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Thursday, 2 December 2010

The Whisky Round Table - December's Big Festive Question...

December's diary pages are already starting to 'dram'atically fill up and what with this being the Christmas party season, you'll no doubt find Joel and myself being kicked out of numerous hostelries across town, full of good cheer and with a bottle of the stuff still corked in our bags. But there is still the matter of the latest buzzing issues of the day to attend to and this month, we have a corker for you. As hosts for December's Whisky Round Table (12 noble knights, who discuss all things whisky on a monthly basis) we at Caskstrength have decided to apply a festive theme to our question, hopefully generating a few 'interesting' responses. So here it is, plus some fabulous answers from the cream of the world's whisky blogs and enthusiasts. As always, your comments are welcome...

'The festive season sees the big players in the spirits business heavily discounting some of our favourite whiskies in the supermarket chains with a view to entice the 'once a year' buyer and to grab some healthy market share. But does it de-value the product? Or do you think by discounting decent malts, it allows those with a curiosity to develop their palates further, albeit at a discounted rate??'

Mark Connelly - Whisky Whisky Whisky/glasgowwhisky.com

As I write this it has started already: the UK supermarket Christmas bunfight to grab the festive shopper is in full swing. Already the popular brands have had their prices slashed (in mid-November!) to incredibly low levels which has gone so far as to have been brought up in the Houses of Parliament by a particularly concerned MP. A bill to curb below-cost sales has been tabled but won't come into effect until possibly 2012. Whilst this is primarily aimed at beer and cheaper spirits it does highlight a very irresponsible attitude by the supermarkets who splash the Drinkaware logo wherever they can yet sell beer cheaper than water.

The main problem with this tactic, that I see, is that the consumer then expects to get their malts at that price all year round and this surely impacts on the independent retailer (something which is going to be extremely relevant to myself early next year). In fact I know of at least one producer who created a supermarket-specific bottling in their range in order to maintain the respectability of their core offerings. Perhaps all the distilleries and bottlers should follow suit and simply give the supermarkets a budget version? As the margins on spirits are pretty slim this is squeezing an already difficult market to breaking point. No wonder many companies choose to focus their efforts overseas.

I'm not entirely convinced that those purchases at this time of year lead to further exploration by the consumer into the world of single malts and would suggest that many of these sales will end up as gathering dust on a shelf or in a drinks cabinet for a 'special occasion', many of them being gifted to those who don't necessarily drink malt whisky in any sort of regularity but happily accept a bottle as a present. Having said all that I am certainly one of those people who will take advantage of the cheap prices - we all love a bargain and a decent malt whisky at under twenty quid is not something I'm going to turn down!

Keith Wood- Whisky Emporium

G'day CaskStrength and all fellow Knights (and Knightess) and a jolly festive season to you all. Unfortunately, or maybe even fortunately, depending upon one's viewpoint, this festive season discounting would appear to be only a UK phenomenon. There has been much forii discussion on this topic in recent weeks and days; Ardbeg for 20GBP, Glenmorangie for 15 funny English pounds, others for nineteen ...... crazy prices indeed! In fact here in deepest Bayern supermarkets have almost no decent whisky selections and when they do offer a couple of bottles, one is lucky to see Ardbeg 10y for €45 or a couple of Glenmorangie for similar prices. Thank goodness for decent internet shops, although apart from a few special deals they also don't enter festive-season mania.

My first pontification here is whether anyone other than the UK Government is really making a living from these prices? If I'm not too mistaken the combined duty and VAT on such a bottle sale would cover just under one of those English tenners, this leaves, in the case of that Glenmorangie, about a fiver to cover production, delivery, distributor and supermarket costs and profits. So not much there then!

Are the supermarkets making any money on this? Well, I was a student in the 1970's and earned a few of those funny English pennies filling supermarket shelves and lived through the really silly times of loss-leaders and supermarket wars. Anyone else old enough to remember the "Baked beans" wars when they sold at 1p per tin? Or even similar sugar-wars? Now that was crazy. Did this devalue the products? Not at all, but it made shed loads of money by bringing people in and then charging a wee bit extra for other items which they bought whilst there.

Is the same thing happening here with whisky? really don't believe so. In this case I think the supermarkets and suppliers are relying on that annual rush of once-a-year buyers and wanting their top brands or household names to be on the top of shopping lists, therefore discounting accordingly and I fully expect at least one of the brands to claim "top spot" for Chrsitmas sales sometime in January.

But does this devalue the product? Again I would say no. It probably cements those household names in the minds of the populous so that when they want another bottle later In the year, they'll hopefully return to that brand in some form of loyalty. So, I bid all ye festive drinkers, board your charabancs, don't spare the horses, head not for the hills but for the out-of-town centres of purveyance, following very much in the footsteps of the many aiming towards Yukon Territory and a town known as Klondike in 1897 and shouting "There's (liquid) gold on them there shelves!"

Chris Bunting – Nonjatta

My initial thoughts on this question were short and sweet: None of the real value of whisky is in its price. If delicious liquids were valued because of their price, then the cool water in a stream on a walk in the mountains would be worth nothing. So, let the shops discount it as much as they like.

On second thoughts, though, some of the real value of whisky is indeed in its price, because it is from that price that its producers` get their livelihoods and their ability to make and age their superb products. I don`t know much about the supply chains of whisky, but the usual story of supermarket discounts is that suppliers, in one way or another, are being squeezed by monopsonistic buyers. That is a bad thing for whisky.

Gal Granov – Whisky Israel

Well, Let's say all this is really a hypothetical debate for us Israeli whisky lovers since we do not celebrate those holidays here (no Xmas - we're Jews!, we killed Jesus remember ? - joking, of course). So, there are no whisky discounts here whatsoever. we'll continue not buying our whiskies in the stores because of amazingly high prices (200% more than your prices - at best) But, if we did get those once a year special promotions prices, i think i would have been totally in favor. low prices are good for :

1.You can get more whisky. yes, whisky is not a gem, to be looked at, it's a drink to be consumed, enjoyed and drammed with friends, alone, whenever you can.

2.It allows newbies to experiment and get some quality whisky at a good price. once a year, we may help newcomers take the first sip of a good single malt, and from that moment on, be entirely addicted. ;)

3.What about low income groups, such as the elderly, students etc? whynot make their holidays happier with a dram they can now afford and be merry?

I do not think it de-values the brand. It does the opposite, it opens the market for many more that will appreciate and buy that product from that day on. it's not as if they are selling it at Coca Cola price, but a few pounds off, will certainly entice new people to join. The whisky circle will expand, and more expressions and interesting drams for the rest of us.

So, merry Xmas. enjoy your amazing prices over there, and think of us poor Israelis, having to sell a kidney or two for a wee dram.

Peter Lemon – The Casks

Perhaps I'm missing some larger industry issue I know nothing about but I don't feel holiday sales "devalue" a product at all. Certainly, a discounted price would enable the curious and low-level fan to perhaps branch out a bit when otherwise they would not. I think we can all admit to being a low-level fan at some point and have bought that one bottle that pulled us in deeper into the black, soulless, pit of despair that is a serious whisky habit.

I think the one concern I have regarding bigger retailers and supermarkets (most supermarkets in the states do not have great whisky selections by the way, at least not the big chains) having big sales is that it can potentially hurt smaller, local retailers who might not have the buying power to offer that kind of irresistible discount. These days, it's harder to stay loyal to your smaller local shop when the bigger chain is offering a price that's $20+ cheaper on more expensive whiskies, but I do try to use locally owned businesses when I can...I just wish they'd have more 85% off sales. Happy Holidays!

Ruben – Whisky Notes

Personally, I don’t mind discounting as long as there is a season for it and most of it is done through supermarkets (that don’t usually have a lot of single malts). Like fashion sales, everyone understands that occasional promotions or stock clearance are necessary to boost interest and sales. On the other hand, I’m a little worried about the recent offering of exclusive Glenury Royal bottles (and other brands) for less than half of their introduction price in dedicated whisky stores. Whisky enthusiasts tend to spend higher amounts, and pricking the balloon of premium prices makes people think about the value and may backfire in the long term.

Mike, Mike and Dan – Whisky Party

It's our opinion that Christmas/Holiday "deals" in no way devalue a whisky. In fact, we're not even sure what that means since the price of whisky is constantly in flux. If anything, whisky is presently overvalued (we're looking at you, $80 NAS bottles). No one questions it when a shop puts a whisky on sale in the off season. As enthusiasts, if we see the discounted bottle of Talisker or Ardbeg, we rush off to grab it and then rush off to tell our friends. The same should be true around the holidays.

Stores offer discounts around the holidays for a business purpose - to move stock off their shelves and move their operating margins into the black. They're able to do that because of the gift-giving season, and it's a mutually beneficial relationship for all involved - the consumer, the gift recipient, and the small business operator. As enthusiasts we're happy because it means we get to stock up for less money, and gift givers can stretch their dollar further when purchasing an always-appreciated bottle of whisky. If it expands the base of whisky enthusiasts in the process - and we think it probably does - so much the better for all of us.

Joshua Hatton – Jewish Single Malt Society

Neil, Joel, a good question and one that I can answer pretty quickly. I have no issue whatsoever with deep discounts on whisky for the Challahdays. At the same time, I can not blame stores, distillers, liquor store chains, etc... for wanting to make money the rest of the year. I'm not saying I am happy about near-year-round higher prices for whisky. I'm just saying that these are businesses who are in business not to make people happy but to make money. On the flip side of the coin, I think it's on the consumer (you, me and Moshe the mohel) to do our due diligence by seeking out the best deal year round to help keep the price gougers from gouging. I wish all the knights a very merry Christmas. Gal & Jason, I'll raise my glass to you for 8 crazy nights as we dram and eat latkes in celebration of Chanukah. Lastly, I wish all the readers out there the very best! Happy Challahdays

Karen & Matt – Whisky For Everyone

As with most arguments, this one clearly has two sides. The supermarkets know that it is the time of year when people who maybe do not usually buy these products, will be shopping for whisky and other spirits. They also know that ‘customer loyalty’ is generally a thing of the past and that people will buy the products from the place with the cheapest price or best deal. Gone are the days of just shopping at X or Y supermarket – people shop around. Therefore, the supermarkets want them to shop at their chain rather than their competitor. Many such deals on whisky and other spirits are sold as ‘loss leaders’, meaning that the supermarket will happily take a loss of profit or margin on that product because the customer will then think they are saving money and purchase something else, as well as perceiving that supermarket chain as being cheap or economical for future purchases.

The idea of the supermarkets ‘bringing in new people’ seems honourable but the argument is badly weakened by a general lack of knowledge of staff, especially since most of supermarkets have reduced their specialist staff members during tougher trading times in recent years. It is further weakened by the fact that cheaper blends are also heavily discounted – therefore people will see a home brand whisky or other spirit for £10 (or even cheaper) for a litre and buy that instead of trying a single malt for double the price, albeit that it may have been heavily reduced itself. This is where the argument starts to swing around – is it therefore pointless to follow this discounting practice on premium spirits without promoting knowledge and education about those products and what makes them different from the economy brands? And just how many of the people buying discounted single malt whisky at Christmas actually return at other times of the year to purchase another one? Probably not many …

Naturally, the practice of discounting means that those ‘in the know’ can pick up decent whiskies or other spirits for a decent bargain price. Rather than complaining about it, should we just be thankful? Should we really look a gift horse in the mouth? The heavy discounting by supermarkets has lead to certain whisky distilleries and brands removing or limiting their stock for such promotions, as they feel that the quality and/or reputation of their whisky may be being devalued. The alternative is to shop at an independent specialist retailer, most of whom have knowledgeable staff who can help the ‘once a year’ shopper to choose their gift or something for themselves. Many of these retailers now offer special deals for Christmas, Father’s Day etc, although not to the same discount levels as the supermarkets.

The problem the specialist retailers have is a perceived intimidation factor – not for the whisky connoisseur or fan but for the beginner or ‘once a year’ buyer. While some will seek out the specialist advice in that search for the perfect present, many more won’t. The fear factor or embarrassment of not knowing about whisky will naturally mean that many shoppers will not visit such a shop. This is where the supermarkets cash in as they know that a half decent whisky range will sell, as customers feel safer just picking something that looks good off their shelves rather than tackling the perceived minefield that is the specialist retailer. Having said that, the knowledge of the staff and extended range of whiskies offer the customer much more choice and diversity that is second to none.

Jason Johnstone-Yellin - Guid Scotch Drink

Ahh, whisky being sold in supermarkets, how I miss thee. Living in a controlled liquor state here in Washington (with similarly controlled neighbours Idaho and Oregon) residents have to purchase spirits from liquor stores who, generally speaking, have very few options, although pricing isn't terrible on these limited offerings all year round. But what about the situation in the UK?

To be honest, without these festive season deals I might not have found my way into whisky. It was a Safeway special on Glenfiddich that provided me a gateway into the world of whisky. So, with this in mind, I take very small issue with seasonal discounting. The issue I see with it is the usual big buyer vesus small buyer concerns that cover a gamut of products. Tesco, Asda, Morrisons, and the like are in a position to discount in a way that Robbie's Drams, Tam's Drams, and even Royal Mile Whiskies, for example, simply can't. If you're a dedicated whisky drinker it's in your best interests to support "the little guy" as they can make suggestions, bring in special releases, and basically provide a level of service that you'd never get in the supermarket. They also have nice deals from time to time, especially on online orders, so keep your eyes peeled if you're a bargain hunter. If you're a newbie looking to lose your whisky cherry then maybe the supermarkets bringing you into the whisky fold with a special deal is a good thing. Especially if it ultimately leads you to making special requests from a smaller whisky shop once you really get into the world of whisky. That would be a nice win-win situation, wouldn't it?