The trouble is that Scotch whisky – and particularly single malt Scotch, carries an aura of unchallengeable integrity not always found in those who produce it. Diageo’s adventures with Cardhu will, through history, stand to impugn the probity of the industry.

The authority of the product masks some neat commercial swerves and we have just seen a couple of examples of this.

Edrington Group, Tamdhu and Macallan

A few days ago, on 20th November, the Edrington Group announced that, from April 2010, its Speyside Tamdhu distillery and maltings will be put on to a care and maintenance footing, cutting 31 jobs in the process.

The Group’s announcement of its decision said: ‘The proposed restructuring follows a decision by Edrington to rebalance its malt whisky production levels in direct response to the global economic recession, which has affected all of the Scotch whisky industry’.

Edrington’s recession driven ‘rebalancing’

This ‘rebalancing’ in indeed just that, although it is far from what it seems. As we understand it, there are two curious parallel facts here:

• Tamdhu, selling 4,000 cases of malt, is closed down – because of ‘the global economic recession’.
• At the same time, production at a second Edrington distillery – Macallan – has increased by 2 million olas (original litres of alcohol). Odd that ‘the global economic recession’ didn’t stop the hike in production at Macallan.

The suspicion is that this ‘rebalancing’of production is more about centralisation and improving profit margins than it is a response to hard times inflicted by the handy scapegoat of ‘the gobal economic recession’. The quality whisky market has remained largely untroubled by the recession.

The SWA and new regulations on Scotch whisky

Yesterday, in the guise of welcoming what it trumpets as protection for the Scotch whisky industry, the Scotch Whisky Association (SWA) is celebrating new guidelines which came into force in Scotland today (23rd November).

The SWA says that these regulations are designed to protect whisky from foreign imitation. They include new rules on labelling, bottling (with a new requirement that Single Malts may only be bottled in Scotland) and tighter rules on the use of distillery names on bottle labels.

The ban on bulk export of single malt – which may only be bottled in Scotland, is barely worth bothering about. It is really designed to protect the position of the 5 or 6 big conglomerates – who can and will do what they like – and obstruct the smaller non-aligned distilleries. Any serious effort to prevent overseas abuse of Scotch would simply ban all bulk exports, but the game, as usual, is oblique – see the closing paragraphs to this article.

Threats to the Scotch whisky industry do not only come form ‘foreign imitation’. They also come from within as did the long-reverberating damage of the Cardhu expedition.

The new rules give and remove protection in equal measure. It would be naive to imagine that the industry will not have had a steering influence – with Diageo as its most powerful member, SWA has a  very forceful lobby presence.

Coming and going on the Cardhu legacy

There is apparent protection in that the new regulations protect against a recurrence of that Diageo-inflicted black spot on the reputation of the entire industry that was the corruption of Cardhu.

• They ban the use of the term ‘pure malt’ which disguised the blending at the heart of the Cardbu operation. However, at the same time they legalise the use of the term, ‘blended malt’, introduced to replace the term ‘pure malt’.
• They ban the use of a distillery name as a branding on any Scotch Whisky which has not been wholly distilled in the distillery named. On this matter, the midnight garlic-and-stake has not yet disposed of the spirit of Cardhu. This regulation (9/2) does not apply ‘where a distillery has changed its name and the new name for the distillery is used as a brand name or as part of a brand name (or is used in a similar fashion in terms of its position or prominence) for a Scotch whisky distilled at that distillery before the new name had been adopted. Interestingly, Diageo wanted to change the name of the distillery to Cardhow, leaving them free to use Cardhu as a name for a ‘pure’ or now ‘blended’ malt.

Dealing with misleading marketing – in the UK

• They ban misleading labelling and marketing of Single Malt Scotch Whiskies. Will this embrace the overseas marketing of Skye’s Talisker… ‘lashed by the sea spray of the west coast… sea air… gives its powerful marine character, influenced by seaweed and pepper’. In truth Talisker is matured in Central Scotland / East Kilbride and gets no marine influence at all.

Failure to legislate on place of UK maturation

• They  make it a requirement that Single Malt Scotch Whisky may be bottled only in Scotland. But at the same time they require only that Scotch Whisky must be wholly matured in Scotland. This means that, however much its offshore advertising campaigns may suggest the contrary, Diageo can continue to tanker away single malts like Skye’s Talisker and Islay’s Caol Ila to be matured far from the islands – and from the romance of the salt spray of the sea – in East Kilbride or elsewhere in the Central Belt.

Classifications for Scotch

There are now five legal classification categories for Scotch whisky and these must be prominently displayed on labels:

• Single Malt Scotch Whisky
• Blended Malt Scotch Whisky
• Single Grain Scotch Whisky
• Blended Grain Scotch Whisky
• Blended Scotch Whisky.

Protection for producing regions

And the five traditional production regions for Scotch, two of them in Argyll, are to be protected:

• Highland
• Lowland
• Speyside
• Islay
• Campbeltown

Summing up

Whatever things may seem, the word is ‘be watchful’. Enjoy your dram but read the label like a lawyer. There are straightforward distillers in the business but they’re not in the driving seat.

If you think we’re wrongly cynical – try this. One of the new rules (9/2), described above, is that single malt whisky must be bottled in Scotland and therefore cannot be exported in bulk.

The word is that there is already a plan for the big boys to export it in bulk as ‘blended malt’ by adding a couple of teaspoons of another malt to each tanker load. This will legally get it out of the country under the new ‘blended malt’ denomination; and after arrival at its destination, it can conveniently revert to ‘single malt’ for further maturation and bottling there.

So we’re not cynics as much as realists getting our eyes opened ever wider by the manoevres of the big beasts in the whisky jungle.

The generic photograph above is by copyright holder Chris Huh and is reproduced here under the GNU Free Documentation licence.

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