Irish Whiskey: Distilling Gem

Irish Whiskey is booming every which way. Everyone appears to be up for it, including Christian Davis who went to the Midleton Housewarming in the Emerald Isle

It is nigh-on impossible not to get swept up by the enthusiasm for Irish whiskey. The sector is booming, with volume up approximately 10% and value up 17% (IWSR/industry estimates). Basically, the distillers and brand owners cannot make enough of the Emerald Isle’s amber nectar.

As well as the enthusiasm there is the bonhomie, seemingly genuine interest in each other’s progress. At the recent official opening of Irish Distillers’ new still house (more of that later), Brendan Buckley – Irish Distillers’ haughtily titled innovation & category development director – quipped: “This is the best job in the world – but don’t tell anyone.” Apologies. He was talking to a journalist. He went on: “We’re in an incredible position. There is a dynamism and investment behind Irish whiskey. Also we have got William Grant with Tullamore Dew, Diageo with Bushmills and Beam now with Kilbeggan.”

Now normally marketers and brand managers, particularly representing the big corporate companies, would rather have their finger nails pulled out than mention their arch rivals. Not in Ireland. Not in Irish whiskey.

Stephan Teeling who, along with father John and brother, Jack, sold the Cooleys business with the Kilbeggan, Tyrconnell, Greenore and Conamarra whiskey brands to Beam for a cool US$95 million, positively oozes with appreciation of Irish Distillers’ Housewarming, the name of the official opening of the Garden Stillhouse at its huge Midleton distillery outside Cork. A Ä200m investment to double production and maturation. Thank you Jameson, from one and all.

You do not usually invite your rivals to a major launch or opening but the Teelings were at Midleton along with hundreds of other people, including the Taoiseach (Irish prime minister), who opened the extension, the agriculture & food minister, plus journalists and bartenders from around the world. 

You have to hand it to Pernod Ricard and Irish Distillers – they know how to put on a party. They emptied and dressed one of the huge maturation warehouses and got the legendary Chieftains, along with two other bands, to entertain the throng. A splendid time was had by all.

Stephen Teeling eulogised to Drinks International about how good ID’s Midleton Housewarming was. Apparently father John, a well-known figure in Ireland, could not get over the size of the grain silo, describing it as a ‘skyscraper’.

Another slightly incredible development about Irish whiskey is that the Teelings are back. Normally when you sell your business, particularly for serious money, you have to sign an agreement not to come back for a stated time. Yes, Beam bought its business but the family, which goes back to Walter in 1782 selling his distillery to William Jameson, brother of the new famous John, is back as the Teeling Whiskey Company and has just concluded a deal with Diageo to buy the old Harp & Smithwicks’ Great Northern Brewery site in Dundalk and convert it into a malt and grain distillery.

How come? Teeling says that, having acquired a great deal of aged whiskey stock, they made it clear to Beam that they intended to stay in the sector. Beam wanted the Cooleys business enough to acquiesce on trying to exclude them.

Having seen the Teeling offerings in Drinks International’s Travel Retail Awards for the TFWA Cannes exhibition, you have to welcome their presence in the category. The Teeling Whiskey Small Batch, non-chill filtered, aged in rum barrels, in a Dublin traditional dark bottle along with the Vintage Reserve 21 Year Old Single Malt and the limited-edition The Gathering 11 Year Old, both single malts and all 46% abv.

Teeling is effusive – and he isn’t the only one. Benoît Batard, who is global marketing manager for William Grant’s Tullamore Dew, is equally enthusiastic. “Irish whiskey is booming,” he says. He trots out the 9%-10% growth but tempers it with the fact that Irish still only represents 4% of the total whisk(e)y sector. Nevertheless, in 10 years it has gone from 3 million 9-litre cases to 6.2 million.

Jameson is the giant, accounting for around 4 million cases, while Tullamore Dew is, it has to be said, a distant second with around 850,000 cases. Diageo’s Bushmills in Northern Ireland is third with approximately 700,000 cases (IWSR/industry estimates).

Up until fairly recently Irish Distillers’ Midleton distillery was making most of Ireland’s whiskey, irrespective of the brand and owner. That has always been an Achilles heel of the Irish whiskey story: its lack of differing provenances. This is changing.  

Building for the future

Work on building William Grant’s distillery for Tullamore has just started and the Teelings intend to build a single pot still distillery in Dublin’s famous Liberties district. There are several other projects in the pipeline. There is the Dublin Whiskey Company; a plan to build a Ä10m distillery on Horse Island producing approximately 300,000 litres of pot still whiskey; Echlinville and Belfast distilleries in the north, Slane Castle, West Cork Distillers and Glendalough Irish Whiskey.

According to business analyst Gavin Daly of the Irish Sunday Times, there are projects for Niche Drinks to build a £15m (Ä17.8m) distillery in Derry, plus others in Galway, Portlaoise and Longford. Dare one say it? From famine to feast, as regards Irish whiskey.

But back to the big one. Dan Lundberg, Jameson’s global brand director, says the flagship Irish whiskey is now a 4 million-case brand. Its top markets are the US, Russia and South Africa, apparently. Its link with films has worked well for the brand in the latter two countries. While most see New York and the East Coast as its bedrock, Lundberg claims the brand is big all over the US.

He acknowledges that Jameson’s ‘hits’ are patchy compared to the leviathans of Scotch. Nevertheless, once all the Midleton stills are underway, there will be plenty of opportunity in the likes of Asia. India loves whisky and South America needs to be shown there is more to ‘usquebaugh’ (Gaelic for the ‘water of life’ which became ‘usky’ and then ‘whisky’) than just the Scottish version.

Back to Buckley. He says the success of Jameson has resulted in the Ä100m investment in new stills, doubling Midleton’s capacity to 64 million litres of pure alcohol, and a further Ä100m in buying the land and building 24 new maturation warehouses about four miles from the distillery. 

“It is a statement of intent and confidence in Irish whiskey,” he tells DI: “Irish whiskey was the premier whiskey years ago (post US Prohibition). Now it is re-establishing itself. There is a renaissance. Fifteen or 20 years ago, the back shelf was populated by vodkas. There has been a sea change in the fashionability of whisk(e)y.

“There is growing popularity of whisk(e)y and a massive increase in women drinking whisk(e)y. There is a consumer trend of breaking the boys’ club,” says Buckley

With typical Irish eloquence, he says: “The success of Jameson has been the heavy lifting for the industry. We can now go and polish off the hidden gems. Jameson has blazed the trail.”

With the creation of the single pot still category to rival Scotch’s single malts, ID has added Yellow Spot to Green Spot, we have Power’s John’s Lane, Midleton The Barry Crockett Legacy, Paddy Centenary Edition and a new Redbreast is on its way.

Tullamore’s Batard agrees that Irish whiskey appeals to potential new drinkers. “It is cleaner, fresher and smoother than Scotch and bourbon,” he declares. “It has more heritage than bourbon and a more social image than Scotch.”

Tullamore Dew is number one whisk(e)y in the Czech Republic and number one Irish whiskey in the Baltic countries and Germany. Batard sees the opportunity to “expand the global footprint” of Irish whiskey to Asia and Latin America but acknowledges that it will take time. The E35 million distillery will have a capacity for 850,000 9-litre cases when production gets under way.

Bob Gorman, Beam’s world whiskey marketing director, has an American perspective on the success of Irish whiskey. “Irish whiskey is the fastest-growing category in the US whiskey market, up 400% since 2002, and up nearly 23% in the past year, according to the Distilled Spirits Council of the United States.”

“Irish whiskey as a category has grown at a compound annual growth rate of 8.8% since 2008 (IWSR), outpacing Scotch with a CAGR of 1.7% since 2008 and American whiskey with growth of 4%. Other ‘whiskey’ is primarily led by India and has grown at 12.5% since 2008 (IWSR). The US has been a key driver of Irish performance, representing 34% of the category and growing at 19% CAGR since 2008 (IWSR),” he says.

Stateside growth

He agrees with Lundberg about the spread of Irish whiskey. “We are seeing growth in Irish whiskey across the States as the category extends beyond its East Coast power base. Markets in the Midwest, South and West Coast are growing their share of the Irish category. 

“Irish whiskey is a vast and unique category and it’s important to sample many different styles so LDA (legal drinking age) consumers can truly appreciate how exceptional it is and discover where their tastes lie,” says Gorman.

As well as paying a hefty sum for the Cooley brands, Beam bought the 2 Gingers* brand in December 2012. Gorman sees that brand as stimulating growth and expansion, with particular regard to enticing women in Irish whiskey.

“Currently available in Iowa, Illinois, Nebraska, New York, North Carolina, North Dakota, Massachusetts, Minnesota, South Dakota and Wisconsin, 2 Gingers will now also be available in Indiana, Louisiana, Michigan, New Hampshire, New Jersey, Oregon, Pennsylvania, Texas and Washington in 2013,” reels off Gorman.

Artisan brands

Bernard Walsh, managing director and founder of The Irishman, concurs: “The Irishman’s top four states are Georgia, Texas, Colorado and California. For artisan brands such as the Irishman, they gain traction a lot quicker away from the Jameson ‘lime light states’.”

While virtually all of the players in Irish whiskey enthuse about the category, Diageo with Bushmills border on the reticent, bearing in mind that Diageo predecessor company Grand Metropolitan tried to buy Irish Distillers but was basically blocked primarily for ‘political reasons’ by the Irish government.

When Pernod Ricard had to divest itself of some of its whisk(e)y portfolio following the takeovers of Seagram then Allied-Domecq, Bushmills almost fell into Diageo’s lap. You would expect the company to be more enthusiastic about the Northern Irish brand, which lies in the area that boasts the oldest licence for distilling whiskey.

The fact is Diageo’s priority is Scotch whisky and Bushmills’ volumes and potential production capacity are not sufficient to make it one of Diageo’s priority brands, unlike Pernod with Jameson. So it suffers by comparison.

Nevertheless, Bushmills global brand director Kate Glenn is bullish. She says: “Global expansion presents a great opportunity for the category. There are many countries where consumers still aren’t that familiar with Irish whiskey, where we’d hope to replicate the success that we’re seeing in Russia, Bulgaria and other eastern European countries.”

Obviously with an eye to the success bourbon has had with adding honey to sweeten the whiskey, Bushmills has broken with the rest by launching Bushmills Irish Honey in the US, Ireland, Benelux countries, Bulgaria and the UK. It also relies on its Bushmills Live music event to bring younger drinkers into the distillery and into the category.

Walsh says: “As for Irish whiskey being a ‘one-trick pony’, that may have been the case 10 years ago but it is far from that now. Even ID realises this as it rolls out several new pot still whiskies each year and the beefing up of the Powers range. The consumer is looking for choice and authenticity and that’s what the Irishman has achieved by bringing its unique expressions to more than 36 countries with exports accounting for 95% of its business.”

In conclusion, going back to Stephen Teeling, he recounts his father commenting that as far as Irish whiskey is concerned, it used to be about St Patrick’s Day when you would have a pint of Guinness followed by a Paddy’s or a Powers as a chaser. 

Now he’s staggered to see Lady Gaga and Rhianna talking authoritatively and glowingly about Irish whiskey. Where will it end? Hopefully in tears of joy rather than sorrow.

As Daly concludes in his excellent Irish Sunday Times article: “Time will tell if there is enough room on the shelf for everyone, or whether the Irish whiskey dream goes sour.”

*2 Gingers was invented by an Irishman in Minnesota. It is a 40% abv blend of twice distilled whiskey, aged for four years, described as a “smooth, malty and slightly sweet taste followed by a tingle of honey and citrus”.