Do Scotch whisky rules need to change?

The production of Scotch is highly regulated, but in a bid for innovation and transparency some producers are calling for change. SB talks to some of the leading distillers in the category about the pros and cons of reformation.

*This feature was originally published in the March 2018 edition of The Spirits Business magazine. 

There is arguably no other spirit category as stringently supervised as Scotch whisky. Since 2009, Scotland’s native spirit has been governed by the Scotch Whisky Regulations, which have been enshrined in UK and EU law. The ingredients permitted in the production of Scotch are few (cereal grains, water and yeast), distillation must take place in Scotland and the liquid must be matured in the country for a minimum of three years in oak casks. The sector has also successfully agreed myriad geographical indications (GI) for Scotch globally – all in the name of safeguarding the success that Scotch has, deservedly, accumulated.

But there is a contentious, cyclical debate regarding Scotch whisky’s regulations that frequently surfaces in the industry: do the rules stifle innovation?

Whisky purists will cry out defiantly against any suggestion of changing the legislation, arguing that it protects ‘tradition’ and ‘integrity’. The opposition retorts loudly about the need for ‘transparency’ and ‘modernity’, as each side tries its best to drown the other out – both with an aim of ensuring Scotch whisky’s longevity.

The same dispute was once again thrust into the spotlight in January when a story broke in The Wall Street Journal claiming the world’s largest spirits producer, Diageo, had assembled a “secret task force” to assess potential changes to the law. Within the alleged proposals was the creation of a new category of blended whisky to cover flavoured or lower-­abv line extensions of existing brands, as well as the ability to finish Scotch in ex­Tequila barrels.

A Diageo spokesperson said: “Scotch is the most important category for Diageo and we have an unwavering commitment to the integrity, long­term success, history and tradition of the category.

“As champions of Scotch, we are always looking at ways to innovate, to both protect and secure the future success of the category. In doing so, we work with the Scotch Whisky Association (SWA) on a range of ideas that seek to strike a balance between tradition and innovation, in a way that ensures consumers get the great products they want. We will never compromise on the quality and integrity of Scotch.” Fellow spirits giant Pernod Ricard aligned itself with Diageo’s desire to adapt and innovate, claiming it “constantly challenges” the SWA to keep the category creative. “It’s our job to innovate; our job to push the category and certainly we have had success,” asserted Glen Brasington, marketing director – strategy, business development and services, Chivas Brothers, the Scotch whisky arm of the French drinks group. He also highlighted a need for more innovation to tap into the highly coveted millennial market. “We have innovated and created products like Ballantine’s Brasil, which is a flavoured spirit drink,” he continued. “The point about millennials is they want new experiences and customisation. If we limit ourselves to traditional references, we may become out of touch with consumers.”

Then there are others, like Billy Walker, former managing director of BenRiach Distillery and current master blender at GlenAllachie Distillery, who take a more “conservative” view on the Scotch regulations, concisely summed up in his comment: “I think the definition of Scotch whisky is pretty appropriate at the moment.”

Liquid asset: the production of Scotch is strictly regulated

GREATER TRANSPARENCY

But not everyone seeking change is doing so to dabble in more experimental maturation or distillation processes. The reasoning behind several Scotch producers’ desire for reformation relates to transparency. Compass Box has been vocal about wanting brands to have the option of sharing more information with consumers. In 2016 the whisky maker launched its Scotch Whisky Transparency campaign after receiving a rap on the knuckles from the SWA for breaking EU regulations by detailing the age components of two of its whiskies: This is Not a Luxury Whisky and Flaming Heart. Compass Box called for the “freedom but not the obligation” for Scotch producers to publish the age of all liquid included in their whiskies.

“By not being able to disclose complete, unbiased and clear information on the age of every component used in our whiskies, we are not able to tell the whole story about the make­up of our products, and we are keeping consumers in the dark about a key factor that influences the taste of the whiskies they’re drinking,” said John Glaser, founder and whisky maker, Compass Box. “We would continue to encourage the SWA to reconsider and evolve their interpretations of the law, in regard to both maturation and transparency, so that Scotch whisky can maintain its competitiveness with other spirits, especially whiskies, made around the world.”

Glaser might be in luck. The SWA recently said it would be open to “more flexibility” in how the regulations could be interpreted than in the past. Speaking to The Spirits Business in December, SWA chief executive Karen Betts said: “I always say Scotch has been such a successful export because we have protected the category so successfully, because as soon as you start to export a good thing, somebody else is going to want to copy it, produce it more cheaply and sell it under the same name. Having said that, I equally think there is space to look at whether, not so much the regulations are right, but the way in which it is interpreted and the guidance that we produce around it. It may be that there’s space for some things to change.” That’s a bold statement from the body that enforces the rules.

Then there’s the unconventional Lone Wolf, one of Scotland’s newest distilleries, launched in 2016 by the team behind Scottish brewer BrewDog. Head distiller Steven Kersley is less concerned with the semantics of what can be labelled on a bottle and more fixated with what he can put inside it. “I don’t really care about the regulations. I’m going to do what I want with regards to what we put in bottles,” he said. “Whether there’s a regulation there or not about what I can and can’t call our whisky, that’s just a couple of words on a bottle. Ultimately, you’ll be judged by the liquid inside the bottle.”

Whether change is really afoot is unclear. The SWA’s latest comment on the matter was vague at best. A spokesperson said: “The SWA regularly engages with our membership on a broad range of ideas to ensure that the category is well placed to grow in an increasingly competitive global marketplace.” But what’s evident is a thirst in the industry, from players of all sizes, to at least hold a serious review of the regulations that have governed them for almost a decade.

Even Kersley concurs: “I would advocate and completely support any sort of opportunity to review and drag these rules and regulations into the 21st century.”