151 1,34% 12,69% Doublewood

26 William Grant Balvenie 21 year old $130 $165 $188 $221 $227 $229 3,62% 76,15% Portwood

27 William Grant Balvenie 25 year old $616 $621 $616 0,00% 0,00%

28 William Grant Balvenie 30 year old $688 $739 $861 $919 $969 12,54% 40,84%

29 William Grant Balvenie 40 year old $4,531 $4,557 $4,851 7,06% 7,06%

30 Brown Forman BenRiach 10 year old $57 $57 $55 $56 $60 $64 14,29% 12,28% Curiositas

31 Brown Forman BenRiach 10 year old $60 $54 $59 -1,67% -1,67%

32 Brown Forman BenRiach 12 year old $57 $51 $49 $52 $55 -3,51%

34 Brown Forman BenRiach 15 year old $80 $82 $89 $90 12,50% PX Finish

35 Brown Forman BenRiach 15 year old $83 $81 $81 $82 -1,20% Madeira Finish

36 Brown Forman BenRiach 15 year old $84 $82 $87 $95 13,10% Rum Finish

37 Brown Forman BenRiach 15 year old $81 $81 $84 $84 3,70% Port Finish

38 Brown Forman BenRiach 16 year old $81 $76 $77 $80 $82 1,23%

39 Brown Forman BenRiach 20 year old $118 $121 $114 $124 $133 $187 50,81% 58,47% scarce

40 Brown Forman BenRiach NAS $30 $32 $38 $38 $41 $41 7,89% 36,67% Heart of Speyside, scarce

41 G&M Benromach 10 year old $52 $52 $58 $60 $56 -3,45% 7,69%

42 G&M Benromach NAS $73 $73 $73 $73 $72 -1,37% -1,37% Organic

43 G&M Benromach NAS $72 $70 $68 $72 $72 5,88% 0,00% Peat Smoke

44 G&M Benromach NAS $37 $37 $35 $41 $43 16,22% Traditional

45 Suntory Bowmore 10 year old $98 $99 $98 0,00% 0,00% Dorus Mor

46 Suntory Bowmore 12 year old $39 $46 $47 $50 $51 $51 2,00% 30,77%

47 Suntory Bowmore 15 year old $49 $67 $71 $71 $77 $76 7,04% 55,10%

48 Suntory Bowmore 18 year old $97 $95 $106 $130 $131 $132 1,54% 36,08%

49 Suntory Bowmore 25 year old $193 $275 $303 $450 $451 $457 1,56% 136,79%

39 WHISKY MARKET REPORT 2018/2019

Owner Distillery Product JAN JAN JAN JAN JAN JAN 2016-2019 Total Notes 2007 2011 2013 2016 2017 2019 price change price price price price price price change in %

50 Suntory Bowmore NAS $30 $32 $31 $35 16.67% Legend

51 Suntory Bowmore NAS $41 $41 $41 0.00% 0.00% Small Batch

52 Remy Cointreau Bruichladdich NAS $58 $57 $57 $56 -1.75% -3.45% Classic

53 Remy Cointreau Bruichladdich NAS $64 $65 $67 4.69% 4.69% Islay Barley

54 Distell Bunnahabhain 12 year old $45 $48 $51 $55 $57 $58 5.45% 28.89% version change

55 Distell Bunnahabhain 18 year old $87 $99 $101 $121 $122 $128 5.79% 47.13% version change

56 Distell Bunnahabhain 25 year old $246 $308 $318 $388 $615 $845 117.78% 243.50%

57 Distell Bunnahabhain NAS $75 $77 $76 1.33% 1.33% Toiteach

58 Diageo Caol Ila 12 year old $49 $56 $60 $65 $67 $68 4.62% 38.78%

59 Diageo Caol Ila 12 year old $80 $79 $95 $94 17.50% Distillers Edition

60 Diageo Cardhu 12 year old $51 $45 $46 $49 $50 $51 4.08% 0.00%

61 Diageo Clynelish 14 year old $45 $52 $55 $64 $63 $65 1.56% 44.44%

62 Bacardi Craigellachie 13 year old $55 $55 $55 0.00% 0.00%

63 Diageo Cragganmore 12 year old $45 $49 $54 $59 $61 $61 3.39% 35.56%

64 Diageo Cragganmore 12 year old $69 $68 $76 $80 $79 $81 1.25% 17.39% DistillersEdition, scarce

65 Emperador Dalmore 12 year old $32 $43 $49 $56 $60 $65 16.07% 103.13%

66 Emperador Dalmore 15 year old $78 $81 $93 $104 $118 26.88% 51.28%

67 Emperador Dalmore 18 year old $146 $144 $172 $183 $229 33.14% 56.85%

68 Emperador Dalmore NAS $208 $215 $234 $250 $269 14.96% 29.33% King Alexander III

69 Emperador Dalmore NAS $126 $144 $152 20.63% 20.63% Cigar Malt

70 Diageo Dalwhinnie 15 year old $49 $54 $58 $65 $65 $65 0.00% 32.65%

71 Diageo Dalwhinnie 15 year old $73 $72 $76 $78 $81 $81 3.85% 10.96% Distillers Edition

72 Distell Deanston 12 year old $32 $45 $51 $55 $56 $56 1.82% 75.00% version change

73 Distell Deanston 30 year old $240 $266 $280 $284 $295 22.92%

74 Distell Deanston NAS $32 $33 $33 $35 6.06% 9.38% Virgin oak

75 Signatory Edradour 10 year old $51 $57 $55 $58 $60 $61 5.17% 19.61%

76 Suntory Glen Garioch NAS $45 $43 $47 $48 $49 4.26% 8.89% 0.8 Founder’s Reserve

40 WHISKY MARKET REPORT 2018/2019

Owner Distillery Product JAN JAN JAN JAN JAN JAN 2016-2019 Total Notes 2007 2011 2013 2016 2017 2019 price change price price price price price price change in %

77 Suntory Glen Garioch 12 year old $56 $57 $59 $59 $61 3.39% 8.93% 0.8

78 Campari Glen Grant 10 year old $45 $43 $41 $44 $49 19.51% 8.89% 0.8

79 Campari Glen Grant NAS $32 $34 $35 $35 2.94% 9.38% Major’s Reserve, scarce

80 Martiniquaise Glen Moray 10 year old $36 $37 $38 $31 -16.22% -13.89% Chardonnay Cask, scarce

81 Martiniquaise Glen Moray 12 year old $32 $33 $33 $36 $35 $37 2.78% 15.63% 0.7

82 Martiniquaise Glen Moray 16 year old $51 $70 $55 $53 $56 $58 9.43% 13.73% scarce

83 Martiniquaise Glen Moray NAS $27 $26 $26 $24 -7.69% -11.11% Classic

84 Angus Dundee Glencadam 10 year old $43 $44 $45 $44 $54 20.00% 25.58%

85 Angus Dundee Glencadam 15 year old $60 $75 $73 $83 $79 $86 3.61% 43.33%

86 Angus Dundee Glencadam 21 year old $199 $207 $216 8.54% 8.54%

87 Brown Forman GlenDronach 12 year old $47 $51 $52 $55 $62 $64 16.36% 36.17%

88 Brown Forman GlenDronach 15 year old $83 $84 $93 $106 $106 13.98% 27.71% new version in 2018

89 Brown Forman GlenDronach 18 year old $119 $122 $139 $156 $170 22.30% 42.86%

90 Brown Forman GlenDronach 21 year old $142 $173 $195 $247 42.77% 73.94%

91 Brown Forman GlenDronach NAS $101 $106 $111 9.90% 9.90% Cask Strength

92 Diageo Glendullan 12 year old $45 $36 $35 -22.22% -22.22% Singleton brand

93 J&G Grant Glenfarclas 10 year old $37 $43 $44 $46 $45 $47 2.17% 27.03%

94 J&G Grant Glenfarclas 12 year old $43 $49 $52 $53 $55 $55 3.77% 27.91%

95 J&G Grant Glenfarclas 17 year old $83 $94 $95 $104 $104 $104 0.00% 25.30%

96 J&G Grant Glenfarclas 21 year old $100 $118 $119 $133 $137 $137 3.01% 37.00%

97 J&G Grant Glenfarclas 25 year old $126 $149 $152 $166 $166 $170 2.41% 34.92%

98 J&G Grant Glenfarclas 40 year old $463 $474 $662 $952 $1,006 51.96% 117.28%

99 J&G Grant Glenfarclas NAS $73 $87 $87 $90 $93 $92 2.22% 26.03% 105

100 William Grant Glenfiddich 12 year old $35 $40 $43 $43 $43 $41 -4.65% 17.14%

101 William Grant Glenfiddich 14 year old $58 $53 $54 -6.90% -6.90%

102 William Grant Glenfiddich 15 year old $45 $48 $52 $61 $61 $64 4.92% 42.22%

103 William Grant Glenfiddich 18 year old $67 $76 $87 $104 $105 $105 0.96% 56.72%

41 WHISKY MARKET REPORT 2018/2019

Owner Distillery Product JAN JAN JAN JAN JAN JAN 2016-2019 Total Notes 2007 2011 2013 2016 2017 2019 price change price price price price price price change in %

104 William Grant Glenfiddich 21 year old $147 $185 $189 $189 2,16% 28,57%

105 William Grant Glenfiddich 30 year old $248 $321 $365 $710 $860 $722 1,69% 191,13%

106 William Grant Glenfiddich 40 year old $1,903 $2,298 $2,552 $3,468 $3,681 $4,136 19,26% 117,34%

107 Brown Forman Glenglassaugh NAS $70 $67 $68 -2,86% -2,86% Torfa

108 Brown Forman Glenglassaugh NAS $64 $60 $61 -4,69% -4,69% Revival

109 Brown Forman Glenglassaugh NAS $75 $69 $68 -9,33% -9,33% Evolution

110 Ian MacLeod Glengoyne 10 year old $39 $43 $41 $47 $48 $46 -2,13% 17,95%

111 Ian MacLeod Glengoyne 12 year old $55 $51 $54 $52 1,96% -5,45%

112 Ian MacLeod Glengoyne 15 year old $72 $74 $76 5,56% 5,56%

113 Ian MacLeod Glengoyne 18 year old $114 $121 $120 5,26% 5,26%

114 Ian MacLeod Glengoyne 21 year old $130 $160 $163 $168 5,00% 29,23%

115 Diageo Glenkinchie 12 year old $43 $51 $54 $59 $61 $61 3,39% 41,86%

116 Diageo Glenkinchie 12 year old $69 $70 $73 $80 $81 $81 1,25% 17,39% Distillers Edition

117 Pernod Ricard Glenlivet 12 year old $35 $40 $41 $43 $43 $41 -4,65% 17,14%

118 Pernod Ricard Glenlivet 15 year old $45 $51 $55 $64 $68 $69 7,81% 53,33%

119 Pernod Ricard Glenlivet 16 year old $61 $62 $66 $78 $84 $92 17,95% 50,82% Nadurra

120 Pernod Ricard Glenlivet 18 year old $73 $81 $92 $107 $111 $116 8,41% 58,90%

121 Pernod Ricard Glenlivet 21 year old $124 $134 $149 $219 $254 $275 25,57% 121,77%

122 Pernod Ricard Glenlivet 25 year old $158 $339 $370 $397 $414 $436 9,82% 175,95%

123 Pernod Ricard Glenlivet NAS $82 $86 $87 6,10% 6,10% Nadurra

124 Pernod Ricard Glenlivet NAS $48 $37 $35 -27,08% -27,08% Founder’s Reserve

125 LVMH Glenmorangie 10 year old $43 $43 $41 $40 $40 $36 -10,00% -16,28%

126 LVMH Glenmorangie 12 year old $51 $54 $52 $55 $57 $58 5,45% 13,73% Port finish, version change

127 LVMH Glenmorangie 12 year old $51 $52 $52 $53 $55 $54 1,89% 5,88% Sherry finish, version change

128 LVMH Glenmorangie 2 year old $70 $72 $72 $73 1,39% 4,29% Nectar D’Or

129 LVMH Glenmorangie 18 year old $108 $110 $101 $114 $120 $122 7,02% 12,96%

130 LVMH Glenmorangie 25 year old $588 $602 $626 $673 11,79% 14,46% scarce

42 WHISKY MARKET REPORT 2018/2019

Owner Distillery Product JAN JAN JAN JAN JAN JAN 2016-2019 Total Notes 2007 2011 2013 2016 2017 2019 price change price price price price price price change in %

131 LVMH Glenmorangie NAS $200 $202 $201 $207 $207 2,99% 3,50% Signet

132 Berry Bros Glenrothes NAS $45 $46 $47 $50 $50 $49 -2,00% 8,89% Select Reserve

133 Berry Bros Glenrothes NAS $55 $54 $54 $52 -3,70% -5,45% Alba Reserve

134 J&A Mitchell Hazelburn 8 year old $81 $81 $81 $81 $85 4,94%

135 J&A Mitchell Hazelburn 10 year old $78 $74 $72 -7,69% -7,69% -1,7

136 J&A Mitchell Hazelburn 12 year old $91 $95 $90 $93 $106 17,78% 16,48% scarce

137 Edrington Highland Park 8 year old $47 $51 $52 10,64% 10,64% Gordon & Macphail

138 Edrington Highland Park 12 year old $41 $45 $47 $53 $55 $54 1,89% 31,71%

139 Edrington Highland Park 15 year old $61 $67 $70 $83 $87 $97 16,87% 59,02%

140 Edrington Highland Park 18 year old $75 $100 $111 $133 $140 $141 6,02% 88,00%

141 Edrington Highland Park 25 year old $238 $273 $318 $505 $622 $651 28,91% 173,53%

142 Edrington Highland Park 30 year old $386 $420 $529 $852 $926 $958 12,44% 148,19%

143 Edrington Highland Park NAS $84 $82 $84 0,00% 0,00% Dark Origins

144 Emperador Jura 10 year old $33 $38 $41 $44 $45 $54 22,73% 63,64%

145 Emperador Jura 16 year old $66 $74 $77 $76 2,70% 15,15%

146 Emperador Jura 21 year old $136 $113 $163 $161 $167 $173 7,45% 27,21%

147 Emperador Jura NAS $62 $73 $78 $82 $80 2,56% 29,03% Prophecy

148 Emperador Jura NAS $41 $46 $49 $55 $55 $59 7,27% 43,90% Superstition

149 Anthony Wills Kilchoman NAS $57 $61 $61 $62 1,64% 8,77%

150 Anthony Wills Kilchoman NAS $91 $95 $98 7,69% 7,69% Loch Gorm

151 Inver House Knockdhu 12 year old $39 $38 $44 $48 $49 11,36% 25,64% anCnoc

152 Diageo Lagavulin 12 year old $87 $98 $126 $132 $142 12,70% 63,22%

153 Diageo Lagavulin 16 year old $73 $78 $82 $86 $87 $84 -2,33% 15,07%

154 Suntory Laphroaig 10 year old $45 $48 $52 $52 $51 $50 -3,85% 11,11% ownership change

155 Suntory Laphroaig 10 year old $61 $67 $66 $70 $70 $76 8,57% 24,59% Cask Strength, ownership change

156 Suntory Laphroaig 18 year old $111 $107 $115 $144 29,73%

157 Suntory Laphroaig 25 year old $513 $504 $501 -2,34% -2,34%

43 WHISKY MARKET REPORT 2018/2019

Owner Distillery Product JAN JAN JAN JAN JAN JAN 2016-2019 Total Notes 2007 2011 2013 2016 2017 2019 price change price price price price price price change in %

158 Suntory Laphroaig NAS $57 $59 $60 $59 $61 $61 3,39% 7,02% Quarter Cask, ownership change

159 Suntory Laphroaig NAS $70 $72 $73 $71 -1,39% 1,43% Triple Wood

160 Suntory Laphroaig NAS $58 $49 $48 -17,24% -17,24% Select

161 Distell Ledaig 10 year old $50 $48 $51 $55 $57 $61 10,91% 22,00% version change

162 G&M Linkwood 15 year old $82 $84 $83 1,22% 1,22% Gordon & MacPhail

163 William Lundie Lismore NAS $20 $22 $24 $25 $24 $22 -12,00% 10,00% for all you Lismore fans out there

164 Pernod Ricard Longmorn 16 year old $61 $94 $100 $107 $112 $115 7,48% 88,52%

165 J&A Mitchell Longrow 10 year old $95 $91 $93 $99 $99 4,21%

166 J&A Mitchell Longrow 18 year old $209 $197 $193 $206 4,57% -1,44%

167 J&A Mitchell Longrow NAS $57 $61 $61 $65 6,56% 14,04% Peated

168 Edrington Macallan 10 year old $41 $40 $43 $51 $54 $57 11,76% 39,02% Fine Oak

169 Edrington Macallan 12 year old $47 $52 $54 $61 $60 $63 3,28% 34,04%

170 Edrington Macallan 15 year old $69 $78 $88 $102 $112 $117 14,71% 69,57% Fine Oak

171 Edrington Macallan 17 year old $102 $121 $133 $213 $235 $250 17,37% 145,10% Fine Oak

172 Edrington Macallan 8 year old $132 $151 $171 $237 $250 $270 13,92% 104,55%

173 Edrington Macallan 21 year old $242 $239 $258 $426 $493 $559 31,22% 130,99% Fine Oak

174 Edrington Macallan 25 year old $433 $593 $722 $1,304 $1,669 $1,820 39,57% 320,32%

175 Edrington Macallan 30 year old $770 $956 $1,378 $2,827 $3,137 $3,713 31,34% 382,21%

176 G&M Mortlach 15 year old $82 $89 $90 9,76% 9,76% Gordon & MacPhail

177 Diageo Mortlach NAS $131 $132 $132 0,76% 0,76% Rare Old

178 Diageo Mortlach 18 year old $315 $315 $320 1,59% 1,59%

179 Diageo Mortlach 25 year old $882 $893 $906 2,72% 2,72%

180 Diageo Oban 14 year old $59 $67 $71 $75 $77 $75 0,00% 27,12%

181 Diageo Oban 18 year old $133 $141 $137 $134 -4,96% 0,75%

182 Diageo Oban 14 year old $92 $96 $99 $101 $102 3,03% 10,87% Distillers Edition

183 Diageo Oban NAS $78 $71 $65 -16,67% -16,67% Little Bay

184 Inver House Old Pulteney 12 year old $35 $38 $38 $43 $44 $44 2,33% 25,71%

44 WHISKY MARKET REPORT 2018/2019

Owner Distillery Product JAN JAN JAN JAN JAN JAN 2016-2019 Total Notes 2007 2011 2013 2016 2017 2019 price change price price price price price price change in %

185 Inver House Old Pulteney 17 year old $75 $86 $90 $107 $115 $116 8,41% 54,67%

186 Inver House Old Pulteney 21 year old $95 $107 $142 $149 $161 $177 18,79% 86,32%

187 Inver House Old Pulteney NAS $50 $52 $54 8,00% 8,00% Navigator

188 Remy Cointreau Port Charlotte NAS $61 $62 $65 6,56% 6,56% Scottish Barley

189 Remy Cointreau Port Charlotte NAS $68 $70 $74 8,82% 8,82% Islay Barley

190 Inver House Speyburn 10 year old $22 $24 $27 $30 $31 $28 -6,67% 27,27%

191 Inver House Speyburn NAS $20 $21 $21 $24 $24 $23 -4,17% 15,00% Bradan Orach

192 J&A Mitchell Springbank 10 year old $57 $60 $58 $64 $63 $65 1,56% 14,04%

193 J&A Mitchell Springbank 12 year old $77 $92 $92 $99 7,61% 28,57% Cask Strength

194 J&A Mitchell Springbank 15 year old $100 $100 $101 $110 $111 $114 3,64% 14,00%

195 J&A Mitchell Springbank 18 year old $145 $172 $181 $196 13,95% 35,17%

196 J&A Mitchell Springbank 21 year old $390 $369 $514 $422 $429 $470 11,37% 20,51%

197 J&A Mitchell Springbank 25 year old $825 $808 $829 0,48% 0,48%

198 Diageo Talisker 10 year old $51 $57 $62 $67 $68 $67 0,00% 31,37%

199 Diageo Talisker 18 year old $69 $78 $136 $155 $155 $157 1,29% 127,54%

200 Diageo Talisker 25 year old $213 $219 $264 $549 $551 $595 8,38% 179,34%

201 Diageo Talisker 30 year old $290 $331 $381 $770 $730 $738 -4,16% 154,48%

202 Diageo Talisker 10 year old $73 $78 $79 $84 $85 $85 1,19% 16,44% Distillers Edition

203 Diageo Talisker NAS $72 $63 $54 -25,00% -25,00% Storm

204 Ian MacLeod Tamdhu 10 year old $32 $24 $27 $62 $63 $65 4,84% 103,13% ownership change, version change

205 Distell Tobermory 10 year old $32 $33 $49 $55 $56 $59 7,27% 84,38% version change

206 Distell Tobermory 15 year old $122 $142 $148 $159 11,97% 30,33%

207 Takara Shuzo Tomatin 12 year old $26 $30 $32 $33 $33 $34 3,03% 30,77%

208 Takara Shuzo Tomatin 14 year old $71 $67 $67 -5,63% -5,63%

209 Takara Shuzo Tomatin 15 year old $71 $49 $47 $50 $51 -28,17%

210 Takara Shuzo Tomatin 18 year old $62 $63 $78 $82 $84 7,69% 35,48%

211 Takara Shuzo Tomatin 30 year old $124 $258 $275 $274 $309 149,19%

212 Takara Shuzo Tomatin NAS $58 $58 $58 0,00% 0,00% Cu Bocan

45 WHISKY MARKET REPORT 2018/2019

Owner Distillery Product JAN JAN JAN JAN JAN JAN 2016-2019 Total Notes 2007 2011 2013 2016 2017 2019 price change price price price price price price change in %

213 Angus Dundee Tomintoul 10 year old $53 $43 $43 $43 $45 $43 0,00% -18,87%

214 Angus Dundee Tomintoul 12 year old $73 $68 $68 $70 $66 -2,94% -9,59% Sherry finish

215 Angus Dundee Tomintoul 14 year old $49 $65 $68 $68 $68 0,00% 38,78%

216 Angus Dundee Tomintoul 16 year old $45 $54 $55 $59 $60 $61 3,39% 35,56%

217 Angus Dundee Tomintoul 27 year old $146 $184 $191 $197 $204 39,73%

218 Angus Dundee Tomintoul NAS $41 $51 $50 $50 $49 -2,00% 19,51% Old Ballantruan, scarce

219 Angus Dundee Tomintoul NAS $43 $41 $43 $45 $44 2,33% 2,33% Peaty Tang

220 Pernod Ricard Tormore 12 year old $45 $48 $47 $52 $49 8,89%

221 Picard Tullibardine NAS $51 $52 $50 -1,96% -1,96% Sovereign

222 Picard Tullibardine NAS $62 $60 $59 -4,84% -4,84% 225 Sauternes

223 Picard Tullibardine NAS $62 $60 $58 -6,45% -6,45% 228 Burgundy

224 Picard Tullibardine NAS $62 $63 $59 -4,84% -4,84% 500 Sherry

225 Picard Tullibardine 20 year old $151 $149 $148 -1,99% -1,99%

226 Picard Tullibardine 25 year old $310 $296 $294 -5,16% -5,16%

46 WHISKY MARKET REPORT 2018/2019

47 RAPORT Z RYNKU WHISKY 2018/2019

Japanese market

For several years, the increasingly growing significance of Japanese whisky has been one of the most important subjects in the alcohols sector. Any cynic should look into its prices at auctions. On 30 January of the last year, a 50-year-old bottle of Yamazaki became the most expensive bottle of Japanese whisky sold at auction. It reached the price of 2.3 million HK dollars (£229,555). It was sold at Sotheby auction in Hong Kong. Several months before, a collection from the famous „lost” distillery, Karuizawa, had reached a record price at an auction – almost $1 million. The Olympics in Tokyo in 2020 is a symbolic date for the majority of whiskies and whisky manufactures in Japan, both the recognised as well as the newly opened ones. Everybody is getting ready for this event, hoping to astonish the world with something special. Time will show whether it is going to be a beginning of the new golden age of Japanese whisky. WHISKY MARKET REPORT 2018/2019

Many online retailers own virtual shelves with Japanese whis- ky but since 2015, there is a specialist in this area - dekantā. Michał Kosior The eye-catching business name of the company constitutes Stilnovisti Sales Director translation of the word “decanter” from English into Japanese. The company has been established by Makiyo Masa, coming Demand for Scotch whisky in Asia has been increasingly growing for a decade. It is mainly linked to the Chinese market which seems to be able from the family of leading manufactures of whisky, owning to absorb any amount of Scotch. According to the newest available data, a marvellous collection of Japanese whisky. the amount of export of Scotch whisky increased in China by 9 per cent For the first time, dekantā appeared online on 3 June 2015 up to £4.36 billion in 2017. It is definitely the strongest growth in six years. and its further successes are impressive. Makiyo Masa sold over A weak pound and enormous demand on the part of China and Russia contributed to it. Curiously enough, export to Singapore increased in the 20,000 bottles and the sales results recorded a two-digit growth. past year by 29 per cent. Singapore constitutes a peculiar hub, from where The customer base has increased by 53 per cent year by year. In a part of whisky goes to China and South- East Asia. As a result, Asia is one its offer, dekantā has 2000 various products, thanks to which it of the most lucrative whisky markets not only for Scotch, but also for any other whisky. Chinese investors are more and more intensively interested is the biggest e-commerce shop with Japanese whisky in the also in whisky auctions. It is significant that almost all the most important world. Whisky is sent to 66 various countries and this number auction items are won by investors from Asia. Last year, the same situation is consistently growing. took place in Edinburgh where another price record of a single bottle of The company sells whisky priced from $20 to $200,000 and whisky was broken. A 60-year-old spirit was sold for $1.1 million. The win- ning offer was submitted during the auction by a private collector from the record result has been reached by selling three bottles of Asia. Karuizawa for $216,000. However, the biggest best-sellers are much more affordable. The customers’ favourite is 12-year-old Yamazaki. During its three years of operation, dekantā sold 2012 bottles of this whisky. The second sales hit is 21-year-old Hibiki, of which 1183 bottles have been sold. Dekantā takes pride in top shelf exclusive products. In its of- fer, there are bottles from limited editions the price of which ranges from less than $10,000 to $50,000 and more. Due to growing popularity of top shelf Japanese whisky, their acquisi- tion is usually quite difficult. This growing prestige in the country and abroad means that manufacturers are running out of supplies of mature spirits. This year, Suntory company has announced withdrawal of 12-year-old Hakushu single-malt whisky and 17-year-old Hibiki blended whisky. 

49 WHISKY MARKET REPORT 2018/2019

Japanese whisky An increased interest of tourists in Japan and a conviction about the high quality of Japanese whisky thanks to interna- tional awards have attracted new customers and collectors of PRODUCTION this sector of economy. From the perspective of the national 2007 2016 market, a jump in sales of the spirit took place at the turn of 2014/15. It was then when the father of Japanese whisky, Masa- taka Teketsuru (1894- 1979) and his wife Rita Cowan, who came from Scotland, appeared in a TV series “Massan” aired by NHK. This translated into increase in prices of Japanese whisky. “Shortly before the establishment of dekantā, I participated million litre million litre 114 in auctions in Hong Kong and even then the increase in prices 56 was enormous. In the first place, it concerned Scotch whisky but later also Japanese whisky. It was very exciting and it was DISTILLERIES only the beginning” – says Masa. “In 2014, a 50-year-old bottle of Yamazaki (the first edition) 1991-2004 2014-2018 was sold for almost two million yens which constituted a huge amount. Nowadays, the same bottle costs 30 million yens. In   my opinion, there are two types of whiskies – normal bottles which you open and enjoy the flavour of the spirit, and pre- cious bottles kept for special occasions which you enjoy with closed newly opened family or friends or keep them as an investment. 20 26 “A proof of growing demand for Japanese whisky is the fact that in January, when dekantā announced an auction for pur- chase of one out of 150 bottles of 35-year-old Karuizawa Cities EXPORT of Japan Sherry Cask, 3000 persons participated in it, and the

2005 2017 auction resulted in bottles at a price of $12,500 per bottle!” Makiyo Masa defends Japanese whisky from a suggestion that the growth in prices is connected to the tendency of Jap- 933,114 5,489,000 anese manufacturers to pay excessive attention to the appear- ance and presentation of whisky. litre litre

50 WHISKY MARKET REPORT 2018/2019

“A proof of growing demand for Japanese whisky is the fact that in January, when dekantā announced an auction for purchase of one out of 150 bottles of 35-year-old Karuizawa Cities of Japan Sherry Cask, 3000 persons participated in it, and the auction resulted in bottles at a price of $12,500 per bottle!”

After dekantā’s success with whisky, in July 2017 the company Japanese whisky export in million litre, 2016 extended its offer by a collection of Japanese gins, capitalis- ing global interest in this variety which until recently had been unappreciated. In March this year, the time came to open the cellar of dekantā, which presents a collection of Japanese red 1,259,337 wines, basically impossible to purchase outside the country. to France Japanese whisky has a bright future ahead, particularly con- sidering the creative activity of the sector and respect earned in the world. 908,745 According to Masa, “There is an enormous potential for col- to USA lectors and investors as well as for whisky manufacturers. Sun- tory and Nikka are leading distilleries; therefore, there is low supply and very high demand. 868,728 to Taiwan

dekantā in numbers “The time has come for small manufacturers to rise to the

Sales of over 20 000 bottles since the commencement of challenge and the enthusiasts of Japanese whisky to try other activity in 2015. products which Japan has to offer. In my opinion, Japanese whisky has greater potential than Scotch whisky.” 2.5 million page views in the past year “Let us remember that in 2020 Japan is going to be a host of The biggest Internet shop with Japanese whisky in the the Olympic Games. The eyes of the world will be on us and the world - over 2000 products country will be visited by numerous guests. They would like 66 countries to which whisky is sent to get familiar with our culture and try Japanese whisky. I see The most expensive whisky in the offer cost over 200,000 a great opportunity in this for manufacturers.” dollars, the cheapest slightly above 20

51 Investments in whisky

Investments in bottles Quantitative and value approach to market

According to a report of Rare Whisky 101, is currently occupying the first place in the investors ranking, ahead of Brora and Springbank. The widest index of Rare Whisky 101 – Apex 1000 index has shown that in 2018 the bulls were still attacking. 2018 gave us the result on the level of +30.1% and it was historically the third best result since the beginning of the index (the record result of 38.37% recorded in RO2016 and the second best result of 31.44% in RO2011. During entire 2007, the growth was amounted to 27.51%). WHISKY MARKET REPORT 2018/2019

Record year This year £1 million has been paid for a single bottle of Scotch whisky. It is an absolute world record. The previous most expensive bottle in 2017 was sold at auction in Great Britain for the price of 95 thousand pounds (it was 62-year-old Dalmore).

Analysis by quantity Analysis by value

120,000 £45,000,000

£40,000,000 100,000 £35,000,000 107,890

80,000 £30,000,000 £ 40,772,550 83,713 £25,000,000 60,000 £20,000,000 58,758

40,000 £15,000,000 £ 25,060,058 43,458 £10,000,000 £ 7,642,190

20,000 33,998 £ 14,211,767 £5,000,000 £ 9,562,405 0 0 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

source: Rare Whisky 101 Report 2018 source: Rare Whisky 101 Report 2018

The number of whiskies sold on auctions in Great The value of single malt Scotch whisky sold in the previous year at Britain in 2018 has increased by 28.88% to 107 890 items. auctions in Great Britain increased by 62.70% to a record level of (In 2017, 83 713 bottles were sold). 40 772,550 pounds. (In 2017, the result amounted to 25,060,058 pounds).

53 WHISKY MARKET REPORT 2018/2019

40,772,550 pounds – the value of single malt Scotch whisky bottles sold at auctions in Great Britain in 2018

Average price for a bottle APEX 1000 INDEX

£400,000 45,00%

£350,000 40,00% £ 377,91 35,00% £300,000 38.37% 30,00% £250,000 £ 299,36 25,00% £200,000 30.01% 27.51% £ 241,87 20,00% £ 228,12

£150,000 £ 220,04 15,00%

£100,000

10,00% 15.82% 14.36% £50,000 5,00%

£00,000 0,00% 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018

source: Rare Whisky 101 Report 2018 source: Rare Whisky 101 Report 2018

An average price for a bottle increased in 2018 by almost 80 pounds to a level of 377.91 pounds.

54 WHISKY MARKET REPORT 2018/2019

Monthly quantitative index Monthly value index

12,000 £ 7,000,000

£ 6,000,000 10,000 11,099 11,006 10,867

9,961 £ 5,000,000 £ 6,096,163

8,000 9,104 8,916 8,870 8,349 £ 5,418,466

7,976 £ 4,000,000 7,746

6,000 7,111 6,885 £ 3,000,000 £ 4,010,733

4,000 £ 3,343,511 £ 2,000,000 £ 3,342,756 £ 3,127,263 £ 3,125,598 £ 2,627,833 £ 2,562,155 £ 2,441,534

2,000 £ 2,327,461 £ 1,000,000 £ 2,349,077

0,000 £ 0,000,000 JUL JUL SEP SEP FEB FEB JAN JAN APR APR JUN JUN DEC DEC OCT OCT MAY MAY AUG AUG NOV NOV MAR MAR

source: Rare Whisky 101 Report 2018 source: Rare Whisky 101 Report 2018

By quantity, traditionally the highest sales were recorded in the fourth By value they were recorded in November. Bottles sold in the fourth quarter with record December. quarter cost over 15.5 m pounds, that is twice as much as in 2014.

55 WHISKY MARKET REPORT 2018/2019

The number of sold bottles (in the price above GBP 10K)

300

265 250

200

150

100 1,295% 91 the number of sold bottles in a price equal to or higher 50 than GBP 10K has increased

26 by this number 19 17 0 2014 2015 2016 2017 2018

source: Rare Whisky 101 Report 2018

Comparison of the sales results during the past 5 years of whisky bottles with value equal to or higher than GBP 10K shows a growth by 1,295% (year 2014 to 2018).

56 WHISKY MARKET REPORT 2018/2019

Percentage of the market to the price for a bottle. Year 2014 in comparison to 2018.

2014 2018

50.00%

45.00%

40.00% 43.49%

35.00% 38.84%

30.00% 34.09% 33.41%

25.00%

20.00%

15.00%

10.00% 14.32% 13.32% 4.96% 5.00% 2.08% 6.33% 6.48% 1.65% 0.18% 0.31% 0.24% 0.25% 0.06% 0.00% £ 0.00–£ 99.99 £ 100.00 £ 250.00 £ 500.00 £ 1,000.00 £ 2,500.00 £ 5,000.00 above do do do do do do £ 10,000.00 £ 249.99 £ 499.99 £ 999.99 £ 2,499.99 £ 4,999.99 £ 9,999.99 source: Rare Whisky 101 Report 2018

It is clear that investors are purchasing increasingly more expensive bottles. The cheapest category (up to 99.99 pounds) has decreased during the past 4 years by almost 5 percentage points.

57 WHISKY MARKET REPORT 2018/2019 Rare Whisky Index

A company established by Andy Simpson and David Robertson. David Robertson grew up in the environment of Royal Brackla distillery. In 1994 he became the youngest distillery mana- ger in the history of Scotland. He was also gaining experience working as a master distiller in Macallan, where he was responsible for the creation of some of the most iconic whiskies which have ever left this distillery, including the range of “Fine & Rare”. In 2006, he joined Whyte and Mackay as a director of innovation, working on revival of popularity of Dalmore. Most recently, together with Andy Simpson, he created Rare Whisky 101, a consulting com- pany for whisky investors.

58 WHISKY MARKET REPORT 2018/2019

Photo: Greg Macvean

59 WHISKY MARKET REPORT 2018/2019

Andy Simpson in one of the interviews for Whisky Quarterly said:

In Rare Whisky 101, we consider ourselves to be analysts, brokers and appraisers. I conduct the company with David Robertson, co-manager who has previously been a master distiller at Macallan. He was born in a distillery and dealt with the rarest whiskies in the world. We prepare standard sector indexes which show results of Scotch whisky as an investment and collectors’ item. In our base, which constitutes the greatest collection of data on sales of single malt Scotch whisky at auctions in Great Britain, we have a large number of indexes. We have been creating this base for the past 15 years, recording data from major auction houses to the smaller places at province and Internet auctions.

60 WHISKY MARKET REPORT 2018/2019

The value of indexes of Rare Whisky 101 in 2018 and in comparison to 2014

2018 4-year period since December 2014

40,00% 180.00%

160.00% 30.00%

40.00% 162.91%

20.00% 30.01% 120.00%

100.00% 10.00%

2.57% 80.00% GOLD GOLD $ USD PER BARREL FTSE 100 CRUDE BRENT $ USD PER BARREL 10.00% 0.00%

60.00% 1000 FW LIV-EX DIAGEO (DGE) DIAGEO

-2.14% 40.00% -10.00% -12.48% 52.91% APEX 1000 APEX

20.00% 42.49% DIAGEO (DGE) DIAGEO -19.50% LIV-EX FW 1000 FW LIV-EX GOLD GOLD $ USD PER BARREL FTSE 100

-20.00% CRUDE BRENT $ USD PER BARREL 0.00% 7.84% 2.47% -6.16% -30.00 -20.00% APEX 1000 APEX

source: Rare Whisky 101 Report 2018 source: Rare Whisky 101 Report 2018

Offer of one of the greatest players – Diageo – recorded very Apex 1000 Index increased by almost exactly 30%. However, good growths. not all indexes were growing, which shows even more clearly the importance of the selection of proper distillery and bottle.

61 MARKET Quantity share WHISKY MARKET REPORT 2018/2019

Percentage share of the distillery in auction markets in Great Britain

POSITION TOP 10 – 2017 % TOP 10 – 2018 % change

1 MACALLAN 11.39% MACALLAN 13.85% =

2 ARDBEG 5.60% HIGHLAND PARK 5.61%  2

3 BRUICHLADDICH 4.68% ARDBEG 5.02%  1

4 HIGHLAND PARK 4.53% BRUICHLADDICH 4.10%  1

5 BOWMORE 4.21% BOWMORE 3.72% =

6 LAGAVULIN 3.64% SPRINGBANK 3.63% 5

7 GLENDRONACH 3.42% GLENDRONACH 3.57% =

8 LAPHROAIG 3.39% GLENFIDDICH 3.26%  1

9 GLENFIDDICH 3.26% LAPHROAIG 3.09%  1

10 GLENMORANGIE 3.14% GLENMORANGIE 2.92% =

source: Rare Whisky 101 Report 2018

63 WHISKY MARKET REPORT 2018/2019

10 biggest distilleries: change in % by quantity

23.83% HIGHLAND PARK

21.64% MACALLAN

16.46% SPRINGBANK

4.49%

GLENDFIDDICH -0.22%

GLENMORANGIE -7.06%

LAPHROAIG -8.99%

ARDBEG -10.35%

BOWMORE -11.53%

BRUICHLADDICH -12.42%

-15.00% -10.00% -5.00% -0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%

source: Rare Whisky 101 Report 2018

Comparing 10 best distilleries and their percentage share in the market by quantity at auctions, did best in 2018, increasing share in the market by over 23%.

64 WHISKY MARKET REPORT 2018/2019

Biggest change in % by quantity

GLENALLACHIE 227.61%

KILLYLOCH 132.77%

TOMATIN 61.82%

BEN NEVIS 56.72%

OLD PULTENEY 49.56%

GLENROTHES 39.09%

MANNOCHMORE 31.19%

GLENGLASSAUGH 31.00%

BENRIACH 30.18%

BUNNAHABHAIN 28.08%

0.00% 50.00% 100.00% 150.00% 200.00% 250.00%

source: Rare Whisky 101 Report 2018

A change of the owner and rebranding of Glenallachie brand caused enormous growth in sales. Also, Tomatin strategy boosted demand for whisky from Highland region. A growth of sales of whisky does not bear interpretative meaning since it was not present on the auction market in the previous years at all.

65 WHISKY MARKET REPORT 2018/2019 MARKET

Value share

Value share combined with quantity share is of particular impor- tance for investors. If share in the market by value is growing faster than by quantity this means that the market is shrinking, while prices are increasing.

66 WHISKY MARKET REPORT 2018/2019

Top 10 by value

POSITION TOP 10 – 31 DEC 2017 % TOP 10 – 2018 % CHANGE

1 MACALLAN 28.37% MACALLAN 37.79% =

2 BOWMORE 6.31% BOWMORE 7.58% =

3 ARDBEG 5.28% ARDBEG 4.26% =

4 PORT ELLEN 4.19% PORT ELLEN 3.39% =

5 HIGHLAND PARK 3.76% HIGHLAND PARK 3.36% =

6 LAGAVULIN 3.16% SPRINGBANK 2.81% 3

7 LAPHROAIG 3.06% LAPHROAIG 2.66% =

8 GLENFIDDICH 2.65% GLENFARCLAS 2.34%  6

9 SPRINGBANK 2.62% GLENDRONACH 2.28%  2

10 BALVENIE 2.61% GLENFIDDICH 1.95%  1

67 WHISKY MARKET REPORT 2018/2019

33.19% MACALLAN

20.11% BOWMORE

8,45% GENFARCLAS

7,01% SPRINGBANK

GLENDRONACH -8,11%

HIGHLAND PARK -10.80%

LAPHROAIG -12.97%

PORT ELLEN -19.19%

ARDBEG -19.28%

GLENFIDDICH -26.23%

-30.00% -20.00% -10.00% 0.00% 10.00% 20.00% 30.00% 40.00%

źródło: Rare Whisky 101 Report 2018

As in 2017, Macallan has remained a leader; however, selling Glenfiddich, one of key manufacturers of single malt whiskies two bottles from 1926 was the key. Nonetheless, if we removed on the auction market in 2018, did worse, recording a double- these two bottles from the chart, Macallan would still be on the -digit decline. first place with an impressive growth on the level of 23%.

68 WHISKY MARKET REPORT 2018/2019

The biggest changes in share on the auction market by value.

GLENALLACHIE 309.77%

KILLYLOCH 55.48%

CARDHU 49.83%

BEN NEVIS 43.27%

MACALLAN 33.19%

TAMDHU 26.66%

GLEN ELGIN 26.03%

TORMORE 25.96%

GLENUGIE 22.09%22.09%

BOWMORE 20.11%

0.00% 50.00% 100.00% 150.00% 200.00% 250.00% 300.00% 350.00%

source: Rare Whisky 101 Report 2018

The aforementioned remodelling of GlenAllachie signifi- cantly influences this result. Previously, single malt whiskies from this distillery were practically unavailable. Presently, it is a distillery with interesting limited editions. Another distillery which is worth observing in the subsequent year is Ben Nevis. Some of the older vintage-style bottles have been presently obtaining high prices at auctions.

69 WHISKY MARKET REPORT 2018/2019

Bottles Collectors ranking

70 WHISKY MARKET REPORT 2018/2019

Collectors ranking What do collectors 31 DEC 2017 31 DEC 2018 CHANGE 1 MACALLAN MACALLAN = purchase? 2 ARDBEG ARDBEG = 3 BOWMORE BOWMORE = 4 HIGHLAND PARK HIGHLAND PARK = 5 BRUICHLADDICH BRUICHLADDICH = 6 GLENFIDDICH LAPHROAIG  1 7 LAGAVULIN GLENFIDDICH  1 8 LAPHROAIG SPRINGBANK  3 Dominic Roskrow 9 GLENMORANGIE LAGAVULIN  2 editor-in-chief of Whisky Quarterly 10 PORT ELLEN GLENMORANGIE  1 11 SPRINGBANK PORT ELLEN 1 Over the last decade, values of the 100 best bottles of the most desired  12 BALVENIE BALVENIE Scotch whisky have increased by almost 600 per cent. Auction prices = 13 GLENDRONACH GLENDRONACH in Great Britain increased in the previous year by almost 40 per cent. = Generally speaking, whisky has been a great investment ever since the 14 ARRAN GLENFARCLAS  2 market ran short of old and rare whisky. It is caused mainly by investors 15 CAOL ILA ARRAN  1 from Asia who seem to purchase almost everything. Of course, manu- 16 GLENFARCLAS GLENLIVET facturers see this trend, but it is difficult to supplement stock levels of  2 17 DALMORE CAOL ILA old and expensive whisky within a short period of time. It requires many  2 years; therefore, forecasts for the market and investors are good. 18 GLENLIVET DALMORE  1 19 TALISKER TALISKER = 20 BRORA ROSEBANK  1 According to Rare Whisky 101, as long as selling Macallan at 21 ROSEBANK BRORA  1 auctions is not prohibited, there is no chance for this distillery 22 ABERLOUR BUNNAHABHAIN  2 to cease occupying the first place in the collectors ranking in 23 MORTLACH ABERLOUR  1 the coming years. In the last year, the first four places in the 24 BUNNAHABHAIN GLEN GRANT  1 rankings have not changed. For many years, Macallan, Ard- 25 GLEN GRANT MORTLACH  2 beg, Bowmore and Highland Park have been the backbone 26 KILCHOMAN GLENGOYNE  1 of the auctions. Among the first ten places, Springbank and 27 GLENGOYNE GLENROTHES  2 Laphroaig distilleries have improved their positions by seve- 28 CLYNELISH KILCHOMAN  2 ral places. This year it is worth watching how Bunnahabhain 29 GLENROTHES CLYNELISH  1 does at auction. The distillery is well capable of reaching the 30 LONGROW LONGROW = top 20 rankings.

source: Rare Whisky 101 Report 2018 71 WHISKY MARKET REPORT 2018/2019

Bottles Investors ranking

72 WHISKY MARKET REPORT 2018/2019

Investors ranking

. 31 DEC 2017 31 DEC 2018 CHANGE

What do investors 1 MACALLAN BOWMORE  4 2 KILLYLOCH BRORA purchase?  1 3 BRORA SPRINGBANK  3 4 BEN WYVIS MACALLAN  3 Methodology 5 BOWMORE GLENUGIE  12 Investors ranking has been created on the basis of 6 SPRINGBANK LAPHROAIG  22 weighted average of three variables. Eighty per cent 7 ST MAGDALENE BEN WYVIS  3 is based on the index of growth of value of bottles 8 ROSEBANK KILLYLOCH  6 on the auction market. Ten per cent is an average 9 LOCHSIDE CLYNELISH UP  22 highest price for all bottles. The last ten per cent 10 ARDBEG DALMORE  2 constitutes the highest price for a bottle on auction 11 DALLAS DHU ARDBEG  1 during entire year. 12 DALMORE PORT ELLEN  2 It is the most important ranking which is created 13 GLENESK/HILLSIDE ROSEBANK  5 every year thanks to Rare Whisky 101. It has been 14 PORT ELLEN ST MAGDALENE  7 developed since 2014 and by half of 2017, the first 15 GLEN ORD GLENLOCHY  3 place in this ranking was occupied by . 16 MILLBURN GLENURY ROYAL  8 In 2017 it was Macallan which appeared on the first 17 GLENUGIE DALLAS DHU  6 place, to eventually drop to the fourth place this year. 18 GLENLOCHY GLEN ORD  3 It will soon turn out whether it is a long-term trend 19 TALISKER GLEN GARIOCH  7 or a temporary blip. 20 BANFF COLEBURN  16 21 GLENGOYNE MILLBURN  5 22 GLEN GRANT LOCHSIDE  13 23 MORTLACH CONVALMORE  2 24 GLENURY ROYAL LONGROW  14 25 CONVALMORE GLENDRONACH  5 26 GLEN GARIOCH BANFF  6 27 GLENFARCLAS LAGAVULIN  13 28 LAPHROAIG MORTLACH  5 29 GLENMORANGIE GLENESK/HILLSIDE  16 30 GLENDRONACH HIGHLAND PARK  3

source: Rare Whisky 101 Report 2018 73 WHISKY MARKET REPORT 2018/2019

Meanwhile, Bowmore moved up four positions quite unexpect- edly and became “the most valuable whisky for the investors”. Brora occupied the second position and this result was mainly due to bottles from independent bottlers. Similarly to collec- tors ranking, Springbank recorded a nice growth and found it- self on the podium. The biggest movement in the ranking was recorded by Laphroaig and much liked and valued Clynelish. The result of this last distillery is the effect of a growth in pric- es of bottles from the 70s. The top ten is closed with Dalmore, which moved up in the ranking by two positions. Lagavu- lin moved by as much as 13 positions, showing high volume for the investors. Ardbeg left the top ten because the prices of their bottles on the auction market in 2018 were rather flat. Perhaps it is a signal to invest in products of this distillery, in particular considering an increased interest in other distilleries from Islay. A demand for single malt Scotch whisky is consistently grow- ing, mainly due to boom for whisky in Asia.

74 WHISKY MARKET REPORT 2018/2019

Rare Whisky 101 Indexes

BLACK BOWMORE INDEX 92.90%

VINTAGE 50 INDEX 34,45%

ICON 100 INDEX (JAPANESE) 30,06%

APEX 1000 INDEX 30,01%

KARUIZAWA INDEX 29,88%

APEX 250 INDEX 29.74%

MANAGERS DRAM INDEX 27.63%

MACALLAN 25 INDEX 24.49%

APEX 100 INDEX 24.20%

HANYU CARD INDEX 22.61% BRORA OB INDEX 22.17%

PORT ELLEN OB INDEX 19.11%

ROSEBANK INDEX 17.42%

ICON 100 INDEX 10.91%

RARE MALTS INDEX 9.36%

FLORA & FAUNA INDEX -2.78%

MACALLAN 18 INDEX -2.85%

BALVENIE TUN 1401 INDEX -3.15%

NEGATIVE 100 INDEX -3.32%

NEGATIVE 250 INDEX -6.59%

NEGATIVE 1000 INDEX -6.69%

-20.00% 0.00% 20.00% 40.00% 60.00% 80.00% 100.00%

Undoubtedly, year 2018 belonged to the iconic years of the di- accordingly: 30.01%, 29.74% and 24.20%. A Japanese index, Icon stillery. It is confirmed by Black Bowmore index which has in- 100, has exceeded Scotch Icon 100 index. This is the result of creased by 92.90%. The second best index of 2018 is Vintage 50 prices of collections of bottles from so-called card series. The (a collection of one of the oldest and most desired bottles of collection consists of 54 bottles of whisky from inactive distil- Scotch whisky) has increased by 34.45%. What is interesting, all lery Hanyu which were released to the market between 2005- indexes of RW101 - 1000, 250 and 100 have recorded growths, 2014.

75 WHISKY MARKET REPORT 2018/2019

The most expensive bottles sold on the auction market in Great Britain in 2018

Charles MacLean the greatest authority on whisky in the world £ 1,200,000

Why has more than £1 million pounds been paid for a bottle of whisky? Many people have been £ 1,000,000 £ 1,000,000 asking me this question for several months. In October 2018, a 750 ml bottle of 60-year-old Macallan 1926 whisky was sold for a record price of £888,000, that is slightly above $1.1 million. £ 800,000 A month later, the record was broken. A bottle

£ 700,000 sold for £1 million is the “Holy Grail” among whis- kies. This is the rarest bottle of whisky in the world and I do not know whether this price will ever be £ 600,000 beaten. What has created the phenomenon of the Macallan 1926? Well, it is 60 years old which makes them unique. It comes from the best dis- £ 400,000 tillery of Scotch whisky in the world if we consider collecting. Only 40 of them were ever produced, making them among the rarest on the market. Twelve of these bottles had labels of Italian pop £ 200,000

£ 120,000 artist, Valerio Adami. Another 12 bottles were £ 110,000 signed by a British artist, Peter Blake who is par- £ 62,000 ticularly known for co-creating the cover of the Beatles’ album, Lonely Hearts Club. The most ex- £ 000,000 pensive bottle was even more special because its Macallan 1926, Macallan 50 60 years old in a unique, Macallan years old, label was hand-painted by an Irish artist, Michael hand- painted bottle in lalique, 2018 release Dillon. As always, the price was affected by key 50 years old factors: rarity, age and brand. Springbank Macallan 1926, 1919 60 years old Adami bottle number 5

76 WHISKY MARKET REPORT 2018/2019

The most expensive bottles of whisky in 2018 was a 60- £year-old whisky from1,000,000 Macallan distillery in a unique bottle hand-painted by an Irish artist, Michael Dillon. According to Christie’s data, whisky was poured to bottles in 1986. From 40 bottles manufactured in this time by Macallan distillery, only one was hand-painted by Dillon. The bottle presents a histor- ical house of the Macallan’s family built in 1700. It is kept in a unique wooden case which also contains a letter from Macal- lan. In 2007, 60-year-old whisky of the same brand was sold on an auction for 75 thousand dollars. Apart from a bottle sold for 1 million pounds in Bonhams auction house in Edinburgh, there was an auction of a very special 60-year-old whisky: Macallan Valerio Adami 1926. It was put up on the auction for starting price of £ 400 000 by a Briton who purchased it directly from Macallan distillery in 1994. As reported by Fox News, back then he paid for it the equivalent of $5,000. During this auction, the price reached £700,000. The highest price for a bottle of Japanese whisky amounted to £120,000 for a bottle of 50-year-old Yamazaki.

77 Conclusions from the Rare Whisky 101 Report 2018 WHISKY MARKET REPORT 2018/2019

According to a report by Rare Whisky 101, Springbank and Bowmore are the distilleries which will rule on the auction market in 2019. A growth in prices of Springbank’s bottles re- sults from the fact that the bottles of this distillery have pre- viously been simply undervalued. Now it can be said that they have reached an appropriate price, compatible with demand. Where else should we focus our interest? GlenDronach, Ben- Riach, Benromach, GlenAllachie, Tamdhu, Tomatin and Ben Nevis are distilleries which can be valuable for investors and collectors in 2019. Nevertheless, the last year was mainly the time of growth in sales of casks on the auction market. It is worth noting that these were not only highly exclusive casks from the most appreciated distilleries, but also those which could be purchased at very affordable prices. In 2018, Rare Whisky 101 participated in more than 900 transactions of sales and purchases of whisky casks. It is an absolute record. Entering the auction market by distilleries themselves and sales from the primary market can be a recipe for counter- feits. Who could be interested in this? Surely Macallan and Glendronach could be tempted towards such sales. Howev- er, a lot depends on an economic situation and economic solutions that will be introduced following the exit of Great Britain from the European Union. Until then, the market has assumed a waiting attitude and we should not hope for inno- vative changes on the whisky auction market.

79 Investing in whisky casks

The majority of whisky lovers strenuously build collections of limited whisky bottles. While demand for Scotch whisky is growing in the entire world, increasingly more investors decide to purchase entire casks. WHISKY MARKET REPORT 2018/2019

Whisky in casks is gaining value as a component for blend- collectors and investors has been recorded mainly on Asian ed whisky production or rare editions of single cask bot- markets. Many investors from this region refer to consultants tles. Whisky bottled from a single cask is not diluted and its so that they can help them find valuable casks. More than strength can reach more than 60% ABV. The value of whisky 90 per cent of Scotch whisky is sold abroad. In 2017, export casks also increases the use of their content for production of amounted to £4.37 billion, which is approximately 1.23 billion rare collector bottles in inputs not exceeding several hundred of bottles. Sales of rare Scotch whisky have increased this items. The most popular casks can hold 195-250 litres of al- year by 46 per cent and the income has reached £36 million, cohol. A sharp growth in sales of casks purchased by whisky which means eightfold growth within only five years.

Differences between investing in casks and bottles

Whisky casks Collector bottles

Minimal investment amount 5K GBP 2K GBP

Recommended investment time 5-10 years Difficult to estimate

Stipulated annual return rate 3-4 times of bank deposit Impossible to determine. Only 10% of collector bottles gain value

Main factors influencing the price r Growing demand for ordinary blended whisky r Trend among connoisseurs r Dynamically growing demand for single malt r Number of manufactured bottles whisky r Objective lack of possibility to increase produc- tion within short time r Pouring whisky to bottles makes the price of the spirit go up

Main advantages of the investment Liquid investment, easily sold due to large demand Prestigious investment, in case of good purcha- on casks se, possible several hundred percent profits

Main disadvantages of the investment Small market and necessity to use the services of Liquidity – the product must reach the professionals connoisseur 

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Sir Colin Hampden-White Advisor of Stilnovisti

Sales of casks from the best Scottish distilleries such as Macallan, Ardbeg, or Bowmore, have become a key sector of whisky industry which usual- ly focuses on selling bottles. We anticipate that this part of the market will continue to rapidly develop. Presently, we focus on the acquisition of single malt whisky casks up to 5 years old. We have acted as an agent sel- ling casks worth £1 million, and our biggest investors dispose of portfolios made up of several dozen casks. It is worth remembering that in this area, it is necessary to have vast knowledge of whisky and factors influencing its value. Therefore, we work with the best experts and can advise the cu- stomers in purchasing the most financially promising casks.

Distilleries also sense an increased interest of investors in pur- chasing entire casks. For instance, Isle of has recorded an increase of sales in this sector by 300 per cent. It also plans to sell more than 700 casks from the distillery which will be opened in the next year. Each of the casks has been val- ued to £6000 and after filling, the casks will be kept in distillery for at least 10 years. After that, the owners of the casks will be able to bottle them or store them further. They can also sell their cask at any time.

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Prices of particular standard bottles of single malt whisky on the market according to age illustrated with the example of Glenlivet distillery.

300 pounds 15% 277 to production 18 y.o. 250 pounds

200 pounds

25% 150 pounds to production 121 15 y.o. 100 pounds 82 55 50 pounds 50% 36 to production 0 pounds 12 y.o. 12 y.o. 15 y.o. 18 y.o. 21 y.o. 25 y.o.

The graphic shows that the price of single malt Scotch whisky best Scottish distilleries such as Macallan, Ardbeg, or Bowmore is growing in a geometrical matter in relation to its age. This is have become the key sector of whisky industry which has usu- due to the fact that relatively small amount of whisky is ma- ally focused on selling bottles. As a recent report from leading tured more than 12 years. Therefore, we have large deficiencies Scotch market analyst Rare Whisky 101 concludes, forecasts for of 20-25-year-old whisky on the market. Sales of casks from the investments in whisky casks are more than promising. 

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WHISKY MARKET REPORT 2018/2019

ky at 12-years-old or older within the next five to eight years., Record casks auctions as soon as stocks of whisky mature in casks. The result of such action will be a very significant increase in prices of 12-year-old ❶ In the middle of 2014 during an auction in Hong Kong, a cask or older whiskies, which has already been included in the mar- of Macallan whisky 1991 went for over 1.9 million Hong Kong keting plans of the largest manufacturers. dollars. Whisky from the auctioned cask can be poured We have already observed serious price movements for old- into 490 bottles if, of course, the purchaser decides so. Rare er whisky where in the last two or three years the majority of Whisky 101 portal informs about how the market in this area limited edition bottlings have gained in price by at least several looks like. dozen percentage points. It is perfectly illustrated on the exam- ❷ In 2017, 30-year-old Macallan cask was sold for almost ple of specific bottles but also by indexes reflecting the dynam- 3 million Hong Kong dollars (approximately USD 375,000) ics of the market of older bottles which until recently have been at Spink auction in Hong Kong. A cask after hogshead-type available in wide distribution. This trend will translate into the sherry has been filled on 13 April 1987. cask market in a period of about five to seven years. Therefore, ❸ At the end of 2018, at an auction in Hong Kong, 22-year-old investing in casks shall be treated as a long-term fund deposit. Macallan 1996 cask went under the hammer. It was sold for over £342,000. The sales price at this last auction exceeded expectations. Krzysztof Maruszewski According to the auction house, the originally estimated price President of Stilnovisti of the cask was supposed to reach £280,000 at the maximum. Considering the present microeconomic situation on one hand and very This shows how dynamically the value of whisky casks is growing. optimistic long- term perspective for the cask whisky market on the other Daniel Lam, director of Wine & Whiskey in Bonhams in Hong hand, we definitely recommend investing in casks in a longer time hori- zon. Deficiencies at the older whiskies market and a huge demand on the Kong, commented the sale of 22-year-old Macallana cask, men- part of Asian market contribute to the fact that today for each 12-year-old tioning what profits the investor can achieve: “We estimate that cask one must pay the equivalence of 3 analogous casks aged between this cask will allow the owner to obtain 310 bottles of delicious new and three years old. We can see a very large price range of casks, Macallan whisky”. particularly towards older casks aged for several years and over a dozen Presently, in the market for single malt Scotch whisky we years, which are ready for producing expensive expressions of whisky. Therefore, we are currently focusing on buying casks up to five years old, notice considerable shortages of whisky casks matured for and which were filled after 2012. Of course, not each bottle will bring the more than 12 years. Manufacturers have been forced to bottle same return rate. In the selection of appropriate casks, we are supported younger whisky, and have moved away from providing an age by the Investment Committee which consists of the largest authorities on the label. At the same time, young bottles which have re- in the whisky industry. Thanks to this, we are certain that what we select for our customers is the best available, guaranteeing the highest possible placed the older editions are offered. In accordance with fore- rate of return. casts of key distilleries, we can expect a return to bottling whis-

85 Whisky festivals WHISKY MARKET REPORT 2018/2019

The most famous whisky festival, the Spirit of Speyside, takes place every Spring in the Speyside region of Scotland. It is in this region that such famous whisky as Macallan, Aberlour, Balvenie, or Glen Grant are made. Participation in the festival is a marvellous opportunity to learn about the secrets of whisky production and to talk to people connected with the whisky industry. During the several days of the festival, one can eat a whisky-style supper, go to a concert or visit distilleries, even those which are not always available to the tourists. On the other side of the world in the United States, we have one of the most exclusive whisky festivals in the world held in Las Vegas. This year, the most expensive tickets cost $2.600. The most significant representatives of the industry in Scotland are present and each of them brings special spirits. In 2018, the following were among them: Gordon & Macphail – Glen Grant 1949, Glenfarclas Family Cask 1963 and 40-year-old Glenfiddich. On our continent, in Germany, many guests are attracted to Limburg Whisky Fair. The festival is famous for one of the larg- est selections of whisky. It took place for the first time in 2002, and now it hosts 5000 visitors. London, Edinburgh and a number of cities are now offering large whisky show, and the number is growing all the time. A wide range of whisky events is now available, and they are worth attending because they are designed to be of interest to both the whisky connoisseur and the person starting on their whisky journey.

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Diageo is the largest alcohol concern in the world, but it has always been committed to supporting its smaller distilleries. However, since 2001, once a year a small selection of bottles appears, including whisky from closed and less known distill- eries as well as spirits from more recognised manufacturers which are not included in the standard offer. The most recent collection breaks with the tradition. First of all, Port Ellen or Brora – the fixed points in previous editions – are missing. When you consider low supplies and the fact that both distilleries head towards re-opening, it is not a big surprise. The second reason is the price. Without the two more expen- sive products, the most expensive whisky costs below £1000. Also the number of lower priced bottles has been expanded, five out of ten whiskies are priced less than £160 pounds, three of which cost £100 pounds or less. Due to the fact that over Limited years prices are going up, it is important to ensure that the of- fer will not become unavailable for ordinary customers.

editions Diageo special releases

The premiere of special whiskies from Diageo became one of key points in the calendar of whisky fan.

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Diageo Special Releases 2018

The Singleton of Glen Ord Carsebridge Oban Caol Ila 14 Years Old 48 Years Old 21 Years Old Unpeated Blended ABV 57.6% Year 1970 Year 1996 15 Years Old Malt Price: ABV 43.2% ABV57.2% Year: 2002 ABV 57.1% 100 pounds Price: Price: ABV 59.1% Price: 750 pounds 450 pounds Price: 155 pounds 100 pounds

Talisker Pittyvaich Caol Ila Inchgower Lagavulin 8 Years Old 28 years old 35 Years Old 27 Years Old 12 Years Old Year 2009 Year 1989 Year 1982 Year 1990 Year 2006 ABV 59.4% ABV 52.1% ABV 58.1% ABV 55.3% ABV 57.8% Price: Price: Price: Price: Price: 70 pounds 330 pounds 675 pounds 300 pounds 120 pounds

89 The whisky tourism sector has recorded a constant growth which in recent years has turned into boom. Since 2010, the number of visits to distilleries of Scotch whisky has increased by 25 per cent, whereby the growth of eight per cent between 2015 and 2016 has reached a record number of 1.7 million of visitors. This number is equal to number of visitors of well- known tourist attractions such as the National Museum of Scotland or the castle in Edinburg.

2017 was a record year for Scottish tourism connected with whisky. Attractions connected with whisky available for the guests, such as distillery museums, have been visited by a re- cord number of 1.9 milion tourists from the entire world and Great Britain, that is 200,000 persons more than in the previous year. The largest number of visitors came from Germany and the USA and further from India, China and Japan. Research conducted by the Scotch Whisky Association (SWA) On also showed that in 2017 in visitor centres dedicated to whisky, tourists spent £60.9 million which constitutes a growth by 15.6 per cent in comparison to the previous year. On average, one the whisky tourist spent more than £32 during each visit in a visitor centre. Many distilleries invest the profits obtained from tourism in further expansion of attractions for visitors, for instance in mod- path ernisation of shops, creating applications for guests or sampling sessions. An increase of interest on the part of the visitors con- tributes to the opening of new tourist centres, organising blend- ing workshops or preparing special whisky editions.

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Diageo, the biggest manufacturer of alcohols in the world, has presented a three year plan and £150 million for modernisation Whisky Experience Scotch, which has recent- of all tourist centres in distilleries. Scottish whisky distilleries of ly celebrated its 30th anniversary, was opened in 1988 whisky started to organise trips in the 60s. of the 20th century, when 19 particular Scottish companies jointly invested but the first distillery to build a dedicated centre for the visitors 2 million pounds to create the showpiece of whisky industry. is Glenfiddich from 1969. In 1992, 30 distilleries were opened to the public and in that number of visitors since the opening year they hosted more than a million visitors. Nowadays, tour- ists can visit more than 50 Scotch distilleries. The whisky tourism sector has recorded a constant growth which in recent years has turned into boom. Since 2010, the 6,8 m number of visits in distilleries of Scotch whisky has increased by 25 per cent, whereby the growth of eight per cent between number of served drams 2015 and 2016 has reached a record number of 1.7 million visitors. This number is equal to the number of visitors of well-known tourist attractions such as the National Museum of Scotland or the castle in Edinburgh. 8 m the amount of the investment

2 m

1.9 m £15 m 1.7 m

Representatives of the Scotch Whisky Association empha- sise that the industry wishes to continue close cooperation 1 m with tourist organisations, local authorities and Scotch gov-

1 m ernment to provide the tourists visiting Scotland with an unforgettable stay and a possibility to discover everything which this country has to offer.

0 first visitors visitors first centre GLENFIDDICH 1969 2010 2015 2017

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Counterfeits on the auction market

While the business connected with rare limited whisky editions is flourishing, a proliferation of counterfeits has taken place. How to recognise them?

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Last year, a Chinese author of fantasy books on marital arts, Zhang Wei, purchased a 20 ml glass of Macallan in a hotel in Switzerland where he was resting with his grandmother. Surely, it is not the most thrilling news pertaining to this spirit but what happened next is much more fascinating and disturbing for everyone who cares about the purity of whisky. 20 ml Macallan came from a bottle from 1878 and Mr. Wei had to convince the management of Waldhaus Am See hotel in St Mortiz to open the unopened bottle. Next, he paid for this 7600 pounds which according to many people is the highest price for a glass of Scotch whisky in history. There was only one problem. Mr. Wei did not drink 139-year- old malt whisky, but blended whisky which almost certainly was distilled in early years of the 70s. of the 20th century. The fraud transpired when after publication of the story in media, experts noticed anomalies on the cork and label. After that, Waldhaus Am See hotel transferred a sample of the ques- tionable spirit to the University in Oxford where specialists in the scope of carbon dating discovered with 96% certainty that the spirit was created between 1970 and 1972. Further tests conducted by Tatlock and Thomson from Fife showed that the blend consisted of 60% malt whisky and 40% grain whisky. Waldhaus Am See hotel had no other option but to return 7600 pounds to Mr. Wei. If the bottle had been original, it would have been worth approximately £227,000; thus, it is easy to guess why frauds leave no stone unturned in attempting to falsify old whisky. Additionally, in recent years specialist whisky auctions have become popular, arising from a growth in demand on the part of collectors and investors. In 2017, the number of bottles sold on auctions increased by 42.47 per cent in relation to the previous year, achieving the 

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number of 83 713 bottles and their value has grown by 76.3 per cent and obtained a record amount of £25 million. Whisky consultants and Rare Whisky 101 (RW101) broker do everything to solve the problem of counterfeits; this is why they keep on conducting research. They managed to obtain Laphroaig 1903 in order to conduct an analysis. Contrary to Macallan from Switzerland, the “packaging” proved to be au- thentic for this period. Nevertheless, after opening there was a suspicion pertaining to the absence of phenol properties as- sociated with Laphroaig. For this reason, carbon dating was conducted. The results showed that there was a 95.4 per cent chance that the whisky in fact was distilled in 1956 or even later. Carbon dating is quite expensive since the University of Ox- ford charges £500 plus VAT for analysis of each bottle but as one skilled collector has recently said, “I would give £3000 - £4000 for a bottle which I am certain is authentic, but I would pay three times as much if it has been subjected to carbon dat- ing and has and authenticity certificate. This is why it is worth doing”. Andy Simpson from RW101 claims that caution must be exer- cised. “We do not recommend the purchase of spirits from the turn of the 20th century or earlier periods unless they under- went carbon dating. One of the ways to falsify is filling empty bottles and sometimes it is so easy that we have a list of spirits which should not be purchased. One of them is Ardbeg Very Young”. The purchase of whisky from respected auction houses, di- rectly or online, is the best way to avoid counterfeits because the majority want to protect their reputation and get rid of false bottles from the market. Another piece of advice: if a bottle looks “not like it should”, then it is probably a counterfeit. One should pay attention to

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labels with low-quality imprint or with edges which look as if they were cut by hand. A loose cap is another warning signal similarly to the level of filling which seems suspiciously high in comparison to the age of whisky. While the problem of counterfeit whisky is increasing, this is becoming reminiscent of what is happening in the world of wine where it has been existing for a dozen or so decades, from the moment when wine became a collector object for bankers and Internet millionaires. To show the scale of the problem of counterfeiting wines, ‘suffice it to say that 80 per cent of Burgundy wines before 1980 are counterfeits! Just mentioning the name Rudy Kur- niawan in the wine environment would make the majority of people’ faces turn white. At the beginning, Kurniawan seemed to be a greedy collec- tor of expensive wines and without doubt, a connoisseur with vast knowledge but in the end, it turned out that he was a fraud on a great scale who counterfeited bottles worth mil- lions of pounds. In 2013 he was convicted for 10 years of im- prisonment in the USA. The world of whisky is not experiencing this scale of the problem yet but last year a significant operation in Finch- ley was discovered where 41-year-old man was arrested for counterfeiting rare alcoholic drinks and filing old bottles with cheap spirits. The fraud has been identified by Isabel Gra- ham-Yool, a director of online auction house, whisky.auction. Several counterfeited bottles among spirits submitted for sale gave rise for her suspicions. On the other side of the Atlantic, forgers also emerged from hiding. At the beginning of the year, a citizen of New York state admitted in Franklin county to selling counterfeit Van Winkle bottles and the owners of Buffalo Trace dedicated 

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$500,000 for fighting with counterfeit whisky. Empty bottles of Pappy Van Winkle were purchased on Ebay by three or four persons, paying a suspicious amount. These bottles came to the market filled with no one knows what, appearing on web- sites requiring invitation, for instance BottleSpot as well as on Facebook. Also, counterfeiting of Malt Card Series of Ichiro and Karuiza- wa malt whisky from Japan took place due to their rarity and price, which sometimes reached a six-digit value. In the last year, whisky retailer The Whisky Exchange offered for sale bottles from one cask of 31- year-old and 33-year-old “Gold- en Geisha” Karuizawa whisky, and it introduced cutting-edge technology, placing a microchip in to the label to make the lives of potential forgers significantly more difficult. An international consumer group, SafeProof.org, has been established to fight with counterfeited alcohol and a Europe- an project “Food Integriry” (within which a key participant is Scotch Whisky Research Institute) deals with problems con- nected with counterfeiting food and drinks. The problem does not concern only “expensive and rare” spir- its. Professor Tony Bagnall from the University of East Anglia’s School of Computing Sciences claims that as much as 25 per cent of the licensed locals in some parts of Great Britain had counterfeit alcohol for sale, but the problem is global. In China approximately 25 per cent of the imported alcoholic drinks are counterfeits. “Alcoholic drinks are a popular target for fraud, and which can constitute a real threat for health since illegal productions of alcohol can contain harmful pollutions, for in- stance methanol”, says professor Bagnall. “Counterfeit alcohol is also a problem for the integrity of brands. Another chal- lenge is the fact that frauds do not pay taxes so we deal with economic costs as well”.

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“Presently, the only way to check the originality of alcohol is opening a bottle and sending a sample for tests. But this solu- tion is not perfect, in particular in the case of very expensive bottles which cannot be sold after that, even if their originality has been confirmed”. “We have been working on developing a non-invasive mo- bile device which would scan the spirit inside a bottle to dis- cover the content of alcohol and check it for the presence of methanol. The idea is to check whether percentage content of alcohol in the bottle is compatible with the label. If not, the bottle is probably a counterfeit. This would allow for massive checking of alcohols with very low cost”. At the same time in Scotland, Distilled Solutions company from Glasgow has been working on equipment which uses technology called “Modulated Roman Spectroscopy” to scan whisky bottles and determine their age, content of malts and grains (if applicable) and even types of casks in which the spir- it matured. This entails creation of data base which includes samples scanned before bottling and requires involvement of all major manufacturers. For several years, leading distilleries such as Diageo and Chi- vas, have been using QR codes (a variety of bar code) to fight with frauds. Each bottle receives a unique QR code during production process. An application for smartphone allows the customer to check whether a bottle is original. Codes can also be used for marketing purposes. However, even such wonderful technology would not avoid the embarrassment of Macallan when it ordered the removal of 19th century bottles from a wall exhibition in its new dis- tillery because they were found to be counterfeits. But this is nothing new...

97 WHISKY MARKET REPORT 2018/2019 Forecasts

The whisky market is constantly growing in strength: on one hand thanks to Scotch whisky exports, on the other hand due to the dynamically growing auction market.

Growths on the auction markets are reaching ever increasing heights; thus, this year we were able to observe such spectacular auctions as those connect- ed with Macallan 1926.

Also, we are able to fight increasingly more effectively with counterfeits on the auction market. New technologies will soon allow us to eliminate this phenomenon, which consequently will lead to cleaning up and shrinkage of the market. Collectors’ demand will focus on imported bottles which can lead to further growth in prices.

The investment market for whisky casks has been steadily evolving. The uniqueness of these investments consists in the fact that they are independ- ent from financial markets; therefore, even a possibility of occurrence of an economic crisis does not affect them. It is worth emphasising one more es- sential factor which influences the profitability of investments in casks. It is the value of the British pound. Its present persistent low exchange rate makes this moment a good time to invest in whisky.

Therefore, both Scots as well as investors can look into future with optimism. Photo Olga Kharina Photo

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