Irish whiskey: Sky's the limit

Irish whiskey is really pushing forward as a spirits category. With the world’s thirst for whisk(e)y, the sky appears to be the limit. Christian Davis reports.

Irish whiskey is on an almost unbelievable high at the moment. In the teeth of some difficult economic trade winds, the sector has posted up more than 11% growth. International Wine & Spirit Research reports: “Irish whiskey remains one of the hottest categories in the global marketplace, rising by 10% between 2012 and 2013 to reach a new high of 6.9m cases.

The category has more than doubled since 2004. Much of the credit must go to Irish Distillers which, from 1966, was the sole remaining supplier and had the task of both category and brand building. That task seems less onerous today given the favourable trends, but some forget that, for many years, the Irish category was relatively moribund.”

It goes on: “The big change in the industry is that it is no longer controlled by one producer (Pernod Ricard’s Irish Distillers) and, in recent years, Diageo through its acquisition of Bushmills in 2005, William Grant with Tullamore Dew (2010) and, most recently, Beam with Cooley (2012) have all entered the category.

“There have also been some very interesting and ambitious start-ups, such as the Teeling Whiskey Company, which was formed in June 2012. The Teeling family previously owned Cooley.”

Undoubtedly Irish Distillers’ Jameson is the engine of the growth. The brand represents approximately 80% of the overall sector and is itself 12% up in sales and 9% up in volume, according to Brendan Buckley, ID’s innovation and prestige whiskey director.

In Impact magazine’s top 100 spirits brands, Jameson has leapt 12 places to number 17. One could argue that Jameson is on the way to transcending its category in the same way that Johnnie Walker, Jack Daniel’s and Bacardi have risen above their respective categories.

Asked how Jameson appears to be tearing down barriers, Buckley checks and looks slightly hesitant: “It comes back to taste: the smooth delivery. The taste profile (of Jameson) has phenomenal resonance.”

“You have scotch whisky and US whiskies. Jameson is the third way - very premium but without the pretence of other whiskies. Premium – but accessible,” he says.

John Teeling, former owner of Cooley and now director of the Great Northern Distillery, which is gearing up to produce 6 million litres of pure grain alcohol and 1.8m litres of malt/pot still alcohol, agrees there is something special about Irish whiskey, if not necessarily just Jameson.

He tells DI: “ It’s our climate affecting the grain and the water. I do not believe it comes from maturation. The climate is graceful with no extremes.”

Trained as an economist and with 25 years’ experience in whiskey making, Teeling is convinced that, along with milk, whiskey can and will become a major industry for the republic.

“In the early 19th century Ireland had 2,000 distilleries and 60% of world whisk(e)y sales,” he says.

From being the largest whiskey producer, the decline began in the mid 1800s and Irish slumped to about 2%. Many have blamed Prohibition in the US, but Teeling claims the decline started way before that.

From a monopoly with Irish Distillers owning Bushmills, a revival began in the 1980s. Fast forwarding to today, in the last two months William Grant has opened its e35 million distillery at Tullamore and Walsh, backed by e15m from Illva Saronno, has ‘turned the first sod’ on a e25m distillery in County Carlow, which will produce 500,000 cases (2m litres of pure alcohol, LPA’s), or 6m bottles of pot, grain and malt whiskey annually.

Founder of Walsh Whiskey Distillery Bernard Walsh said: “This is a significant day for everyone associated with Walsh Whiskey and our goal to be recognised as the leading independent distiller of premium, craft, Irish whiskey in the world. We are now 15 years in business and we are very grateful to the thousands of people across the world who choose our whiskies and also to all of our international partners who make sure that Irishman and Writers Tears are available in 30 countries and growing.”

He added: “Royal Oak is a special and wonderful place to create world-class whiskey. I look forward to us commencing production in early 2016.”

At the other extreme, there is Dingle in County Kerry with three pot stills and an output of three casks a day, and Echlinville at Kircubbin in County Down in the north, claiming to use barley grown on its own farm to produce pot still and malt whiskey, a limited edition of 144 casks using three sizes – 200-l, 120-land 60-l. Its brand is Patron’s Promise and managing director Shane Braniff has Patron’s coming in pot still or malt, in a number of cask finishes.

In between, we have the Teeling family, flushed with 51% share of the US$95m the company got from Beam for Cooley. Stephen and brother Jack are running the Teeling Whiskey Company, which is building a boutique distillery in the once notorious Liberties area of Dublin. Meanwhile, father John is retro-fitting the former Diageo-owned Harp brewery in Dundalk. Stephen tells DI they hope to commission TWC Dublin in January and are looking to open around St Patrick’s Day, 2015.

Father John, who has immense plans for Dundalk, hopes to have 3.6m litres annually from three copper fermenters, which are being converted into pot stills, and 8m litres from a column still.

According to various estimates, more than 20 distilleries will be coming into production over the next few years – most will be smaller, boutique pot still operations. Teeling is convinced that estimates of future demand for Irish whiskey are at best conservative and there will be a significant shortfall of grain spirit. He intends to supply that.

“I do not think we will have enough capacity,” he says. “I think we have underestimated. Irish whiskey is growing very fast in western markets but there is opportunity in Russia and eastern Europe, countries where scotch is not so established. There are also the likes of Africa, Indonesia, the Philippines.”

ID’s Buckley agrees: “This growth is basically from a handful of markets – US, South Africa, Russia and global travel retail. There is also potential in mature markets and emerging markets, such as China, South America and Brazil.

“The US is the east and west coast but there is considerable headroom for growth, as there is in middle America. The potential is enormous. Jameson is ahead of scotch in Russia. It comes back to the taste: the smooth delivery.”

Buckley calls Jameson the “category icon” and reiterates that Jameson’s runaway success comes down to its smooth, easy-to-drink delivery. But that’s not all.

“Trial and furthering our relationship with bartenders are still a big part of the strategy,” he says. “They are the ‘filters’ to consumers. With Jameson, it starts with the product. It is a long-term investment to educate (consumers) and nurture bartenders. Hence the Irish Whisky Academy (at ID’s huge distillery in Midleton, Cork). It started with bartenders and journalists, now it is open to the public. We want to immerse them in the experience,” he says.

But Buckley and ID are not sitting back on the coat tails of Jameson’s success. He reels off a startling number of other things that are going in the portfolio.

ID has just launched Midleton Very Rare, a pot still blend created by former master distiller Barry Crockett and his successor, Brian Nation. There will be two new pot still expressions before the end of June 2015, thanks to the undertaking given by former ID boss and soon to be overall head of Pernod Ricard, Alexandre Ricard.

There is Jameson Cask Mates, where Jameson barrels were sent to a brewery in Cork, filled with beer then sent back empty and re-filled with Jameson. A genuine collaboration – Buckley sees legs on that concept.

ID’s single pot still whiskies have grown 15.2% since the category was created in 2009. Redbreast accounts for the lion’s share, followed by the ‘Spots’ – Yellow and Green (at some stage there will be a Red, which is likely to be a 15-year-old), not forgetting Midleton with it latest launch.

Going back to bigger brands, Buckley says Power’s, which was originally a Dublin whiskey, is being repositioned as a whiskey for serious drinkers. Buckley says it is being positioned against “the bruiser whiskies such as Johnnie Walker Black Label, Woodford Reserve and Knob Creek”.

On the other hand, Paddy, a lighter whiskey originally from Cork, is being aimed at entry-level whiskey drinkers, hence the flavoured variants which were launched last year in the US and France.

Buckley also points to the formation of the Irish Whiskey Association this year, modelled on the highly influential Scotch Whisky Association and ID’s academy as further evidence of the growing importance of and interest in Irish whiskey.

Bushmills in the north, Diageo’s Irish whiskey outpost has also delved into flavours with Bushmills Irish Honey, which is available in the US, Ireland, Belgium, the Netherlands, Great Britain, Germany, Portugal, Russia, Poland, Bulgaria, Baltics, Israel, Czech Republic and GTME (global travel retail and the Middle East). The brand seems a little lost among Diageo’s huge scotch whisky portfolio. It is not one of the company’s strategic brands so it does not get the focus the likes of Johnnie Walker, Smirnoff and Tanquerary get.

Nevertheless, Bushmills’ Irish whiskey global brand director Kate Glenn is bullish. She says: “The latest results from Bushmills for the year ended June 30, 2014, show strong global growth of 8% volume and 7% NSV (net sales value). Our fastest-growing markets are currently Russia and eastern Europe, Germany and GTME, which are all outpacing the category growth.

“Premiumisation is playing a big part in expanding the category. Global expansion presents a great opportunity. There are many countries where consumers still aren’t that familiar with Irish whiskey, where we’d hope to replicate the success that we are seeing in Russia, Bulgaria and other eastern European countries - where we only began selling Bushmills about five years ago and the brand is now well established with many adorers. Premium spirit drinks such as flavoured whiskey innovations are also playing a big part in expanding and energising the category,” says Glenn.

Finally there is William Grant – owner of brands including Glenfiddich, Balvenie, Hendrick’s and Monkey Shoulder – investing heavily in Tullamore. The impressive new distillery on a 58-acre site will produce initially 1.83m litres of pure alcohol and will be capable of producing 1.5m cases of whiskey from its four copper stills, six fermenters, each with a 34,000-l capacity, and warehousing for 100,000 casks. A grain distillery is part of phase two.

It will be many years before this distillery will produce all the whiskey that goes in the Tullamore Dew brand, if that is the intention. At present the grain and pot still comes from Midleton and the malt from Bushmills. Tullamore Dew is the number two Irish whiskey brand with more than 850,000 case sales, notably in central Europe, the US and the Nordics.

It is the company’s intention to produce new expressions and, to celebrate the opening, it has produced a Tullamore Dew limited-edition Celebratory Phoenix Single Batch, which comprises 2,014 bottles and features all three types of Irish whiskey – malt, pot still and grain – matured in bourbon and oloroso sherry casks before being finished in virgin oak casks. It is non-chill filtered and retails for around €89.95.

TD global brand ambassador Caspar Macrae, says: “William Grant is all about trading up to a more premium offering. The consumer will pay more for our products.

“We see huge potential in the US and we are looking to double the size of sales over the next five years. We are looking specifically at California, New York, Illinois, Florida and Texas. “We are talking about a bright future, yet to be defined,” says Macrae.

With the likes of Irish Distillers, William Grant and the Teelings leading the charge, the future of Irish whiskey does indeed appear to be bright.