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The bright prognosis for global whisky/whiskey is spurring distillers’ expansion plans. But, will the markets be able to mop up the resulting liquid?
The global growth prospects for whisky/whiskey have arguably never been rosier than they are now. And, judging from the bullish expansion plans of distillers from Ireland to India, that might be just as well.
Over the next decade and beyond, there’s going to be an awful lot of new liquid coming to market. Here’s a quick rundown: In India, Amrut has tripled its malt distillation capacity to 1.2m litres, and plans to boost it further to 2m litres by 2026; Radico Khaitan tripled its malt distillation capacity a couple of years ago, and expects to offer three times the volume of Rampur Single Malt; John Distilleries should have doubled production for Paul John Single Malt by the end of last year.
In Taiwan, Kavalan’s third maturation warehouse is in the final stages of planning, with construction scheduled to have started in the second half of 2023. The move will nearly double the distillery’s current storage capacity, accommodating more than 200,000 casks.
Meanwhile, Jameson’s rapid growth – the Pernod Ricard-owned brand hit 10m cases in the year to the end of June – has prompted the announcement of a new, EUR250m (US$278m) distillery to be built next to the existing Midleton plant in County Cork, scheduled to open in 2025.
The bright prognosis for American whiskey, meanwhile, has sparked a wave of capital investment in Kentucky and beyond. The new $250m Jefferson’s Bourbon distillery in Marion County is progressing well, according to Craig Johnson, head of Pernod Ricard’s American Whiskey Collective unit, encompassing Jefferson’s, Rabbit Hole, TX and Smooth Ambler. The carbon-neutral operation should be up and running by June this year.
In 2022, Heaven Hill Brands broke ground on its $135m Heaven Hill Springs Distillery in Bardstown – the location of the company’s distillery destroyed by fire in 1996. The new facility is expected to be operational by the end of 2024, with initial production slated for 150,000 barrels a year, which could expand to 450,000 barrels, matching the company’s Bernheim Distillery in Louisville.
Lastly, Beam Suntory’s $400m investment in boosting production of Jim Beam – expanding the Booker Noe Distillery in Kentucky – is “progressing well”, says group CEO Greg Hughes. The company is also spending $77m on its Yamazaki and Hakushu distilleries in Japan, 100 years after Shinjiro Torii kick-started the Japanese whisky industry by establishing Yamazaki.
Distillers bullish on market growth as Irish whiskey targets higher-end
This is a small sample of the recent investments in whisky/whiskey production, not to mention the many startups with spirit already running off their stills. It’s a lot of spirit, but distillers are united in their optimism that the markets will be only too happy to mop it up.
“According to the IWSR 2022 report,” says Irish Distillers CEO Nodjame Fouad, “Irish whiskey represents just 11% of the total whisky/whiskey category, and has remained the fastest-growing segment over the past five years, with Jameson driving growth as category leader.
“Rather than create a saturation point, new entrants are helping to drive the sector forward, offering more choice in Irish whiskey to consumers. Perhaps most notably, Irish whiskey is becoming an increasingly significant player in the higher-end whisky/whiskey market, with an increased supply of super-premium, prestige and even ultra-rare Irish whiskies.
“While in the past, as an industry, Irish whiskey has underperformed at this level, in recent years things have moved on considerably, with the launch of new and very rare whiskies such as the Midleton Very Rare Silent Distillery Collection.”
American whiskey steps up to premium-and-above
Similar criticisms might have been levelled against American whiskey in the past, but no more. Pernod Ricard’s American Whiskey Collective has a conscious bias to premium-and-above products and innovation – Jefferson’s Ocean, a maritime-aged whiskey, is a prime example – and Johnson sees that continuing.
While the US remains “by far the growth engine”, Rabbit Hole was in 12 markets by the end of last year, with Jefferson’s following a similar trajectory. The UK, Germany and Australia are obvious target markets, but Johnson sees opportunities in Asia too, for higher-priced expressions.
“Our brands really play in that ultra-premium category,” he says. “We’re being compared with single malts and other ultra-premium brands. Whether it’s South Korea or Japan or some South American markets, we think we really can see strong growth. There’s still a lot of stretch for the category and stretch for our brands.”
The category has never been so diverse. Heaven Hill Brands’ VP of American whiskey, Susan Wahl, references the company’s six primary mash bills, with more in development. These help create a range of flavours and expressions, from Old Fitzgerald Bottled-in-Bond to Larceny Barrel Proof and the annual Parker’s releases, not to mention Evan Williams, Elijah Craig and the eponymous Heaven Hill range.
“Growth in the category continues to look strong over the next several years,” says Wahl. “Long term, we know trends tend to shift somewhere between 20 and 40 years, so we continue to cautiously watch and prepare for the future with our new distillery production.”
Getting the balance right between a strong domestic market and overseas growth opportunities remains a key issue for American distillers. “The US remains very important, and we still see a sizeable opportunity for growth,” says Beam Suntory’s Hughes. “Bourbon volumes are still a fraction of their historical peak in the 1970s and in 2022, we saw spirits overtake market share from beer for the first time.
“Having said that, we absolutely take a global view, and we see significant long-term opportunity to grow and premiumise our full whiskey portfolio in various markets across Europe and Asia.”
While brands including Jack Daniel’s, Jameson and Jim Beam continue to dominate international whisky/whiskey volumes, there are opportunities for other, smaller brands. Luxco’s newly-acquired Penelope Bourbon is being introduced to some of the company’s most buoyant markets, including the UK, Germany and Australia.
“The whisky/whiskey market has become more global, which I think has been a huge positive for breaking down barriers and changing attitudes,” says Luxco’s international sales director, Greg Mefford. “When people now talk about high-end, premium whisky/whiskey, they are no longer just having conversations dominated by Scotch.
Array of product types, origins and flavours drive consumer interest
Meanwhile, Kavalan continues to drive awareness through its showrooms in Taiwan, with the latest Zhongxiao Showroom – featuring the art of Taiwanese artist Hong Yuwen – expanding the roster to 49 venues.
Kavalan brand ambassador & global PR officer Kaitlyn Tsai scents opportunities in France and China, where consumers frustrated by shortages of Japanese whisky are exploring other options. And, in South Korea, Kavalan’s sales soared by 169% in 2022 – thanks to Kavalan Solist Oloroso Sherry’s high-profile inclusion in Decision to Leave, a film from director Park Chan-wook.
On the other side of the world, Denmark’s Stauning – which has benefited from Diageo investment via the Distil Ventures incubator – continues to innovate around its rye whiskey core, with co-founder & CMO Alex Munch highlighting its new Douro Dreams Rye limited edition.
Staying in Europe, BBC Spirits is bringing a roster of new products to France and other European markets, including Japanese whisky Kuju (currently in spirit form as it awaits full maturation), made by master distiller Shoji Utoda – a close friend of Ichiro Akuto of Hanyu fame – on Kyushu Island.
Marketing director Cécile Frapsauce also highlights an eclectic mix of newly introduced whiskies from a variety of origins: Fercullen, an Irish single malt made at the Powerscourt Distillery south of Dublin; Morris, an Australian whisky distilled in the Rutherglen wine region; and Goalong, a Chinese single malt matured in no fewer than five barrel types (ex-Tennessee whiskey, -bourbon, -wine, -sherry and -brandy).
Such a broad mix of product types, origins and flavours should continue to drive consumer interest in this increasingly diverse and multifaceted category. Innovation of all types, producers believe, will help to keep consumers enthusiastic to try new whiskies from every continent.
“History is repeating itself,” says Sanjeev Banga, international business president at Radico Khaitan, maker of Rampur Single Malt and the newly launched Sangam World Malt Whisky. “Something that happened in the wine industry a few years ago, when New World wines came on the scene – we are now witnessing the same with single malts. It bodes well for the category, as well as consumers.”
India now a new force in world whisky/whiskey
India has overtaken France as the world’s biggest consumer of Scotch, according to figures from the Scotch Whisky Association last year. Now, however, a growing number of distilleries are producing their own take on single malt.
Amrut Distilleries was the pioneer, and now the baton has been taken up by the likes of Rampur (Radico Khaitan) and Paul John (John Distilleries). All are expanding their production capacities, targeting consumers both domestically and overseas with their increasingly diverse ranges.
“As a company, we recorded topline growth of 18% in 2022, and should sustain these levels this year [2023] as well,” says Amrut MD Rakshit Jagdale. “Our main markets are India, the EU and the US. We strongly feel that all these markets have the potential to grow further for our range of single malt whiskies.”
The story is similar at Rampur, where large-scale increases in production aim to ease pressure on whisky stocks. “Rampur is currently available only in about 33 countries,” says Radico Khaitan’s Banga. “Even in the existing markets, the demand outstrips the supplies.
“We would, therefore, not only focus on meeting demand in the markets like the US, UK, EU, South Korea, the Far East and GTR, but also in huge potential markets like India, the UAE, Australia, China, etc.”
Meanwhile, John Distilleries’ Asa Abraham reports that the company is “refocusing our lens in the UK” for Paul John single malt, and aiming to exploit newer routes-to-market. But, it’s not all about international growth opportunities, he says: “India continues to surprise us with its appetite for Indian single malts, and will remain a focus market, [specifically] its civil, defence and duty-free [channels].”
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