Marketing

Call for mature whiskey supplies for startups

Without the establishment of a wholesale market for bulk Irish whiskey to match growing global demand some of the smaller new Irish whiskey brands here may face going to the wall due to the lack of supply of mature whiskey.

So states a new report from Compecon commissioned by The Wild Geese Irish Whiskey. The report found a number of significant barriers to entry into the Irish whiskey market, inhibiting the growth of the industry as a whole.

But the creation of a bulk wholesale market, similar to that in Scotland, would remove some of the main obstacles facing new entrants, argues Compecon.

The report analyses the performance of the Irish whiskey industry and its potential to contribute to growth in the Irish economy through comparison with the Scotch Whisky industry.

It finds:

 

  • Scotch whisky exports in 2014 were in excess of €5 billion compared to Irish whiskey exports of €350 million
  • Unlike the Scotch whisky industry, Ireland lacks a functioning wholesale whiskey market, resulting in new entrant uncertainty of supply and cost
  • The wholesale whisky 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
  • 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
  • Amongst the significant barriers to entry in Irish whiskey distilling is the mandatory three-year maturation period before the product can be sold
  • Several companies have built Irish whiskey brands to date that have been undermined by a lack of supply of mature whiskey
  • The establishment of a wholesale market for bulk Irish whiskey would represent a very effective means of encouraging new export-oriented Irish whiskey firms in the industry
  • An increase in Irish whiskey brands would yield significant economic benefits in terms of exports, output and employment at little or no cost to the Exchequer.

 

“Our analysis describes the fundamental challenges facing many smaller independent Irish whiskey brands in Ireland today,” stated Compecon Director Pat Massey, “While there’s a significant demand at home and abroad for Irish whiskey, the potential of these small producers and the industry at large is being stifled by a lack of adequate measures to support the industry.

“In 2014, Irish whiskey exports amounted to €350 million utilising domestic raw material inputs and providing employment in communities across the country.

“While Ireland and Scotland are similar in population terms, the Irish whiskey industry is dwarfed by its Scottish counterpart which illustrates the benefit of a proper functioning wholesale market for bulk Irish whiskey. The wholesale market is seen as being not only crucial to the success of SMEs and early stage businesses but also as essential for the entire Scotch whisky industry.

“The Irish Whiskey Association has stated in its Vision for Irish Whiskey report that it should be possible to enter the whiskey market without having to build a distillery and our research illustrates the benefits of this to producers and the economy.”

Andre Levy, Chairman of The Wild Geese Irish Whiskey company commented, While we’ve a broad customer base both nationally and internationally, built-up since 2002, this report describes the challenges that we, as an independent Irish whiskey brand, face day-to-day.

“Issues such as the high cost of market entry, the presence of larger established market players controlling supply and the difficulty in accessing a long-term and competitive mature whiskey supply. These factors are prohibitive to new market entrants and threaten existing brands looking to survive, grow sustainably and share in the category they played a part in growing.

“We’re asking the Irish Government to support our call for the immediate establishment of a commercially-viable wholesale market for bulk Irish whiskey. The case for such a market has been made by the Irish Whiskey Association and we believe the Government has a fundamental role to play in supporting the SME sector as we work to grow the economy at home and abroad.”

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