Andre Levy, chairman of Protégé International, comments on the reopening of Jameson distillery to the public, new brands and the wider Irish whiskey industry
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We welcome anything that contributes to the growth of Irish whiskey in all its forms, be that through an increase in exports, boosting Irish whiskey tourism or developing new distilleries. Unfortunately, the Old Jameson Distillery will not serve to help grow smaller and independent Irish whiskey brands or the overall category but serves only to reinforce the dominance of Jameson in the Irish whiskey category.
Despite the reports of planned and new distilleries, the reality is that there are only four functioning Irish whiskey distilleries with mature whiskey stocks, who are very selective about which brand they will supply – a situation which only serves established players and does not allow for the development of new brands despite Irish whiskey sales being forecast to double by 2020. The dominance and selectivity of the large spirits companies, who between them own over 90% of production capacity, is clearly demonstrated by the launch of Roe & Co. by Diageo who left the category in 2014 and have now re-entered with supply from distilleries denied to The Wild Geese.
New brands are the future lifeblood of the Irish Whiskey industry and are required to drive the industry forward to reach its true global potential. Unfortunately, the current market structure actively inhibits the development of new brands by concentrating supply in the hands of established brands and large multinationals. For the growth of the category to be realized, there is a need for a wholesale bulk Irish whiskey market that will enable smaller brands to access a secure supply of bulk whiskey and grow their brands while new distilleries are being developed.”
This wholesale market structure has been particularly successful in Scotland with regard to the Scotch whisky market and we have made the case for the same structures to be introduced in Ireland to the benefit of the Irish whiskey industry as a whole. The rationale and merit of such an approach has been clearly illustrated by Dr Pat Massey in the Compecon Report on the Irish Whiskey industry. Indeed, the 2015 ‘Vision for Irish Whiskey’ as produced by the Irish Whiskey Association has called for such a market and is allegedly supported by the same large industry players who actively participate in the Scotch whisky wholesale market yet for some reason refuse to do so in Ireland.”
The introduction of a wholesale bulk Irish whiskey market will benefit all industry participants and ultimately help smaller brands to emulate the success of Pernod Ricard and large established actors”.
The Economic Analysis of the Irish Whiskey Industry report makes the following key-claims:
- Unlike the Scotch Whisky industry, Ireland lacks a functioning wholesale whiskey market, resulting in new entrant uncertainty in supply and cost
- The wholesale whiskey market in Scotland has facilitated the growth of a huge industry with 5,000 blended whiskies and hundreds of malts, and enabled firms without a distillery of their own to develop major international brands such as Dewar’s, Cutty Sark, and J&B. Indeed, in the not too distant past many famous Irish whiskey brands, including Millars, Glen Erin, Kinahans, Burkes and Redbreast, were owned by firms which never owned a distillery
- There are only four distilleries in Ireland currently producing mature whiskey while Scotland has 115 working distilleries with 30 new ones under construction, highlighting the benefits of a functioning wholesale whiskey market
- There are a number of significant barriers to entry in Irish whiskey distilling, including the mandatory three-year maturation period before the product can be sold
- Several companies have built Irish whiskey brands to date and that have contributed to the growth of the category have been undermined by an inability to retail their product immediately, and/or purchase mature whiskey
