Wednesday, November 27, 2019

Jameson Irish whiskey among top global brands; UK is biggest exporter

This is Statista's ranking of the Top 15 global whiskey brands in 2018 based on sales volume (in million 9 litre cases): The top 4 are Indian and Pernod Ricard, the owner of Irish Distillers, owns Imperial Blue and Royal Stag. Johnnie Walker is the leading Scotch whiskey at 5th rank, owned by the Diageo, the British drinks group. Jack Daniels of the US is in 6th place; Original Choice is Indian and in 7th place; Jim Beam of the US has an 8th rank; Haywards Fine is another Indian whiskey at 9th rank; Jameson is in 10th place; followed by Ballintine's a Scotch owned by Pernod Ricard; Crown Royal of Canada owned by Diageo has a 12th rank; the last 3 brands are also Indian.

The Irish whiskey industry has made a remarkable comeback at international level since Pernod Ricard of France acquired Irish Distillers in 1988. Jameson Irish Whiskey sales have quintupled since then and today the brand is among the top global whiskey brands but the early 19th century glory days of Ireland as the leading whiskey producer are not back. The United Kingdom is by far the world's biggest whisky (the spelling used by Scotch distillers) exporter.

Irish distillers dominated the whiskey market in the first half of the 19th century but by 1860 they had been overtaken by the Scots thanks to the use of an Irish invention that boosted output and cut costs. However, for seasoned whiskey drinkers, the traditional Irish manufacturing process produced a higher quality product.

The demise of the Irish industry in the early 20th century is often blamed on alcohol Prohibition in the United States in 1918-1933. This is a myth as Scotch whisky was the dominant foreign whiskey in the American market before the First World War. In 1914 the value of Scottish imports to the US was six times the Irish value — the US Congress had enacted a temporary wartime ban on alcohol in November 1918, which the US Supreme Court upheld, while in Congress a permanent ban on alcohol passed as President Wilson's veto had been overridden. The Volstead Act in late 1919 was enabling legislation for the recently ratified 18th Amendment to the Constitution.

Statista, the data firm, says that the UK was the largest whiskey exporter in the world in 2018, with exporting value around US$6.4bn followed by the United States at $1.4bn. Ireland's exports according to the Central Statistics Office (CSO) were valued at €654m ($770m).

Irish exports to the USA/Canada were 61% of 2018 value; 31% to the EU — including €44m to Latvia (for transit to Russia), Germany €28m; France and Great Britain at €24m each— leaving just 8% to the rest of the world. In France, the home country of Pernod Ricard, the value of Irish whiskey exports was less than 5% of Scotch exports value.

Scotch whiskey accounted for over 24% of the global whiskey consumption in 2018 with EU taking 30% of exports value; North America at 27%, and Asia and Oceania at 24% — the export value to the US was over £1bn; France £442m; Singapore £320m; Germany £174m; Spain £170m; Taiwan £168m and India at £139m. 

Global whiskey revenues in 2019 are expected to be about $86bn and the market is expected to grow annually by 3.9% (CAGR 2019-2023). India tops the rankings at $18.4bn followed by the US at $18.3bn; Thailand at $6.7bn; Brazil $6.3bn and France is in 5th place at $3.3bn. The UK is at $2.7bn; Spain $2.3bn; Russia $2.1bn; Germany $1.5bn and China at $1bn.

Whiskey accounts for a quarter of the Irish domestic spirits market with vodka in the lead. 

International Wine and Spirits Research (IWSR) estimated that domestic sales of Irish whiskey rose by 5.4% in 2018 to 581,750 9-litre cases (6.98m bottles), valued at about €350m — excise duty is the second-highest after Finland.

For example about €12 of the price of a 70cl bottle of whiskey bought in an Irish off-licence, goes to the Government before the application of VAT at 23%. The comparable excise rate in Italy would be less than €3.

Origins of spirits

The Chinese spirit baijiu ("white or clear alcohol") is the world's most popular spirit today and for thousands of years, it has been made from grain, usually sorghum or rice, with additions of sticky rice, wheat or corn.

According to the Economist, "10bn litres produced each year is more than twice the annual global production of vodka, the next most popular spirit. It would fill a bath for every person in Britain."

In 2017 Kweichow Moutai, the world’s most valuable alcoholic-drinks firm saw its market capitalisation reached $71.5bn, overtaking that of Diageo, a British drinks giant.

Distillation is also an ancient process and there is evidence that distilled spirits were produced in Britain before the Roman conquest while Spain, France and the rest of Western Europe likely produced distilled spirits but until the 8th century, after contact with the Arabs when the process was improved, It was not common.

Whiskey may have been first distilled in Ireland when monks travelling back from Europe brought the know-how to their Irish monasteries. It could have happened first in Scotland but there is no credible record.

Arnaldus de Villa Nova (Arnold of Villanova: c.1240-1311), a native of Valencia, who was an alchemist, pharmacist, astrologer and physician, wrote the first European medicinal book, 'Liber de vinis,' on viniculture. He is said to have introduced the Arabic word 'al-kuhul' (alcohol) to Europe and in a treatise 'De conservanda juventute Arnaldus wrote, "Burnt water also known as 'aqua vitae' is obtained by the distillation of wine or wine yeast...It cures many diseases and hence deserves to be known as 'aqua vitae' (water of life)" — this Latin term became common and the Irish 'uisce beatha' and Scottish Gaelic 'uisge beatha,' were derived from aqua vitae, as was eau de vie and akvavit or aquavit. According to the Barnhart Concise Dictionary of Etymology, the word 'whiskey' dates from 1715 and earlier spellings include usquebea (1706) and iskie bae (1580s).

The first record of distilling in Scotland was in 1494 when an entry in the Exchequer Rolls lists Eight bolls of malt to Friar John Cor wherewith to make aqua vitae.”

The Scottish Parliament introduced the first duty on Scotch in 1643 and on Christmas Day 1661 King Charles II approved a new duty on aqua vitae — four pence on each gallon produced in England, Scotland, Wales and Ireland. In the following centuries the exciseman became a bogeyman to the many small scale distillers and Robert Burns (1759-1796), the famous Scottish poet, became one reluctantly in the last years of his life. In Ireland, poteen — in Gaelic poitín ('little pot') — was part of the culture in particular in the West and South-west. Here (youtube) the Clancy Brothers and Tommy Makem sing The Mountain Tay (The Hills of Connemara) in the I960s.

The famous lexicographer Dr Samuel Johnson (1709-1784) defined the excisemen, "Wretches, hired by those to whom excise is paid!"

In 1980 Irish Distillers Limited issued this 12-year old whiskey to commemorate the bicentenary of the opening of the John Jameson Bow Street Distillery in Dublin in 1780. However, in 1780 John Jameson was working as a lawyer in Scotland and it would be several years before he would emigrate to Dublin.
The Bow Street distillery, off of Smithfield Square in central Dublin, was built by John Stein, a member of the Scottish distillery family and a cousin of Margaret Haig of the Haig distillery family. Margaret Haig had married John Jameson. Across the River Liffey from Bow Street, John Stein also owned a distillery on Marrowbone Lane.
It would take about 25 years for ownership of the two distilleries to pass to John Jameson, and his sons John and William would take over the management of the Bow Street and Marrowbone Lane plants respectively.
As the first branded Jameson Irish whiskey did not appear on the market until 1810, Irish Distillers Limited was 30 years ahead of the true bicentenary.

Irish whiskey industry

Dr Samuel Johnson in his 'A Dictionary of the English Language' which was published in 1755, suggested that he prefered Irish whiskey to Scotch.  

In the entry for usqueba'ugh, or whisk(e)y, Johnson noted that the distilled spirit was "drawn on aromaticks" making the Irish whiskey "particularly distinguished for its pleasant and mild flavour.” He added that “The Highland sort is somewhat hotter; and, by corruption, in Scottish they call it whisky.” 

The Jameson whiskey brand dates from 1810.

About a decade after Arthur Guinness (1725-1803) began brewing porter stout John Jameson (1740-1823), a Scottish lawyer moved to Dublin — the black stuff had been invented in London in the 1720s when roasted barley was used in the brewing process; the beer was apparently a favourite of the street porters of Covent Garden and Billingsgate markets. 

The signatures of both Guinness and Jameson adorn the products of their companies, that would become rare Irish global brands. Guinness had begun brewing ale at the St. James Gate site in Dublin that he had acquired in 1759.

Jameson arrived in Dublin in 1788 (some histories cite 1786) and he became a manager at the Bow Street distillery. He took control of the firm in 1805 and in 1810 the distillery was named John Jameson & Son's Bow Street Distillery.

Official duty data show that between 1797 and 1840, Irish spirit consumption was always higher than Scotland's and despite the difference in population, was higher than consumption in England and Wales in 23 of those 44 years.

In addition, according to Dr Andy Bielenberg of the School of History, UCC, while Ireland had only 108 licenced distilleries in 1827, there were 343 in Scotland and 13 in England, "indicating that the Irish industry was more heavily capitalised than in Scotland" (the tables above are from Dr Bielenberg's research).

Despite the fall in population triggered by Famine deaths in the 1840s, rising emigration, a hike in duties imposed by William Gladstone, chancellor of the exchequer, to help pay for the Crimean war,  and the continuing influence of the temperance movement, whiskey production rose by almost 1.6m gallons in the period 1850-1854. The Anglo-Celt weekly newspaper for the Cavan area noted that whiskey was Ireland's only real export.

The devastation of the vineyards of France by the phylloxera plague would also raise whiskey demand in succeeding years. 

By 1867, Midleton Distillery in County Cork had the world’s largest still (a record that still stands today) with a capacity of 31,500 gallons.

In 1887, Alfred Barnard (1837-1918), the author of 'The Whisky Distilleries of the United Kingdom' noted that, Dublin was a global whiskey hub with 6 big distilleries in the city: the so-called 'Big 4' were Jameson's Bow Street Distillery (production 1m gallons [4.5m litres]; John Power & Sons John’s Lane Distillery (900,000 gallons); George Roe & Co's Thomas Street Distillery on 17 acres (with a massive output of 2m gallons or 9m litres) and William Jameson & Son's Marrowbone Lane Distillery with an output of 900,000 gallons.

The other 2 were the Dublin Whiskey Co. on Jones Road and the Phoenix Park Distillery.

Barnard wrote, that the entrance to George Roe & Co’s vast Thomas Street plant "is unlike any other distilleries we have seen, reminding us of some of the chateaux in France"; William Jameson’s Marrowbone Lane distillery has "two mash tuns said to be the largest in the United Kingdom’; Phoenix Park, with its incandescent lighting and water-wheel spanning the Liffey, is the ‘most modern of any of the distilleries owned by the Distillers’ Company, Limited [DCL]."

The Irish Department of Agriculture and Food has noted that "between 1823 and 1900, the output of Ireland’s distilleries quadrupled. Dublin whiskey, with its six powerhouse distilleries, dominated the Irish and world stage (?), employing hundreds of workers with their own cooperages, stables, blacksmiths and carpenter shops and they exported around the globe."

However, all was not well in Dublin. In 1891 George Roe & Co merged with the Dublin Distilling Company (a new name for the William Jameson & Son firm) and the Dublin Whiskey Co's Jones Road Distillery. The group also had a yeast factory. Ostensibly it was possibly the biggest distillery in the world but it was losing money and collapsed in the 1920s with civil war in Dublin and American Prohibition being the final nails in the coffin.

By 1900 the John Jameson Distillery was reporting a net profit of £119,705 (in 2018 sterling pounds would be £14m.)

Scottish innovation thanks to an Irishman

A key development for Scottish and Irish distillers was the invention of a still by Aeneas Coffey (1780-1852), who had been an inspector of customs in Dublin.  Patented in 1831, it was a modification of a Scottish still and was called the "continuous, column, patent or Coffey still" -  see here.

Irish distillers, in particular, the Dublin firms, typically preferred to stay with the traditional copper pot still with triple distilling as this was necessary to boost the alcohol content. They regarded the Coffey still as a means of producing an inferior product.

Coffey's still provided a concentrated spirit containing 86 to 96% of alcohol in a continuous and rapid operation.

The pot still provided a higher quality product but the blender could mix the results of both processes.

In 1879 a book, 'Truths about Whisky' was published to promote Irish pot distilling. It was commissioned by the leading Dublin distillers.

According to Louis M. Cullen (born 1932), the former Irish diplomat and Trinity economic historian, "Its greatly enhanced productive capacity meant...that unit costs of production and the capital/output ratio in patent still distilling were lower than in pot still distilling."

Dr Ron Weir (1945-2009), the late British economic historian, noted that whiskey production in the United Kingdom (including Ireland) was 27m proof gallons in 1860. Excluding Ireland, the rest of the UK would have produced over 20m gallons. Sixty-three per cent of the total output came from patent/ Coffey stills that were concentrated in 28 distilleries.

Weir noted that "Irish distillers were the first to develop sales in England in the 1860s but were soon overtaken by Scottish blenders...(who) developed proprietory blends and standard brands. Scotch whisky displaced brandy, gin and rum in England and by 1914 some 10m gallons were being exported." 

Irish and Scotch whiskies are matured for a minimum of 3 years in wood casks.

In 1900 Scottish distillers produced 31m gallons of mainly blended whiskies (typically a mix of grain and single malt) whiskies in 161 distillers compared with 14m in 29 Irish distilleries.

Note from this chart that exports of Irish whiskey from Belfast had trebled in the last quarter of the 19th century. This reflected the output of large distilleries in the north-east of the island, which had installed patent stills.

The export sales were mainly to Scottish blenders and English wholesale/retail dealers.

Edward G. McGuire in his 1973 book, 'Irish whiskey: A history of distilling, the spirit trade, and excise controls in Ireland,' wrote, "Thus in 1900 over 14m gallons were distilled in Ireland and the United Kingdom absorbed nearly 10m."

In 1908 a Royal Commission on the definition of whisky was told that at the close of the 1907 financial year the amount of whiskey kept in bonded warehouses was 11m in England, 119m in Scotland and 32m in Ireland.

C.H. Oldham (1860-1926), a professor of economics at University College Dublin in a paper stated that Irish exports (32 counties) were valued at £49m in 1904 and whiskey accounted for 4.7%.

Myth of US as top pre-Prohibition market

Scotch was the top foreign whiskey in the US before the First World War and its market share was less than 1%. It was followed by Canada.

Nevertheless, claims like the following are repeated ad nauseam:

"Jameson, the world's largest-selling brand of Irish Whiskey. ... when Prohibition destroyed their export trade to America, which gave Scotch its world opportunity when Prohibition was repealed."

"Before Prohibition, Irish whiskey was the leading imported whiskey in the United States."

"In the United States more than four hundred brands of Irish were on sale by the time of Prohibition."

Britain and its empire was by far the biggest market.

There was a false dawn for Dublin's pot still distillers in June 1908 when a United States Court of Appeal ruled in a trademark case that a spirits bottle label with the slogan 'Brookwood Pure Old Rye Whiskey,' was deceptive and misleading as the contents of the bottle comprised more than rye. The justices noted, "When we speak of Scotch whisky we do not mean whisky made from corn but malted barley."

On the June 28, 1908 issue of The New York Times, there was a short report from Dublin on the case. The US rules on labelling had already been updated and in London of that year, the Royal Commission on Whiskey had declared that blended Irish and British whiskey was whiskey (the commission used the word containing an e!).

As was noted above, the big distilleries in the north of Ireland were using the patent/ Coffey stills not pot stills.

US Prohibition allowed alcohol for medicinal purposes!

In 1914 Scotch imports to the United States were valued at $1.9m compared with $324,000 from Ireland.

Distilling was suspended in Ireland in 1917 because barley was required for the war effort.

The world war, Prohibition, the war for independence, a civil war, the loss of access to the British Empire markets, the Great Depression, and a so-called economic war between the Irish Free State and Britain, destroyed an already fragile industry.

I have previously written here on the rise and fall of the Bandon Distillery, about 100 years apart.

When Prohibition ended from 1934, Irish distillers lacked mature stocks and in 1938, Scotch was more than 5% of the US domestic market. 

Whisky exports accounted for 27% of the UK's £118m exports to the USA in 1938 (see chart above).

The Department of Agriculture and Food has noted, "By 1953, there were only six distilleries on the island, mainly based on domestic demand. These were the Jameson and Powers distilleries in Dublin, Cork Distilleries Company (CDC) in Cork, Tullamore distillery in Offaly and the Bushmills and Coleraine distilleries in Northern Ireland.

By 1966, the number of distillers in Ireland had dropped to four. This became two as Jameson, Powers and Cork Distilleries merged to form Irish Distillers, then known as United Distillers of Ireland, and then finally in 1973 to one company when Bushmills merged into Irish Distillers. A new distillery was commissioned by Irish Distillers in Cork in 1975 to replace the Jameson, Powers and Midleton Distilleries which were all closed in the same year.

This marked the beginning of the revival [ ] In 1987, Cooley Distillery was established and was the first independent distillery to begin distilling in over 100 years."

A year later, Pernod Ricard acquired Irish Distillers and began to invest heavily in its Irish whiskey portfolio.

The future

There are now 20 or more distilleries or aspiring ones in the Republic and there are hundreds of new distilleries across the Continent.

Official figures from HMRC, the UK customs and excise agency, show that England in 2018 had more distilleries than Scotland for the first time since records began, amid a craft gin boom.

There were 361 distilleries recorded in the UK last year, of which 166 were based in England and 160 in Scotland.

About 1,000 people are directly employed in distilling in Ireland compared with more than 10,000 in Scotland.

Distilling is a niche area and even though Jameson is a brand that is owned by a multinational foreign firm, most of its business comes from English-speaking countries.

Last September Pernod Ricard, the owner of Irish Distillers, announced that a new 13-hectare single malt whiskey distillery is to be built in Emeishan, in South-west China's Sichuan province, with an investment of some ¥1bn yuan ($150m) over the next decade. The distillery, the first of its kind in China, will start production in 2021.

In Asia, apart from India, Japan is another big whiskey producer.

Over the past two decades, Pernod Ricard's brands, including Chivas Regal, Ballantine's, Royal Salute, The Glenlivet, Aberlour, Longmorn, Jameson and its Swedish Absolut Vodka, have been promoted in the Chinese market.

Jameson will continue to do well.

Single malts

The single malt whiskey is a premium whiskey and apart from malted barley, in Scotland typically peat smoke is applied during the heating process.

Recently a bottle of Lagavulin 16-year old from the island of Islay was recommended to me but I found that its taste was too pungent.

The standard Jameson drank neat or straight has appealed to me over the years compared with rough standard Scotches but I found a bottle of 18-year old Jameson (not a single malt) too bland!

My favourite single malt is Glenfiddich and my latest is 23 years old! 

Malted barley — malting is the controlled germination of cereals, followed by a termination of this natural process by the application of heat. The sprouted grains provide available sugars for conversion to alcohol in the production of whisky.

A single malt whiskey is produced solely from malted barley in a single distillery while blended whiskies may contain malted and unmalted barley together with other grains.