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Why some single malt whiskies are costlier than others?, Hospitality News, ET HospitalityWorld

By Prem Dewan

Single malt whisky is defined as one made only from barley malt and distilled and matured in a single distillery without any part of the product having been sourced from any other manufacturing unit. Hence, the most suitable explanation of what single malt is would be a blend made exclusively of barley malt produced completely in one specific distillery. This pretty much explains the uniqueness quotient of the spirit. Why are some single malt whiskies much costlier than others? The answer lies in a number of factors explained hereunder.

As single malt whiskies are made exclusively from barley malt, the cost of the core constituent is the foremost factor that impacts the final cost of the product. The cost of barley as well as the conversion costs can have a bearing on the basic cost depending on the location of the manufacturing unit. Furthermore, single malt whiskies are manufactured in copper pot stills and have to undergo the maturation process before they can be ready for marketing which eventually has a great bearing on the final price.

The cost of single malt is directly proportional to the length of maturation. Maturation involves storing in Oakwood or other special barrels over a period of time, normally at least three years as per statutory requirement in most countries. This involves cost of capital as also cost of spirit lost during maturation, which is referred to as Angel’s Share. Significantly, the maturation costs are lowest in Scotland due to the region’s cold weather and extremely low cost of capital.

The type of barrels used for maturing the malt also impacts the cost of the product. Barrels can be ex-Bourbon, ex-Sherry of ex-Wine. Ex-Bourbon casks are normally the rule and are the cheapest but most appropriate for maturation. There can also be a huge difference in the cost of ex-bourbon casks depending on the source and the age of the barrels. Ex-Sherry casks are normally used only to give malt, which has already been matured in ex-bourbon casks, an extra finish. The malt matured in ex-bourbon casks is transferred to ex-sherry casks which impart their particular flavour to the product and add immense value to the same. These casks are very expensive and the costs can differ immensely depending on the place from where they have been sourced.

Select casks: Malt spirit is produced in batches but the spirit is matured in casks. However, despite being from the same batch, the spirit from different casks can be quite different after maturation even though most of it would be quite similar, some casks may give much better results. The malt from these casks is separately stored and marketed as SELECT to indicate that it is from the barrels which have been selected for the better quality of their product. This SELECT malt sells at a much higher rate.

Single casks: Similar is the case with single cask malt whiskies. Malt from casks is sampled and the cask with the best malt is separated from the rest and sold as single cask malt. Single cask spirits are selected for their excellence and as the name suggests would generally have low volumes.

Limited editions: Limited edition malts are usually launched during specific occasions such as festivals or factors of significance like historical reasons etc. These are normally packed in more expensive materials and are usually the mostly picked up by connoisseurs or collectors.

The cost of packaging also plays a major role in determining the selling rate of single malts and can differ drastically across each brand.

So generally, the cost of raw material, the maturation period, the climate, the cost of capital, the type of barrels, the finishing procedures and the selection of spirits plays a major role in deciding the pricing of single malts.

The author is chairman & managing director of DeVANS Modern Breweries Ltd.

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