Why I’m missing out (a train of thought on why Diageo’s new price policy might impact us all)

Where do you set the price bar when buying bottles? This is not only a question that will get a different answer depending on who you ask, it’s likely you’ll get a different answer from the same person depending on where they are in their ‘journey’, assuming they’ve taken the red pill and are now exploring how deep the rabbit hole goes. I’ll apologize in advance because this is probably going to end up as a pretty self-centred post about why I have been, am and probably will be missing out on some excellent whiskies in recent times and times to come. I just think some of you might relate.

Realisation dawned on me, quite abruptly at that, that in the past year or so, I’ve been holding myself back on more than one occasion on whiskies I was convinced I absolutely needed. Let’s make that ‘absolutely wanted’. On numerous occasions, I saw a bottle being announced, got really excited, made a note of it to make sure I’d go online when it became available, yet at the very end finally pulled out. The reason was always the same: the price tag. And before you think this will just be another rant about whisky becoming too expensive (it is, btw), it’s not. It’s about how maybe it’s time we (as in: I) need to recalibrate my benchmark on what is an acceptable price for a bottle of whisky. I know people have been complaining about whisky becoming too expensive for 20 odd years now, so as such it’s old news, but I fear that what we’re about to witness, might hit us like an avalanche.

Now, I’ve bought expensive bottles over the years, whiskies (well) north of €100, although not that many, as I am of a stubborn belief and conviction that there is a shit ton of very good, nearing the line of excellent even, whiskies out there sitting in the €50 - €100 range. I think the vast majority, some 80% of what’s in my cabinet, are whiskies in that price bracket, the other 20% being budget friendly (less than €50) or ‘folly’ (+€100) bottles.

The bottle that triggered this thought which in turn led to this post, was a single cask release of a bottle of Bunnahabhain 12 yo. Cask strength, natural colour, unchill filtered: all the boxes ticked basically. The thing being: it retailed at €130. And to be clear, I’ not talking about the recently released official 12 yo cask strength (which on secondary is already steadily pushing towards €200, btw) , this was from an indie bottler.

I know it’s probably some part of my reptile brain that’s stuck in the past, but when I see a whisky with a 3 digits price tag, I almost automatically pause and a whole process of consideration gets kicked into motion. And it’s a psychological thing more than anything, because I have bought cask strength whiskies of similar or even younger age that were cleverly priced for just shy of €100 without so much as blinking an eye or thinking twice about it. There is something deeply rooted into my mind-set that stops me from making the equation of (12 yo Bunna for €130 = a good deal).

I’m well aware of there being a whisky boom going on out there, and I’m equally aware of the fact that prices for quality casks are getting to the point of ridiculous, and I know just about enough about economics to understand the law of supply and demand. But still. This is not even meant as a complaint towards bottlers or distilleries bumping up prices over the years (been there, done that), it really is about me (and I’m guessing I’m not alone on this one) getting taken aback when I see what some bottles now sells for (like hot cakes, If I may add). It really requires me stepping over some sort of mental threshold to go out there and pay premium price for a bottle of 10 or 12 year old (hopefully) cask strength whisky. Even for what is nowadays considered a somewhat premium brand when it comes to special releases or single casks. It’s not even about being a cheapskate or holding a grip on my purse, I think, it’s really about me needing to come to grips with the fact that expensive is the new normal.

Tip of the iceberg.

If I’m complaining now that a lot of new releases are pushing the limits of what the market will stand for, I feel I’ll soon regret not adjusting my mind-set to this new normal. I think many have heard the news/rumour by now that Diageo is about to announce a substantial price increase on some of its products (Talisker 18 and Lagavulin 16 getting namedropped a lot). And I do mean ‘substantial’, as the former is said to go up as high as £200 and the Lagavulin 16 will soon be retailing around £100. This is economics at its coldest and most ruthless I think. And it’s not even about taking the wind out of the sales of the flippers, as these are, generally speaking, core range, fairly available expressions, it’s an artificial premiumization of brands, stretching things to the limit of what the market will stand for.

You could argue that we only got ourselves to blame, of course. We happily followed the (granted:far less dramatic) price increases over the past 5 to 10 years for starters, and for whatever reason, we convinced ourselves that £50 - £60 for 3,4, 5 year old whisky from the new wave of young distilleries is a fair price, not to mention what happens with all the inaugural and / or limited releases of pretty much any given distillery on secondary. So if we’re content paying £60 for a 5 year old whisky, why shouldn’t a 16 yo whisky retail for £90, or an 18 yo for £200? Of course there’s a lot of other factors playing when it comes to the pricesetting of young distilleries. For starters they are usually operating on a much smaller scale, and furthermore they don’t have the same, often global distribution network nor deals with other companies securing 1st pick access to casks, etcetera, etcetera. The simple response from Diageo here, it seems, comes down to the age old saying ‘money talks and bullshit walks’.

This of course begs the question what this year’s special releases will retail for (12 yo cask strength Laga for €180-€200? I’m not at all certain it won’t happen), but a more pressing matter is how the market will respond. I hear plenty people saying something in the lines of ‘I’ll happily take my business elsewhere if Lagavulin 16 will be a £100 bottle’. But will they? Take their business elsewhere, I mean. Even if we stick to our guns and step away from £100 Lagavulin 16, we might find ourselves scratching our heads looking for quality alternatives that do offer good value. Diageo is, after all, the leading corporation in the world of scotch whisky. It doesn’t require a degree in economics to understand where this is going. Likely (in fact, I’m certain of it), it’ll affect all and everything. Diageo’s main competitors, the other big boys so to speak, might at first stand by and watch with interest how the head honcho of whisky ‘s bold move plays out, but if proven successfully they probably will follow sooner rather than later. Then there’s the distinct possibility that retailers and/or importers will ‘adjust prices accordingly’ to be more in line with what ‘leading brands’ such as Talisker an Lagavulin are going for. And don’t think it won’t happen: The retail price for a bottle of Kilkerran 16 yo anywhere on mainland Europe is easily €100 or more. And finally, in the off chance that the other players on the market won’t jump on Diageo’s premium price band wagon and we all swarm to their brands as a result, sooner or later the question of supply and demand will come in to play and those prices will start creeping up as well. I don’t like to be the guy to rain on a whisky parade, but over time, a lot of Scotch distilleries might be affected, far more than the 28 now owned by Diageo.

Now obviously not all whiskies from all of distilleries will see a serious bump up in prices, not immediately anyway, if only for the fact that not all of distilleries have official releases. A lot of them are ‘work horse’ distilleries catering for blends, but they are enjoying quite the fanbase through their independent releases none the less (Teaninich, Blair Athol, Linkwood, Glentauchers…) . I‘m not very optimistic about the announced price hikes not cascading through and affecting the prices for each and everyone involved. What that will mean for independent bottlers and the smaller distilleries and businesses remains to be seen, but even if the price hikes aren’t as dramatic as with the Laga’s, Taliskers or other ‘rockstar’ distilleries, I’m still a bit of a pessimist. We can only hope it’ll treacle down gently rather than go full Niagara.

What really troubles me, is that I’m pretty sure that ‘they’ will get away with it. Like I said, we’ve accepted previous price increases, albeit they were not so abrupt and dramatic, so chances are we’ll moan and complain and then swallow this bitter pill as well. As there’s still no sight of the end of the boom, Diageo are now at a point where they are ready to take their chances on doubling their prices, saying we can take it or leave it as they have plenty of markets, both here and across the globe that will stand for these prices if we don’t. So we can either shut up and cough up or it’ll be them taking their business elsewhere rather than then the other way round.

So, you tell me: stock up now while we can at more or less reasonable prices? Go with the flow in times to come and cough up the money? Or end up being really critical about what and where to purchase, perhaps even shifting focus entirely to whisky and spirits from other countries? I love whisky, and most of all scotch whisky. But if I’m not at all convinced that €130 for a 12 yo cask strength Bunnahabhain seems like a good deal today, I’m dreading the thought of having to convince myself that a chill filtered, coloured, large scale produced 16 yo, 43% ABV whisky retailing for €100 or even more, is a reasonable price.

Picture taken from Whiskybase.com: Talisker 18 yo for a €105 - soon to be distant memory?