Supplies and demand

There is rice down the river,
Up the river people need rice.
If we store the rice,
They will pay more for it.
Those who tow the rice-boats,
Will get even less of it.
Then for me the rice will be even cheaper.
Do I know what a rice is?
Do I know who knows that?
I know not what a rice is!
I know only its price...
Bertolt Brecht ‘The Ballad of Supply & Demand’

Ah yes, price. Either consumers are complaining about high prices at the top end, or distillers are moaning about the discounts being applied at the other. It’s the subject which never goes away, and for a number of reasons I suspect it will become a central issue over the next couple of years. Brecht and Eisler’s song (the best version? it’s a toss-up between Dagmar Krause or Eric Bentley) drifted into my mind when, pre-Christmas, the discount supermarket chain Aldi released two single malts.

One, Glen Marnoch 24 Years Old, was at the budget price of £29.99, while Glenbridge was 40 Years Old and retailed for £49.99. Yes, there is a decimal point in there.

Now, Aldi runs a low-priced luxury PR stunt every Christmas, one year it was lobsters, so this can be seen more as a one-off rather than a move on their part to further destabilise the whisky category. It’s hard to see anyone, even Aldi, either being able to maintain this price point, or get their hands on sufficient juice.



That said, it does demonstrate a couple of issues. Firstly, that there was a supplier, and rumours abound as to who it was, willing to supply precious whisky knowing that it was destined for a bottle selling for less than £50.

I suspect it was either an existing Aldi supplier, or someone who is desperate to get into the low-margin bulk end of the market. As there’s precious few of the latter, I’d go for the former which makes this stunt as clear a demonstration of the power of supermarkets as you could wish for.

Not only did this supplier have good quality 40 Years Old whisky sloshing around, at a time when we’re not exactly drowning in a whisky loch, but they were willing to dismiss the possibility of making serious money themselves. On the same week as the Glenbridge stunt was pulled, Balvenie launched its own 40 Years Old at£2,500 a pop. I rest my case (while scratching my head) at a further example of how what should be a premium market with premium prices has become dangerously commoditised.

That said, I wonder whether this is could be seen as one of the last throws of the deep discounting dice. There’s evidence that distillers are beginning to find their spines again. One major supplier is setting a pan-European (and UK) price with no supplier-driven discounts, or special deals attached. Others will follow. Why? Supply and demand.

Stock levels are beginning to tighten, mostly driven by the pressure on mature stock to supply the global boom in 12 Years Old plus blends. This will continue during the next couple of years and will also impact on range.

As a result of this, you can expect to see greater firmness on price on the part of distillers and malt whisky finally raising itself out of the discount mire into which it has been dragged. If retailers don’t play the game, then there are plenty of suppliers who are already saying they’ll quit the discount-driven markets and focus their attentions elsewhere.

What of the top end? Various brands will continue to push prices into the stratosphere, but the bubble will burst as the drinkers who are buying because of vanity will find some other glittery bauble to satisfy their status-driven lust. With prestige Cognac offering better value at luxury levels then I’d say that luxe single malt is playing a very dangerous game, but that’s for another issue.