Is Irish whiskey really ‘booming’?

14th November, 2019 by Tom Bruce-Gardyne

There is a real distillery-building boom in Ireland. But as the liquid will take time to mature, we ask how many of the eager start-ups will become successful players in the long term.

Temple-Bar-Irish-whiskey

Irish whiskey is in the midst of a distillery boom

“We’re still quite tiny in the relative scheme of things,” says Stephen Teeling, Teeling Distillery’s sales and marketing director, about Irish whiskey in general. “Go back 150 years and 60% of all brown spirits sold was Irish whiskey. Where we are now is, at best, 7% or 8%, and that’s been led by a mature market, which is the US. We haven’t really touched the emerging markets.”

The Teeling Distillery opened in Dublin in 2015, 40 years after whiskey-making had ceased in the capital, seemingly for good. Back then there were just two distilleries in the whole island of Ireland – Bushmills in County Antrim in the north, and Midleton in County Cork. When Stephen Teeling’s father, John Teeling, added a third by converting an old potato-alcohol plant into the Cooley Distillery in 1987, Irish whiskey barely existed beyond its homeland. According to the broadcaster and whiskey writer-turned-distiller Peter Mulryan, total exports were around 140,000 cases. “So we’re coming from a very low base,” he says.

His Blackwater Distillery in County Waterford began laying down stocks six months ago with a view to releasing its first whiskey in 2022. But with an annual production of 5,000 cases it probably won’t be giving category leader Jameson too many sleepless nights. When it fired up its stills last November, Blackwater became Ireland’s 21st distillery, and there have been several others since. These are booming times for the category, with global sales of 10.7 million cases in 2018, according to the Irish Whiskey Association (IWA), and a forecast of surpassing its mid-19th century peak of more than 12m cases next year. Yet so far, in Mulryan’s view: “It’s been the Jameson boom, not the Irish whiskey boom.”

Belief in Jameson

Since acquiring Irish Distillers for the equivalent of US$442m in 1988, Pernod Ricard has never faltered in its belief in Jameson and has invested accordingly. But today, given the sheer scale of the brand that sells more than 3.5m cases a year in the US, you wonder if familiarity might be breeding a little contempt? “Fortunately, I don’t

think we’ve had that problem yet, and I hope we don’t,” replies Brendan Buckley, marketing director at Irish Distillers. He claims that US growth is still “close to double digits”, and says: “The brand has transcended the category in the same way as Jack Daniel’s [has in American whiskey]. For many consumers of Jameson, the fact that it’s an Irish whiskey is secondary or tertiary. While we’re mature in certain markets in the US, there are many big markets, such as Texas or Florida, where we still have huge headroom for growth.” Apparently, Texans drank 200,000 cases of Jameson last year, compared with the 900,000 they hoovered up of the Canadian whisky Crown Royal.

Teeling-Irish-whiskey

Teeling believes the Irish whiskey the category is in good health

Beyond the US, the Irish whiskey category has barely got going, if you consider that in 2017 its second-biggest export market – Russia – was a tenth of the size of the US on 404,000 cases, according to the IWA.

To maintain momentum, Irish Distillers has been growing the family beyond the original Jameson, which accounts for more than 90% of the brand’s volumes. There is Jameson Black Barrel and Jameson Caskmates to ween craft beer fans onto something stronger. And separate to the Jameson family are the new Method and Madness whiskeys that are heading to the US next year. Recently, Buckley spoke of fragmentation in the US and said: “If you want to keep share in a fragmenting market, you need more propositions.” One of the most successful has been pot still Irish whiskey Redbreast, which he claims is growing by 25%, and heading towards 100,000 cases a year. Whether this heralds a whole new category to challenge single malt Scotch, or whether it will remain a one-brand sensation is hard to say.

Jameson may be in rude health and excelling within the category, but its share of Irish whiskey has declined to around two-thirds. This is partly due to the efforts of the number-two brand, William Grant’s Tullamore Dew, which is market leader in Sweden, Denmark, Poland and the Czech Republic. “Germany’s very strong too,” adds Tullamore Dew global brand ambassador John Quinn, who has been following the surge in new distilleries with interest. “The boom in Irish whiskey has to be defined by the sales of Irish whiskey,” he says. “If you build a lot of factories making anything, it doesn’t mean there’s a ‘boom’.”

Quinn worries that many of the new entrants are yet to appear in the IWSR figures. “That means they’re probably selling less than 5,000 cases a year,” he says. “Also, in many cases they have launched brands using supplies of whiskey from existing distilleries because they haven’t got anything they can bottle themselves for a number of years. I’ve often wondered whether that’s a good thing to do.” As an industry veteran, destined to chair the IWA in two years’ time, he hopes the newcomers will flourish and, in his words: “Challenge the might of Scotch whisky in a very real way.”

For Quinn, the influx of new distillers heralds a “honeymoon period for Irish whiskey”, while Mulryan says: “It’s like any gold rush – there are lots of people jumping on the bandwagon.” Among them has been U2’s frontman Bono, who has reportedly sunk €50m (US$55m) into a new distillery in County Kildare, and the boxer Conor McGregor, whose Proper No. Twelve blend launched last September. In May, McGregor modestly revealed that his whiskey wasn’t doing too badly. “Over US$1bn generated in whiskey sales in my first year!” he declared on Instagram. “Like it or not, there is a new King in town!” For clarification, McGregor’s ‘humble’ brag was a reference to overall category sales in the US, not his recently launched brand.

Irish-Distillers-whiskey-warehouse

Whiskey maturing in Irish Distillers’ warehouse

Greater choice

“From a consumer standpoint, I think the category’s never been better. There’s more choice and more variation,” says Stephen Teeling, but he questions whether some of the new distillers have a genuine liquid-led approach”. He suspects the number of new distilleries may have been pumped up to include lifestyle projects, managed by gin distillers who fill the odd cask of whiskey on the side.

“If you’re looking at somebody with a genuine concept, a route to market globally and a pipeline of innovation, there are more like 10 to 15 genuine players,” he says. In his case, distribution has been helped by the contacts built up by his father, and by the partnership with Bacardi, which acquired a minority stake in the brand in 2017.

Today, Teeling is in 60 markets, led by the US, where there are 10 brand ambassadors on the ground, followed by Ireland and the UK. Stephen Teeling began selling whiskey abroad in the 1990s, and says: “I’ve seen a real shift in consumer habits since 2010, with a younger demographic coming into Irish whiskey and enjoying it as more of a social drink. It’s very much about being with a group of friends and about engagement in bars, and it shares the same demographic as Bourbon in America. Whereas with Scotch, we saw it as very male-dominated, and more for home consumption and a bit more traditional. There was quite a formal approach with masterclasses on single malts, and it was more of an ode to the past, whereas the consumers who are driving the growth in Irish whiskey were more about the ‘now’ and ‘the future’.”

Asked if Irish whiskey is perceived as being somehow cooler than Scotch, Quinn thinks it probably is, and he credits his arch rival for that. “In markets where Jameson dominates, they’ve done a really good job on this,” he says. “Where we’re strong, we’re propagating that idea too. Our advertising has been more modern, more hip and less about armchairs by the fireside and shaggy dogs.”

Of course, it’s aeons since any Scotch brand promoted itself in that way and, besides, one shouldn’t get carried away with national stereotypes. The ‘craic’ isn’t always mighty, whatever the Irish tourist board says, and not every Irishman could laugh you into bed with his charm. Peter Mulryan suspects that “there may be a little bit of delusion” among some of his compatriots.

“Challenger brands are always more interesting, and right now Irish whiskey is the challenger brand,” he says. “And Scotch has over-regulated itself and is finding it difficult to innovate.” The rules in Ireland are a little less strict and distillers can age their spirit in wood other than oak, though Mulryan has seen some unusual experiments, including one matured in a mahogany cask. Like Quinn, he questions the wisdom of new distillers buying spirit from the big guys to bottle what he calls “fake brands”. He fears one of them might cause a spectacular own goal for the category. Other issues include Brexit and the risk of retaliatory US tariffs on EU spirits.

Part of what’s fuelling the excitement around Irish whiskey is that many of the new expressions are still maturing in wood. Once they’re ready to be bottled, finding a route to market won’t be easy, but Stephen Teeling believes there’s a consumer audience out there ready to embrace fresh ideas. “People are open to discovering something new, and that’s the big change,” he says.

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