What's in a barrel?
Ian Wisnewski looks at the complex nature of acquiring casks and the increasing demand for quality.
Understanding the complexities of maturation has deepened significantly during the past 25 years, with ‘wood management’becoming an established phrase among distillers.
But ‘wood management’ also entails various considerations beyond the influence of oak during maturation.Sourcing and transporting casks is one example, to ensure that the appropriate amount arrive at the right place at the right time.This may sound a pragmatic process, but it’s actually a case of multi-tasking, as there are various issues involved that require specific skills and experience.
Meanwhile, as various distilleries increase production levels, the demand for casks is increasing correspondingly, with the Scotch whisky industry predominantly using bourbon barrels.
However, the range of other customers for bourbon barrels,and the quantities they require, is providing significant competition.
“American distillers have found a number of other industries interested in buying casks, so they’re shipping to rum and tequila producers for example,”says Ken McKinlay of Wm Grant & Sons.
Greater demand for bourbon barrels naturally raises the question of availability, and of course price.
“Acquiring the required volume of bourbon barrels is still achievable, but the price is significantly higher than it was two to three years ago. I’d like to think the price is approaching the peak but there’s not much evidence of that, and forecast prices for 2009 show another significant price increase coming,”says Dewar’s Iain Lochhead.Meanwhile,McKinlay gives a longer termperspective, “Dependent upon the volume of fillings in Scotland, during the next three years I’d expect to see prices of bourbon barrels drop.” Whether the availability of bourbon barrels can meet growing demand depends of course on production levels.Production figures are expressed in terms of barrels, which conveniently indicates the number of new barrels entering the system each year.And it’s a total that’s been rising dramatically.
In 1999 total production was 455,078 barrels, soaring to 572,260 barrels in the year 2000.Another major increase up to 711,294 barrels followed in 2001, while a smaller increase in 2002 brought the total to 718,564 barrels. In 2003 it was 765,031 barrels, with the 2004 total of 806,423 barrels leaping to 906,839 barrels in 2005.
Another hike in 2006 reached 946,326 barrels, although the 2007 total registered a minimal decline to 937,865 barrels, according to the Kentucky Distillers’Association and Kentucky Revenue Cabinet.
Scotch whisky distilleries belonging to international conglomerates that also own a bourbon distillery do of course have an opportunity to conduct ‘in house’ deals.Alternatively, Scottish customers can deal direct with distilleries or cooperages in the USA.How ‘hands on’ the process is obviously varies.
For Glenmorangie’s Dr Bill Lumsden it’s a very close and personal relationship.
“For designer barrels, which are used for expressions such as Glenmorangie Astar, I chose some oak trees myself in the USA, though I also have a forester employed by the Blue Grass Cooperage who knows exactly the spec that I want.This oak is air seasoned for longer than usual, with bundles of staves having a ‘G’ marked on them, then given a specific toasting regime.Barrels are then all supplied to the same distillery,where they are filled and a specific ageing regime applies.
Barrels are bought upfront so we own them for the duration of the process,”says Lumsden.
Similarly, acquiring sherry casks sees some distillers going to the source and dealing direct.
“We buy the casks ourselves, and always have done since our first wood experiment in the early 1970s, that’s when we started looking at wood seriously,”says John Grant of Glenfarclas.
The choice of sherry casks is either a hogshead (250-305 litres) or butt (500 litres).However, choosing between these two options is not as straightforward as it used to be.
“Sherry hogsheads are pretty much out of the picture.That’s because planks are cut into staves that are ideal for butts,whereas if you made hogsheads there would be some wood left over, which you’d have to find a use for, so it’s not very price efficient,”says McKinlay.
At least pricing is more consistent than bourbon barrels, but that doesn’t mean the price is immobile.
“The price of sherry butts is more stable but has been increasing around five to 10 per cent per annum,”adds McKinlay.
Having acquired casks a carefully planned time-table is vital to ensure that they arrive where and when required.Otherwise, a lack of casks would obviously compromise the distillery’s schedule. Similarly, a lack of coordination could result in empty casks hanging around waiting to be filled.
“It’s quite challenging to keep casks coming in as we need them, suppliers sometimes can’t deliver on the date specified for various reasons, so logistics can be challenging to say the least.
Sometimes there are transport problems due to bad weather, so you’ve got to build that into your lead time, though at any given time on site there’ll be enough for a couple of fillings,”says Glenmorangie’s Rab Sormon.
In addition to punctuality, the cost of transportation is another significant factor.
“Because of the rising cost of transport when bringing casks from abroad you have to make sure that the best use is made of the transport by always bringing in full loads.
“We usually bring in a couple of containers of sherry casks from Spain each year and as long as the casks are kept cool and filled within a reasonable time scale they will stay fresh.
“In the worst case scenario the hoops may fall off causing the cask to collapse and require recoopering,”says Springbank’s Frank McHardy.
So, while various practicalities of sourcing casks are a known quantity, the essential question is future availability and the price.
“Prices are going to be directly connected to whether the Scotch whisky industry continues to fill more casks than it empties, each company will take a different view.
Spirit filled in 2007 will start to be emptied from 2010, so more casks could be available,”says Ken McKinlay.
Douglas Cruickshank of Chivas Brothers adds,“We closely control the quality of spirit at distillation, and we know it’s imperative to control the quality of the wood for maturation.But it’s not that easy to pick up good quality wood with the volumes of distillate being produced at this time. It’s not just volume of supply that’s the issue; it’s the quality of the wood that we use that is absolutely key.” FACT BOX Although bourbon barrels are a more popular choice in the Scotch whiskyindustry,sherrycasks are more traditional.That’s hardly surprising considering that sherry has been such a favourite in Britain,and shipping casks from Spain,which disembarked at ports such as Leith,with the contents bottled locally,was the traditional routetomarket.
This resulted in a continual supply of empty sherry casks,which were dispatched to ageing warehouses in Scotland for a further period of employment.However,two consecutive historical events, the Spanish Civil War (1936-39) and World War II (1939-45), disrupted the arrival of sherry casks,and larger numbers of bourbon barrels made up the deficit.This was compounded by sherry increasingly being shipped in bottle rather than cask,during the 1980s,which led to a further rise in the use of bourbon barrels.