Scott McCroskie: Macallan ‘very close’ to 1m case sales mark
The head of The Macallan, Scott McCroskie, says the secret to the single malt’s success is a historical obsession with quality, as it nears the one-million-case sales mark.
Scott McCroskie, managing director of The Macallan
*This feature was first published in the September 2017 issue of The Spirits Business
James Bond may have swapped his usual shaken Martini for a refreshing swig of Heineken in 2012’s Skyfall, but for the film’s most explosive scene, another beverage stole the spotlight: The Macallan. A glass of 1962 Fine & Rare Macallan, which villain Raoul Silva referred to by name as a “50yearold Macallan” and a “particular favourite” of Bond’s, was placed on the head of sultry love interest Sévérine. Unfortunately, Sévérine met her untimely demise during a risky marksmanship trial, leading Bond to simply comment: “That’s a waste of good Scotch.” Despite its grisly role in the film, it’s difficult to imagine a more fitting drink for the world’s suavest and slickest spy than The Macallan.
The single malt Scotch has long been an emblem of the luxury goods market, appealing to those with a taste for the finer things. But according to Scott McCroskie, managing director of The Macallan, luxury is not a characteristic that the brand ever actively sought to assume. “In my view, you can’t really choose to be luxury – you either are or you aren’t, and it’s what you do and how you do it that confirms if you are a luxury brand,” he tells me on a rainy day in London.
“Luxury products have craftsmanship, heritage, style and sophistication, and they have integrity, and if you have these things you can become a luxury brand, but you can’t just decide one day: ‘OK, now I’m going to position myself as luxury.’
“The Macallan has accidentally become a luxury brand because of how it operated for years and years. It’s not a deliberate choice, but we are a luxury brand.”
The Macallan: The breadwinner
McCroskie became managing director of The Macallan in 2015 after spending seven years as commercial director for parent company Edrington. His role change was part of the company’s move to a brand-focused structure, and he was certainly not disappointed to have been selected to take the reins at The Macallan – Edrington’s breadwinner.
“In a way it was a classic case of ‘which is your favourite child?’,” he muses, “but Macallan was always my favourite child. My father actually drank it and I have loved it for a long time. So from a point of view of my connection to the brand, and I guess the size of it, for me it was a brilliant opportunity.”
McCroskie assumed his role at an exciting point in The Macallan’s history, two years after plans were announced to build a new £100 million distillery and visitor centre for the brand in Speyside. The distillery will be commissioned and start to produce spirit “over the next month or two”, McCroskie confirms. Finishing touches are still being made to the bar, visitor centre and other amenities for future guests.
The site will be fully functional by early next summer, and McCroskie is emphatic about how it is shaping up. “It’s going wonderfully well; it’s stunning,” he enthuses. “It’s really exciting, and we are just getting to the end of the main build phase. The new distillery is unique – I don’t think there’s anything like it; in fact, I don’t think there will be anything like it again. It’s something truly special and we are absolutely delighted with the progress.”
Macallan invested £100 million in the new Speyside distillery and visitor centre
The distillery’s rolling-hills design by architecture firm Rogers Stirk Harbour + Partners certainly turned heads when initial plans were released in 2013. Edrington has stayed pretty tight-lipped on its progress since construction work started, but provided The Spirits Business with a never-before-seen image of the site. McCroskie stresses that the spirit from the new site will be “identical” to that produced in the current distillery, using the same Forsyths stills and production processes. “It’s exactly the same, just more of it,” McCroskie says.
Edrington has not disclosed the new distillery’s capacity, but McCroskie says it is “about a third bigger” than the maximum capacity of the current site – which has also not been confirmed. He does, however, offer some benchmark by claiming that the new distillery will be of a similar size to “leading brands”.
Nevertheless, McCroskie says the project “isn’t really driven by capacity; it’s about wanting a brand home that’s in keeping with The Macallan brand”.
The distillery will play a key role in The Macallan’s future marketing messages and will be able to accept “about double” the number of visitors to the current distillery. “It’s still quite small numbers in the scheme of things,” says McCroskie. “We don’t want to be a mass tourism destination – that’s not the point. But we do want it to communicate a better essence of the brand.”
Scott McCroskie says The Macallan will continue to make age-statement and no-age-statement expressions
Surprisingly, despite talk of The Macallan’s struggle to meet demand around the world, the new distillery “will not increase production in the short term”. McCroskie says: “The capacity is a very long-term investment, but it does give us the option to meet demand if somewhere like China really takes off, and it could well do. This investment is a good sign for the entire Scotch whisky industry; it shows confidence in the future.”
Out with the old
The Macallan will mothball its existing site once the new distillery is fully functional. “We are going to preserve it,” states McCroskie. “It isn’t going to run, but we are going to keep it in a condition that should someone in the future want to restart it for whatever reason, then that option is open to them.”
And might that someone be Edrington? “Maybe,” answers McCroskie. “There are no plans at this minute. It’s not on our agenda, and it’s a big job to get the new place up and running. But this is a very long-term business, so who knows what the future generations might want to do?”
A move by Edrington to restart the distillery would not be particularly surprising if demand for its aged expressions continues to outpace supply. “We are tight for stock,” admits McCroskie. “We have a nice growth trajectory ahead of us, but it is obviously constrained by what was made all those years ago. This does provide ample scope for growth, in any case, and we wouldn’t want to be growing at an exponential rate – it’s not that kind of brand. As long as we can support steady growth, which we can, then we are in good shape.”
Since Edrington is a private business, its privilege is to keep information about volume sales and production capabilities close to its chest. However, when I ask McCroskie if he would one day like to see The Macallan become a one-million-case brand, he tells me it is already “very close” to that milestone. “It’s just below that now, so hopefully in the not too distant future it will reach the mark,” he says. “The Macallan has steady growth – markets grow at different levels at different times – but it’s a good, strong, solid growth dynamic behind the brand.”
To reach 1m case sales would be particularly impressive for The Macallan – which is, on average, positioned at a significantly higher price point than its nearest single malt rivals. In 2016/17, the brand enjoyed a “strong” year of sales volume and revenue growth following an increase in brandbuilding investment. McCroskie observes: “We’ve had a bit of a windfall with the weakness of sterling over the year, but if you step back a level and look at trading, it’s really strong for The Macallan, both in top-line and bottom-line growth.”
Alongside the significant distillery investment, the brand will continue to pump funds into its Sherry-cask programme. In 2013, I was told that Edrington spends roughly £16m on Sherry casks each year. When I tell this to McCroskie, he laughs and says: “It’s much more than that now. Stuart [McPherson, The Macallan’s master of wood] spends a lot of time in Jerez because of the scale of this investment. We do obsess about wood because we believe it sets us apart and underwrites the quality of our whisky.” McCroskie adds that Edrington “takes 90% of the output” of most of its partners in Jerez.
Wood, and Spanish oak in particular, has been a longstanding fixation of The Macallan’s, which is famously bottled without caramel colouring. “It’s a very honest approach to whisky,” says McCroskie. “What you see is what you get.”
The Macallan spends millions of pounds annually on Sherry casks
Investing in wood
Spanish oak has become a major finishing trend in the Scotch industry, but The Macallan whiskies usually remain in the same cask from filling to bottling. When one considers that a “very high proportion” of The Macallan spirit is aged in first-fill Sherry-seasoned casks, the mind boggles at just how much investment is dedicated to Edrington’s wood programme. “The accountant in me sometimes frets about how much we invest in casks,” McCroskie concedes, “but when we look at what it gives us – this quality – without a doubt it’s worth it.”
The Macallan made a bold statement in 2012 when it released the 1824 range, which defined its expressions by colour rather than by age. Will aggressive cask investment mean the creation of more age-statement products in the future? “The vast majority of our output has an age statement on it already,” answers McCroskie. “We will continue to produce age-statement products and no-age-statement products, simply because without age statements, you can produce wonderful products.”
The brand still has a few special parcels of aged stock up its sleeve. In 2015, The Macallan launched the travel retail exclusive Rare Cask Black, made with whisky from the few mature casks of peated Macallan available. McCroskie explains: “This was a discovery of casks, many of which dated back to the war years when we didn’t have the materials that we have today. It’s still The Macallan, but it’s quite a different take. The reaction has been fantastic, and it really made me think that consumers want to try different takes on brands that they know. Thinking about how we will use precious parcels of stock will certainly continue.”
Old and rare
Last May, The Macallan concluded its luxurious Six Pillars collection with the launch of The Macallan Lalique Peerless Spirit – which at 65 years old is one of the oldest and rarest products ever released by the distillery. When asked if The Macallan has any liquid older than this in its stocks, McCroskie is coy. “We might have,” he laughs. “I couldn’t possibly comment – watch this space.”
Like the vast majority of other luxury spirits, The Macallan’s new product developments usually come in the form of limited editions. But in 2016, the brand added Double Cask 12 Years Old to its core range. The expression is described as a “new take on the signature Sherry oak style of The Macallan”, combining European and American oak. “We want to have a core that’s strong and consistent,” says McCroskie. “There will be developments in the core, but most activity will be in limited editions, because the consumer today demands that. They want to try new things and explore different flavour profiles through different products.”
Old and rare bottles of The Macallan have been known to sell for eye-watering amounts at auction
As well as its pioneering status in the primary luxury single malt market, The Macallan has carved a strong position on the secondary market. The brand is often among the leading lots of any notable spirits auction – just last month, rare whisky analyst Rare Whisky 101 said The Macallan now accounts for £300 of £1,000 spent on Scotch at auction in the UK. Earlier this year, a bottle of The Macallan Lalique 50 Year Old became the “most expensive non-charity bottle sold at any UK auction” after fetching more £65,210. Meanwhile, a collection of six Lalique-bottled Macallan whiskies aged 50 to 65 years old became the most expensive lot of whisky sold at auction anywhere in the world, after fetching US$993,000 (£769,000).
As whisky becomes an increasingly attractive proposition for investors, commentators have expressed concern over the shockingly rapid price increases on the secondary market. Could The Macallan’s success at auction negatively affect its main business? Might consumers be put off by what they see as its inaccessibility? “Possibly,” replies McCroskie. “Recently, prices have gone up and up and up, and people may think that they are beyond where they should be. But we have no influence over that – it will be what it will be. I think where we are at the moment is helpful, and it sends a positive message.
“I hope it doesn’t change, but we shall see – markets are markets.” Ultimately, he says: “If someone chooses to collect The Macallan, then fine, but I’d rather see the brand consumed and enjoyed.”
Whether for collection or consumption, The Macallan remains one of the most well regarded names in Scotch whisky. How has a brand that is not known for competing on price managed to retain such a popular reputation? “When you look back at the brand over the course of generations, it has always been respected,” McCroskie says. “It was respected for its quality even when it was a malt to buy for use in blends. The fundamental reason for its success has been an obsession with quality and continuing investment in the long-term to make sure that this quality is sustained for the future. And long may it continue.”