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Independent Irish Whiskey Brands Risk Demise Due to a Lack of Supply

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Independent Irish Whiskey Brands Risk Demise Due to a Lack of Supply

Independent Irish Whiskey Brands Risk Demise Due to a Lack of Supply
November 23
10:21 2015

A report prepared by Compecon for The Wild Geese Irish Whiskey has found that without the establishment of a wholesale market for bulk Irish whiskey, smaller Irish whiskey brands may face demise due to a lack of supply of mature whiskey. The report found a number of significant barriers to entry in to the Irish whiskey market inhibiting the growth of the industry as a whole. The creation of a bulk wholesale market, similar to that in Scotland, would remove some of the main obstacles facing new entrants.

The report was commissioned to analyse the performance of the Irish whiskey industry and its potential to contribute to growth in the Irish economy through comparison with the Scotch Whiskey industry.

The report found:

  • 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 in supply and cost;
  • The wholesale whiskey 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;
  • There are a number of significant barriers to entry in Irish whiskey distilling, including 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.

Pat Massey, Director of Compecon, states: “Our analysis describes the fundamental challenges facing many smaller independent Irish whiskey brands in Ireland today. While there is 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 and Co-Founder with his wife, Mairade (nee Kelly) of The Wild Geese Irish Whiskey, comments: “While we have 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 are committed to providing our customers with the very best quality product and representing the Irish whiskey industry internationally, and we are 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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