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#Business of Scotch

On Buying a Barrel of Whiskey: Tuthilltown Distillery

Are you guys related…

Mike F recently wrote of his trip to the Tuthilltown Spirits Distillery, the female planner of which (LadyDrammer?) checked with me before making arrangements as to whether I thought it would make a good holiday surprise and if I was interested in joining.  Although the distillery canceled their tours for the day on which I was on the east coast and able to go, in looking at the Tuthilltown website, I saw that they offer the option to purchase a barrel of whiskey.  It’s something I’ve always wanted to do but have always been scared away by a) the cost and b) the lack of options available.  It seems that Tuthilltown whiskey was able to counteract both.

The Plan

Tuthilltown offers the option to buy barrels in 3 gallon, 5 gallon, and 7 gallon sizes.   On their website, they estimate that each gallon will produce 8 to 11 Tuthilltown-sized bottles (375 ml).  Whenever I have seen the opportunity to buy barrels before, it seems like the up front commitment is thousands upon thousands of dollars.  A 3 gallon barrel seemed totally doable without much hassle for me and my friends (we figured that it wouldn’t be too difficult to find buyers for between 24 to 33 bottles of whiskey), and after a few e-mails to test the water, we decided to go through with it.  Turns out, after only a couple of e-mails, we had every bottle spoken for at both the minimum and the maximum count (24 to 33).

The Process

The first step was placing the order for a 3 gallon barrel online through their website. I then waited for them to make contact.  At this point, I hadn’t specified the type of spirit we were looking for - only the barrel size.  It wasn’t long before they got in contact, and we started discussing some of the particulars.  Throughout the process, Gable Erenzo and Luz Reid from Tuthilltown were amazing.  I had to give them my credit card to let them know I was serious (as well as to put a deposit of under $100 down to pay for the barrel).  And then our conversations continued.

Throughout this period of about a week and a half, Gable and I spoke about what was available.  At that time for 3 gallon barrels, we could have chosen single malt, baby bourbon, or rye.  He also amended the website’s statement to let me know that we’d probably get about 6 to 8 bottles per gallon (he said the angels had recently been taking a larger share), and then we discussed shipping options.  We were responsible for paying for all bottles that came out of the barrel, at a price discount of around 10% per bottle.  My friends and I decided to go with the single malt, which due to local regulations prohibiting the sale of non-NY products at the distillery (as we indicated in an earlier postthe barley is from Canada), Tuthilltown arranged for us to purchase our whiskey at a local liquor store.  This just added an extra process as I had to call up the liquor store and give them my credit card.

Out of the barrel, we actually got 23 bottles - closer to the original website-stated minimum estimate.   This had us scrambling a bit after we had originally told people that they couldn’t take part based on the reduced estimate  of 6 to 8 bottles per gallon (after people dropped out, the numbers did not work out as smoothly).  My only complaint throughout this initial process might be that we talked too many times, and I found myself having to repeat things as they wanted to make sure they got everything the way we wanted it.   Perhaps when it comes down to it, this isn’t such a bad thing, but I felt at points that they might not have the best internal communication or have written everything down that was spoken about and relevant.

Making it Special

Some other interesting things came out of this - first, as far as customization of the label when you buy a barrel, your options are extremely limited.    All liquor labels are approved by the NY State liquor board, and that process takes months and resources far beyond what we had (and probably beyond what Tuthilltown should reasonably be willing to do).  Your option is to basically choose a label that they have already approved with the state liquor board and customize it through the batch number and date space.  Most often with the barrels they have available for purchase, they recommend their “New York Whiskey” label.  They did not actually have enough of these current labels to cover our order (they ran out).  We lucked out and got the last batch of their initial run of these labels, which are actually longer than the current stock and therefore slightly more rare and “custom”.  However, we didn’t see pictures of the labels beforehand and they were described as ‘just like the current “New York Whiskey” label but longer’ which turned out not to be entirely true; some of us considered the large pregnancy warning covering the original label to be overwhelming and vastly different than the ‘New York Whiskey’ label we were shown.  Some also complained that the labels weren’t affixed to the bottles very well, as a few wound up crooked and unaligned.

Second, we also got to keep the barrel.  I had it shipped to a friend who homebrews beer so that we can try our own barrel-aged ale.  This was pretty great of the distillery (it didn’t actually add to the cost of the whiskey - the original deposit went to the total purchase price).

Third, though we wanted some aspect of immediate gratification, Tuthilltown will work with you to really get whatever it is you may want.  They’ll age something longer, find fun barrels for you, or just tell you what they have in stock on hand and let you come in and taste it.  Obviously we didn’t go for these options and our original plans to taste before bottling did not pan out,  but it’s nice that they exist.

The Outcome

Barrel of Whiskey

We will post our tasting notes and review of the whiskey itself in another, forthcoming post.  However, regardless of how the whiskey tastes, I’m happy we went through with this.  It’s an interesting process in which to take part, and something as I said before I always wanted to do.  We did it on the cheap, relatively speaking (mind you, I understand and acknowledge that $40 dollars for 375ml of whiskey is not cheap, but in my mind,  the ability to have your own unique barrel of whiskey for that price amongst some friends is worth it, especially when you only have to cover 23 bottles in total).  It’s worth noting that not every member of WhiskyParty or the group of friends at large feels this way.

Would we do it differently next time?  Probably. I think we’d have to taste the product beforehand.  $75 for a bottle of whiskey is a bit much right now to purchase a whiskey without knowing how it tastes.  In addition, I’d ask more specific questions up front on the barrel used and the aging time (vs. standard aging time for official bottlings).  There’s too much risk involved in not finding something with a taste that everyone will be excited about.  However, all in all, the process was easy, the distillery was extremely helpful and supportive, and cracking open a bottle of whiskey out of your very own barrel is something special.

Doing it Again (Other Opinions)

Though limited, there are indeed options to buying barrels from distilleries.  In general, buying a cask or barrel of whisk(e)y is extremely expensive up front, involves patience (usually) and is then expensive because of duties and import fees on the tail end.  The options seem to change often, so there is no real master list, and as usual, opinions vary greatly:

  • The Scotch Blog has a great, researched and detailed post on it (though it’s a couple of years old at this point).  He basically says it’s not a smart move if you’re doing it for investment purposes.
  • John Hansell posts about some of his experiences with buying a Bushmills Millenium cask and then asks the community where purchasing casks is an option.

Current (though not extensive) options available:

  • Bruichladdich allows for purchases of casks, with different wood types and potentially different peat levels.
  • Though removed from the website currently, Tuthilltown obviously has recently offered barrel purchases.
  • Tullibardine offers cask purchases.
  • GlenGoyne offers cask purchases of different wood types and potentially may have stuff not part of the catalogue.
  • Isle of Barra, which I hadn’t heard of before, also allows for up front cask purchases.
  • Nant Distillery in Australia has what you’re looking for (if you’re looking for casks).
  • Half a year ago, John Hansell posted about Glenglassaugh offering purchases and they may still.  The distillery put out a nice (if not necessarily well organized) FAQ afterwards.
  • QuarterCasks offers you the option to go in on casks from a variety of distilleries.
  • Bladnoch offers you to buy a heavily peated lowlands malt in a full cask or a tenth share.  Pretty cool!

- StrongLikeCask


John Hansell and Jim Murray chat about ratings.

I found this really interesting.

I posted my thoughts in the comments, and I’m really curious what everyone thinks.

It seems that the trend right now is to reach to the extremes - releasing younger and older expressions while potentially squeezing out the middle years. See Laphroaig 15 to Laphroaig 18 and Laphroaig Quarter Cask. Or, the Port Charlotte series as a younger.

I tend to think that I have an inexperienced palate, but I like younger whiskies - so I’d align with Jim Murray on that. However, many of John Hansell's tasting notes I think are spot on, and I really respect his communication of them.

Pretty cool to read about a discussion of two legends like that.


On becoming a Friend of Laphroaig

Recently, I became a “Friend of Laphroaig” at the urging of my fellow Whisky Party writers.  I’m not one to usually sign up for a marketing list of a company and I don’t like being solicited for products.  This is different.  I’m happy I signed up.  You should too.  Sign up here. All you need is the upc barcode number from the back of a bottle of Laphroaig.

Friend of Laphroaig LeaseFriend of Laphroaig Lease

At the right is one of the things you get when you sign up to be a “Friend of Laphroaig”.  You get your own one foot by one foot piece of land on the distillery property, near the water source of Laphroaig, the Kilbride stream.  By “get” I mean you actually own it for your lifetime.  They lease you the square foot of land, and entitle you to a yearly rent.  Guess what the rent is?  A dram of Laphroaig whisky.

This is ingenious marketing.  They would be giving away drams of Laphroaig on distillery tours anyway, but this way, it’s more encouragement for people to come (like people needed more encouragement to come taste Laphroaig for free).  The lifetime lease itself is on a nice piece of vellum paper and explains the terms of rent.

Another cool part of this is that when you visit the distillery, they’ll give you a map, directions to locate your plot of land (your square foot) and stuff like wellingtons, a tape measure, an overcoat, string, and a towel so that you can visit your plot of land and be protected from any errant weather the islands throw at you.  Really, really smart.  The document is signed by the master blender, John Campbell.

John Campbell (@laphroaigwhisky on twitter) also includes a letter with the lease, welcoming you into the Friends of Laphroaig.  There are some interesting tidbits in his letter, too.  His father worked at the distillery, and John is the first native of Islay to manage Laphroaig in its 190+ year history.

The Friend of Laphroaig club boasts over 260,000 members (or plot leasers, if you will) from 150 different countries around the world.  There’s also a community on the website where people can interact, post reviews, and “build” a home on their virtual plot of land.

My Plot of LaphroaigMy Plot of Laphroaig

This marketing is wonderful.  It’s well thought out, it rewards you for purchasing their brand, draws you in to purchase more by giving you not only increased access online, but a facilitated real world relationship at the same time.  Since joining I have noticed I have purchased more bottles of Laphroaig than I usually do, and I have even shown my lease to several friends and family members.  This marketing has done what all marketing should do - it has made me into a peer to peer brand ambassador, for little more than some postage and paper.  Smart.  I feel part of the family and community of Laphroaig, and I look forward to whatever the smart people who came up with this, come up with next.

Other Blogs Posting about being a Friend of Laphroaig

  • ScotchAddict gives a short quip and responds to comments about “magic smoke”
  • Jungle-Bar blog talks about Quarter Cask (a favorite of the WhiskyParty Editors) and gives a satellite image of his plot from being a Friend of Laphroaig
  • Vivi Capeta really displays the giddy excitement of unexpectedly getting to become a friend.
  • Good Libations talks about claiming his yearly rental dram and has some great pictures and a beard of which we all should be envious.
  • And just to display the many countries that are part of this, check out this blog post from Japan.  His pictures are way more artistic.  But, pretty neat that people from so many different cultures can have a unifier that reflects their similar loves and tastes.

Diageo Potentially Partners with Darth KKR Maul to Get Even Bigger Through Stake in United Spirits

There are many rumors a-swirling that scotch’s very own Globochem, Diageo, (a company that has had lower sales recently and has experienced turbulence in the market) is going to partner with the big bad leverage buy-out wolf, KKR (subject of Barbarians at the Gate), to buy stake in United Spirits, the huge Indian liquor company (United Brewers).

This comes after rumors that Diageo was in talks to take over LVMH (luis-vuitton moet hennessy) of which it already has a 34% stake.  Apparently this deal fell apart because of anti-trust issues.

One has to imagine that those anti-trust issues will still be a problem with the current deal.  And, all the anti-trust issues pretty much revolve around single malt whisky because it is such a small market and Diageo is a giant.  Diageo has Caol Illa, Cardhu, Clynelish, Cragganmore, Dalwhinnie, Glen Elgin, Glen Ord, Glenkinchie, Knockando, Lagavulin, Oban, Royal Lochnagar and Talisker.  United Spirits, the company that the latest rumor is about, is the parent company of Whyte and Mackay, the owners of Jura, Dalmore, and Fettercain.  LVMH is the parent of The Glenmorangie Company which owns Glenmorangie, Ardbeg, and Glen Moray.  All of these liquor deals involve a large deal of anti-trust and are potentially bad for the consumer.

In looking at the brands, though, one could also imagine that it might lead to some interesting things for the consumer.  First, if a deal goes through, there’s a good chance that Whyte and Mackay would have to be divested.  This could mean that Jura, Dalmore, and Fettercain could wind up back in family hands.  Or if the brand isn’t divested, maybe we’d see some interesting things like Dalwhinnie peated with peat from The Isle of Jura.  One thing is for certain - that in today’s depressed markets, deals will start to happen more and more, and as single malt whisky is growing, it will become a really interesting space for private equity shops and hedge funds to play.


Scotch Whisky Association Releases Data on Exports and Value for 2008

The Scotch Whisky Association just released some data on the exports and value of those exports for the 2008 calendar year.  This data is NOT broken down into whether the whisky is blended or malts, but there are a couple of interesting things that peeked out.  There’s not a whole lot of data in this set, and when there is a lot of data, it isn’t very fresh by a couple of years (except that it’s cool to see that the entire whisky exports to Azerbaijan in 2007 was 1 liters worth at a value of 469 pounds).

2008 Whisky Exports by Volume2008 Whisky Exports by Volume

But, I digress.  The first chart is the top 10 countries by total volume of exports (in 70cl bottles, which is a little smaller than the 75 cl bottles we get in the states).  What’s interesting to see here is that most of the countries dropped off by quite a bit (double digit percentage change drop) except for Singapore, South Korea, South Africa and Germany, which all had low single digit increases.  France is number 1, USA is 2, which is a little strange considering that USA has 304,059,724 people and France has 61,538,322 people.  France has 1/5 the number of people, but drinks more scotch whisky by volume.

Whisky Exports Based on ValueWhisky Exports Based on Value

Now, looking at the second chart, which is the top 10 countries by total value of exports (in british pound sterlings), you see that USA is 1 and France is 2.  What does that mean?  Well, it could mean that France drinks cheaper whisky than folks in the US drink.  If you compare the past years, you’ll also see that while USA dropped in value (percentage change of -11%), France screamed up in value of exports (+22%).  But, remember, their volume dropped.  So, USA dropped in both volume and value.  France dropped in volume (though it’s still 1), but just destroyed in value gain over previous years.  That must mean that the French have started drinking way more expensive whisky (or, there is some serious inflation in the French economy right now).

Hope you like the charts.  When I get more data, I’ll do more.  Overall it’s interesting to see that though total volume has decreased from 2008 to 2007, total value has increased.  People are paying more for whisky - whether or not that reflects prices increasing for the same product, or people just purchasing a higher quality product at a higher price, we do not know.   The BBC has more on the story.