Earlier this January, the whisky world was stunned by the news that a bottle of whisky was auctioned off by Sotheby’s in Hong Kong for the price of around US$628,000 which set a new world record for the priciest bottle of single malt ever sold in an auction. Sure, it was no ordinary bottle of whisky: the Macallan Imperiale M Constantine – named after the Roman emperor who founded the Byzantine empire and ruled from 306AD to 337AD – is a rather unique and highly collectible creation. The prized amber liquid was chosen and blended by The Macallan’s whisky maker Bob Dalgarno from the distillery’s almost 200,000 single malt casks dating from the 1940s to the early 1990s.
The creation of the 6-litre crystal decanter that cocooned the precious whisky, by prestigious French house Lalique, also made history in its own way. Standing at 28-inch tall and weighing 11.3 kilograms – it’s a whopping 16.8 kilograms when filled, and can serve a total of 300 20ml drams – it was the largest decanter Lalique ever attempted and posed an incredible challenge in its making at its glassworks at Wingen-sur-Moder in Alsace.
“Carrying and hand-blowing the weight of crystal alone stretched beyond the absolute technical limits of how one can make a glass receptacle that size,” says David Cox, Director of Rare & Fine Whiskies at The Macallan. “They made dozens of these before they finally got one right. The fact they got one made at all was a bit of a triumph.” In fact, 40 decanters would be created and destroyed before the first flawless decanter emerged from the furnace.
But what made some in the industry sit up and notice about the Constantine sale was that it could mark an epoch in Scotch whisky history where Asia is concerned.
The winning US$628,000 bid for the Macallan Imperiale M Constantine far outstrips the amount that was paid for the previous record holder for the priciest single malt whisky ever paid in an auction. In 2010, the Macallan 64-Year Old in Lalique: Cire Perdue – made to commemorate the 150th anniversary of the birth of Lalique founder René Lalique – was sold for $460,000 in a lively auction at Sotheby’s in New York City.
But what made some in the industry sit up and notice about the Constantine sale was that it could mark an epoch in Scotch whisky history where Asia is concerned. Consider that the Constantine was one of only four Macallan Imperiale M ever made – aside from Constantine, there is the Justinian, Caesar and Augustus – with the winning bid coming from a buyer based in Taiwan. Of the remaining three, two were archived by The Macallan, with the last Imperiale M going to a private buyer from Macau.
“The fact that it sold for almost US$630,000 was a surprise; we were absolutely amazed and delighted,” Cox reveals. “But what it shows is there is a growing appreciation for rare whiskies and rare single malts in this part of the world.”
“The fact that it sold for almost US$630,000 was a surprise; we were absolutely amazed and delighted,” Cox (right) reveals. “But what it shows is there is a growing appreciation for rare whiskies and rare single malts in this part of the world.”
Whisky producers acknowledge that Scotch whisky consumption in Asia has been increasingly exponentially; a significant portion of the volume consumed in this part of the world are also concentrated on higher end – and pricier – products. But could this merely be the tip of the iceberg when much of the region is experiencing sustained economic growth?
“In Asia the propensity to drink the best you can possibly afford, which is a bit different in Europe where more economy-minded,” observes Cox, adding that it’s really in Asia where bottle culture – buying entire bottles of spirit and placing them on bar tables – is prevalent.
But the interest in Scotch whisky is a relatively recent trend in Asia. Even Macallan, one of the more iconic single-malt whisky brands, started humbly in this part of the world in 2001. “In the year 2000, we were hardly selling anything in this part of the world – maybe a few hundred cases,” shares Macallan’s Cox. But that was almost 14 years ago, since then demand for its Speyside single malt has skyrocketed. “We do more now in Singapore alone every month,” he says, adding that over half of its total business today stems from the Asia Pacific region.
Cox traces back that success to an advertising campaign in Taiwan. It borrowed heavily from a marketing campaign in the United States from the mid-1980s that targeting a very literate audience – one that probably read The New Yorker and was into fly-fishing (a relatively elite sport participated by many professionals like doctors and dentists) – that played very well to its premium positioning. That campaign itself was adapted from one in the UK in the early 1980s, a series of distinctive black-and-white advertisements that told funny little stories about people on their experiences with the brand.
“Around 2000 or 2001 our people in Taiwan saw what was happening in the US and thought the time was right to establish the Macallan brand there,” Cox explains. “And it followed a similar process – premium pricing that helped place us at the top of the category, and we had very energetic distributors there who spent a lot of time on branding and educating the consumers. That helped to build the brand from ground up.” What worked in Taiwan also translated very well into many mainland Chinese cities, and the Macallan similarly applied that model to markets like Hong Kong and Singapore.
“How do we cope with an explosion in demand in Mexico and Brazil, whilst also accommodating for increasing growth in this part of the world?”
But skyrocketing Scotch consumption in Asia is taxing whisky production beyond its limits. The biggest and most fundamental challenge faced by the Scotch whisky industry today is supply – they just can’t make enough of it, or make it fast enough. “I think a lot of people don’t appreciate how long it takes to make whisky,” muses Cox. “We’re in the wood for a long time.”
The UK has in place regulatory guidelines – the Scotch Whisky Regulations 2009 – governing the production of Scotch whisky, which dictate that only liquid produced in Scotland distilleries and aged for at least three years in oak casks can legally be considered Scotch whisky. And that’s not counting the additional years required for specific age statements. Existing stocks, especially those of older vintages, are already drying up.
“If you look at what happened with the demand in the Asia Pacific markets in the last 12-14 years, and let’s assume for the sake of argument that a similar growth pattern for single malts starts to establish itself in Latin America – which for a long long time been a strong market for blended Scotch whiskies 12 years old but where there are now signs that show single malts are being more appreciated – the question is: how do we cope with an explosion in demand in Mexico and Brazil, whilst also accommodating for increasing growth in this part of the world?” Cox asks. He concedes that at this point there is simply no way for Macallan to match all its demand in the foreseeable future – by necessity supply is going to be limited, and that means that allocations for different markets are going to be required.
The only way the industry can begin to start addressing that shortfall in supply, Cox says, is to increase its capacity. Diageo, for example, has unveiled plans to grow its whisky production capacity and will pour more than £1 billion into building new distilleries and expanding existing ones in order to slake the growing thirst for Scotch whisky around the world. The Edrington Group – which owns the Macallan brand – also recently announced a major plan to invest £100 million to build a spanking new distillery to crank up production.
The Edrington Group – which owns the Macallan brand – recently announced a major plan to invest £100 million to build a spanking new distillery to crank up production.
But the unanticipated global explosion in demand for and sustained interest in Scotch whiskies – especially Asia’s preference for older and rarer vintages – may mean that this coming new supply can be too little, too late. “This capacity (from our new distillery) will not come on-stream until 2017; so if you fast forward 12 years it’s only 2029 when we’re going to start seeing (whiskies produced from this new distillery) in the market,” warns Cox.
“There is no doubt that the issue of supply is the biggest challenge we’ve got, and it is for all single malt whisky makers – how are we going to be able to meet demand in the future? All we can say is that we’ll do our best, but we’ll never be able to satisfy all the demand we anticipate is coming in the next few years.”
This article was first contributed to and posted on Cosmone.com.