Tariffs and Covid-19 aside, the resurgence of rye and the growth of American single malt suggest there are good times ahead for American whiskey, reports Richard Woodard
There are times when the immediate concerns of the world are so all-encompassing that it’s hard to lift your eyes to the horizon and fix your gaze on the long-term trends that will shape the way of things for years to come. For US whiskey, the seismic shocks of Covid-19 and punitive tariffs are much more than a mere distraction — but they can sometimes disguise the positive forces that continue to circulate around the category. As cautious optimism grows amid the vaccine roll-out, the international trade picture, too, is beginning to look more positive. At the time of writing, the EU, the UK and the US have suspended one set of 25% tariffs related to the long-running Airbus/Boeing dispute, and hopes are high that another set, related to steel and aluminium imports and directly impacting EU imports of US whiskey, will also cease — not least because that tariff is due to double to an eye-watering 50% on 1 June.
No matter which set of figures you examine, the damage has been considerable. Michter’s president Joe Magliocco quotes a -35% fall in exports of Kentucky Bourbon in 2020 (according to the Kentucky Distillers Association) — which incidentally makes Michter’s own 34% export hike all the more impressive. “Retaliatory tariffs clearly make our products less competitive — especially for Bourbon in markets like the UK and Germany,” adds Clarkson Hine, senior vice-president corporate communications at Beam Suntory.
“According to Discus (Distilled Spirits Council of the US), since the EU imposed the 25% tariff on American whiskey in 2018, the value of exports to the UK and EU has decreased by -53% and -38%, respectively. Reversing these tariffs is our top public affairs priority.”
And this from Brown-Forman president and CEO Lawson Whiting: “The latest Eurostat data shows that about 25% of the entirety of the UK and EU steel and aluminium tariffs levelled against the US has been borne by the American whiskey category. Based on data from IWSR Drinks Market Analysis, we know we’re about two-thirds of the American whiskey category exports to the UK and EU. We estimate that Brown-Forman has borne roughly 15% of the entire tariff build that’s been levelled against the US.”
Cooler heads and a more conciliatory stance from the new Biden administration hint at better times to come for a category that is otherwise in rude health, both at home and abroad, and with considerable headroom for future growth. This positive picture is a consequence of a virtuous circle of growing consumer interest and continued innovation from distillers, the latter also boosted by a plethora of craft operators not afraid to question the status quo and try new ways of making and maturing whiskey.
Most notably, where Bourbon (plus Jack Daniel’s) was once almost the only game in town, now a diverse range of styles has broadened American whiskey’s appeal: the resurgence of rye and the growth of American single malt as a category in its own right. Crucially, this plays differently to US and international audiences.
“The blossoming American single malt category has added a new dimension to the larger idea of ‘American whiskey’ domestically and abroad, but in different ways,” explains Matt Hofmann, managing director and co-founder of Rémy Cointreau-owned Westland Distillery, based in Seattle. “In the US, Bourbon is for sure the dominant whiskey culturally. Every other spirit type from around the world competes with the attention for Bourbon. Our experience abroad, however, has been much the opposite. Single malt whiskey is king in London, Paris, Tokyo and other major metropolitan areas with discerning whiskey enthusiasts.”
To Hofmann, the rise of American single malt is analogous to the development arc of New World wine — proving that it can rival the old guard for quality, but with its own unique provenance. “In 10 years, my hope is that every serious backbar in the world has at least one bottle of American single malt on its shelves,” he adds.
Resurgence of rye
If American single malt is the new kid on the block, rye is the old hand. The ‘original’ American whiskey, it had become an all-but-forgotten curiosity until its recent revival. “When we began our work in the 1990s to resurrect the Michter’s brand in Kentucky,” recalls Magliocco, “the market for American rye was close to non-existent. It was the bartenders and some whiskey aficionados in retail stores who championed quality American rye and reintroduced it to the public both in the US and abroad.”
The result now, says Heaven Hill master distiller Conor O’Driscoll, is a 1.5m-case market that is still some way short of where it stood in the 1970s. And, far from cannibalising Bourbon, he says, it “absolutely complements” the Bourbon category. As such, there’s a conveyor belt of new rye products: Heaven Hill’s Elijah Craig brand now has a rye expression, while at Beam Suntory, Knob Creek Twice Barreled Rye continues to grow, alongside “bartender darling” Old Overholt. The company also launched Basil Hayden’s 10yo Kentucky Straight Rye Whiskey during 2020.
While rye still has potential to grow, the curve is beginning to flatten as the category matures, says Chris Morris, master distiller at Brown-Forman. “The dramatic revival of rye whiskey has slowed to a growth rate more in line with those of Kentucky Bourbon and super-premium Tennessee whiskey,” he notes. Rye is competing for headlines with a vast number of new whiskey launches. To name just a few: Westland’s new Outpost Range; Heaven Hill’s roster of Bottled-in-Bond products, as well as Elijah Craig Toasted Barrel, Barrel Proof and Larceny Barrel Proof; Beam Suntory’s Knob Creek 12yo (a permanent addition to the range) and 15yo (a limited-time release); the Maker’s Mark Wood Finishing Series; and — last but by no means least — Jim Beam Peach, hailed as the brand’s most successful innovation to date.
Beam Suntory has also plundered the history books to revive Old Tub as an unfiltered, 100-proof bonded Bourbon which the company says “celebrates Bourbon’s true rustic character” and has generated “much excitement” among bartenders and retailers.
Underpinning this wave of innovation is the conviction that American whiskey’s journey in markets around the world is only just beginning. A Beam Suntory spokesperson points out that American whiskey is only about one-fifth the size of Scotch outside the US — and, even at home, Bourbon volumes are a fraction of their historical peak in the 1970s.
“We see an opportunity for Bourbon to become the world’s whiskey,” the spokesperson says. “Bourbon’s versatility, mixability and sweet flavour profile increase its appeal to many palates globally and give it a lot of headroom for growth.”
And that’s just Bourbon. Throw the myriad other styles of American whiskey into the mix and — whatever short-term hindrances the category may face — the future both at home and overseas looks very bright indeed.●
