Diageo Are Back in the Game!

Well, that is a turn up for the books as they say….I knew that Diageo were coming back into Irish whiskey, they never  left in reality. However, the news today that they are ALL IN was a bit of a surprise. They are bringing back the old George Roe (ish)  brand kind of under the new name ROE &CO. Its going to sit in the ‘luxury’ business unit that I used to work for Reserve Brands Group, so you can expect the pricing to start off in the region of Super Premium and go upwards from there. George Roe was an historic distillery with three brand attributes  that Diageo Reserve Marketeers covet:  Provenance, Heritage and Quality.  Its a bit of a masterstroke if I am honest, they already have liquid in cask and their first release will be just in time for St. Patrick’s day. They’ll funnel it nicely into their distribution network globally and it’ll be a million case brand before we can say Slainte.

In the meantime they’ll build a lovely visitor experience/distillery on a property they already own in Dublin right beside the old George Roe distillery from the 17th century and within a decade everyone will think that the George Roe distillery has been there for 300 years and will have no idea its owned by a UK multinational.

To those of you wondering why they got rid of Bushmill’s and are now back in the game, simply look at their annual shareholder reports. Diageo’s current boss Ivan Menezes is a brilliant accountant. When he signed on he promised shareholders annual operating cost savings of  £200 million per annum, which had to come from somewhere. The Diageo plants all over Ireland had become notorious for their inefficiency and were ruled by unions on every aspect, think canteens from the 1970’s huge overtime etc. etc Great for employees but awful for shareholders which is Diageo’s primary concern. I sold most of my shares to start this business so cant say I did not benefit…….. Operating costs were through the roof, so they offloaded many of the existing plants i.e. the Harp Breweries etc.

In addition they effectively swapped Bushmills for Don Julio Tequila which is an amazing brand, well if you consider a swop to include $400 million sweetener. I’ve been to the Don Julio distillery and agave fields and its absolutely fantastic. So,  lets look at the math, they got out of the untenable running costs of the existing Bushmills plant, pocketed $400 million AND a growing Super Premium/Ultra Premium Tequila brand and now are investing a paltry 25 Million Euros in a new set-up….Sounds like a deal to me.

I think this is good news for the category in many ways. Diageo are much stronger in mainland Asia and South East Asia than Pernod are. Jameson has ZERO traction out there and the Irish whiskey category is non-existant. Japan has some movement because of Beam Suntory but not enough. Diageo can plug this brand into their Reserve portfolio and network and put some force behind the category there. This is good for a small player like me. I can’t afford to build the Irish Whiskey Category anywhere. My job is to swoop in and scoop up consumers AFTER they understand the category. I need Diageo the other guys to pave the way for me.

Me watching the Pernod/Diageo Irish Whiskey Show….

Of course in other ways it is not good. They’ll have a seat on the Irish Whiskey Association now meaning it’ll be a lot of multinationals with their agendas  and then there’ll be me and a few other small guys looking for share of voice. Plus they are highly trained and aggressive SOB’s when it comes to the sales field. I don’t have the budgets to go head to head with Pernod and I sure as hell don’t have the budget to out market Diageo either. However I am super interested to see Pernod and Diageo Duke it out now, given that they both have heritage brands based in Southern Ireland. Especially since Pernod are investing 11 Million Euros in a new Dublin visitor experience that won’t have a working distillery as a component…Whereas down the road Diageo will be able to show you their lovely copper stills etc. and simply funnel their 1 Million visitors per annum at Guinness onto the distillery. Interesting Times Folks!

 

 

Coming To America

Death By Powerpoint 

Right! Big week last week for us. We had our AGM, which was all our directors in town from the U.S.A. and UK. We had Minister Pat Breen on site, the local head of the County Council and some friends and neighbours around to formally welcome our whiskey. Our first little event. You can see Eric Flynn’s write up on that here.

Prior to the party we were up at GND where we make our new fill for a tour with the Big Man John Teeling and a taste of some new offerings from Allan Anderson SIGN ME UP FOR THAT POT STILL AND PEATED MALT… Then we went on to Teeling in Dublin to see what a KICK-ASS modern Irish distillery & retail offering looks like. I have to say, as a standard for a modern Irish distillery experience Teeling have everything bang on. The tour is lively and informative, the interiors are evocative and reflective of where our industry is going, its respectful to the past. My only criticism is that the historic narrative focuses on the Dublin Distilleries when in reality,  there was just as much going on beyond the pale (outside Dublin). This is coming from an Irish Country girl otherwise known as a ‘Culchie’. However, it was and  still is  that those in Dublin, the JACKEENS, forgot about the rest of us down the country. Anyway back to the positives, the retail experience is phenomenal and in general its awesome and yes I want one ( a kick-ass distillery that is.)

A Rackhouse Chat

Whilst up in Dublin I squeezed in a visit with Bord Bia who have seriously ramped up their support services since I was there last about 18 months ago.These guys really get it when it comes to Irish Whiskey, which is great as it was also not always thus. They send a trade mission of sorts every year to various USA drinks trade conferences. One in particular is the WSWA, essentially a big meeting of the increasingly consolidated distributor network across the United States.  I went once about 15 years ago and back then I was in a suite talking to people about Champagne that we had already sold, it was not a tough gig we had a huge budget and mostly we went to dinner and drank rare vintage Champagne as I recall. This time I’ll be there as part of the Bord Bia stand all alone trying to drum up interest in our J.J. Corry Irish Whiskey. No big expense account this time round….Oh how the mighty have fallen….

Directors & Minister Pat Breen & Bill Chambers 

I am however FAR more excited about attending this time than in the past. I am not expecting this conference to be the answer to my distribution and sales needs, that is going to happen outside of the conference through hard work. Rather WSWA  in April will solidify our entry into the U.S. market on a legal level if nothing else. The deadline for submission of labels for TTB (Alcohol & Tobacco Tax Trade Bureau) approval is today, so I have had to rejigger our labels properly to ensure they are in line with US requirements. Without that approval I cannot bring samples to the conference in April. The TTB is the government body that regulates labelling on drinks in the U.S.A. Another job out of the way and another step closer to exporting. So when I do land in APRIL to the conference and someone wants to order a cask or a pallet I can tell them “Why YES! we do have TTB approval.” I’ll be spending most of April in the U.S. on pre-sales and finalising an importer the conference allows me to get on the ground, make some contacts and see whats what in the mad and fast evolving world of U.S. distributors. It has changed a lot since I worked in the U.S.

So, if you or someone you know wants to sell J.J. Corry Irish Whiskey in their store, bar or simply wishes to distribute it, or if you are going to be at WSWA in Orlando. Let me know! I’ll be all alone in a booth on the main floor in Orlando, we can grab a coffee or Irish Coffee later int he evening and talk Whiskey Bonding. Otherwise I’ll be doing the rounds most of April in the contiguous United States.

 

 

The Mature Whiskey Supply Conundrum

If only that was pumping 10 Year Old Malt Not New Fill….

This week is manic here at Chapel Gate Towers. Our first annual AGM is happening and I have Investors coming in from the U.S.A. and London. I’m off to GND for a chinwag with Allan A. about Pot Still no less on Thursday and on Friday I have Minister Pat Breen coming on site for a little reception for our casks along hopefully with various nice people from state bodies like Enterprise Ireland, the Local Enterprise Board and Leader. I have received no funding from any of these bodies yet. Now that we are a going concern with Whiskey in the rackhouse and a first release almost finalised I hope that will change.  We also got approved for the Bord Bia Marketing Graduate scheme. This means I’m recruiting for a Brand Ambassador for our introduction to the USA later in the year. During all of that I’m prepping endless Powerpoint presentations for our investors..

Again and again I come up against a single issue not only in our business plan but in all the research and predictions for our industry by fancy analysts. That is very specifically; the lack of supply of mature whiskey on the wholesale market. All arrows point to the fact that this lack is going to stymie growth of the ‘craft’  or ‘Independent’ part of the category in the short to medium term.

This won’t matter to the new Eur 25 Million distilleries, of which there are a few and the multinationals. However, to the smaller peeps like me its a massive deal. Andre Levy talks about this a lot and so he should, he got caught as did many when Cooley was sold and Beam Suntory cut off everyone’s supply. Micheal Collins and Slane basically died as a result and were bought by multinationals. This weeks news from Bord Bia that “the category is expected to post double the current volume figure by 2020 compared to 2015 and volumes are expected to reach 24m cases by 2030 ” is tremendous, and if you have millions of casks in reserve. However if you are desperately trying to source a consistent supply until your own stock is mature in a decade it makes for some creative business planning.

I’m working on finalising our first blend at the moment and I found myself in a conversation this week which could have been the most important one I have had since I started the business.  It revolved around the idea that we could eeeek more out of our existing stock if we put in less of X and More of Y. I stopped the conversation because it would have produced a lesser quality blend as least in my mind. We can run the numbers all we want but we are still screwed, we don’t have enough stock no matter how we slice it and there is not much more out there. My stance is, we come out the gate with something great and hold our nerve. We will have no idea how good bad or indifferent we do sales wise until we hit the market so there is no point in cutting off our nose to spite our face for the accountants sake. We need to focus on creating a great whiskey that people will enjoy and that we can be proud of. This is an approach I need to explain to my investors and its going to be a crunchy conversation as its risky. Then there is the new fill supply, there are four distilleries producing whiskey in Ireland at the moment and only two producing for the wholesale market, this is not ideal either, it sucks in terms of procurement.

I don’t have the answer to this yet. I’m taking the Entrepreneur mindset on dealing with this, I cannot plan my way out of it so I just have to produce the best quality whiskey I can and hold my nerve.

Its f%^&king scary though……

 

My Predictions For the Irish Whiskey Industry in 2017

That’s the All Seeing Eye of Irish Distillers in there…..

In the past I have spent the beginning of January at an intensive detoxification facility in Bodrum Turkey. One of those where you don’t eat for a week and  have vitamin E drips and all sorts. Early January is usually for me a time of personal  introspection and planning. Not this year. This year I don’t have the time to take stock of life like I usually do. 2016 was the year of procurement and logistics for me. I sorted licensing,  built the rackhouse and an office, filled our first casks and in addition found the right people with the right expertise in wood management,  whiskey portfolio development and commercial strategy to surround myself with so as to get to market with a quality and delicious whiskey in 2017.

2017 is the year we start exporting. I have sourced mature grain and malt from the old Cooley Reserves, I also have a smattering of Bushmills and Midelton thrown in. So to clarify just like everyone else on the market who has a mature Irish Whiskey for sale my first release will  have its origins in ex-Cooley stock.  It will be a unique blend of course. In these early years I have no choice. In ten years time I’ll have my very own whiskey that I can confidently and authentically tell you I 100% made but I can’t do that now neither can anyone else, no matter what is written on the bottle. I choose to be TOTALLY TRANSPARENT about what I am up to . Many do not and here is where my first annual prediction for the Irish Whiskey Industry comes in.

 Prediction 1: 2017 will be the the year when saavy Irish whiskey consumers start to reject inauthentic Irish Whiskey brands.  There are too many resurrected Olde Worldie brands coming on the market filled with ex- Cooley stock without being transparent. The whiskey world is starting to take notice and its not doing our industry ANY FAVOURS. Articles like this  one  are just the tip of the Iceberg but are starting to reverberate within the industry and amongst whiskeyphiles.  People are starting to realise what is going on and the category is going to have its reputation put under question.

I have always been and will always be open about what we are doing  and how we are doing it for several reasons. First of all my ENTIRE business model is Whiskey Bonding….that is  just how its done….Its an old business model brought back to life, I distil whiskey elsewhere but mature it, finish it and blend it myself. I can’t do it any other way, if I did I’d be a distiller.  Secondly being transparent is the RIGHT THING TO DO for the industry and I believe in this industry and I want to protect its future.  I’m going to be working in the Irish Whiskey Industry until I die so I want to contribute to it and make it something that I will continue to be proud of to be a part of.

Prediction 2: An Independent whiskey producers industry organisation will emerge to complement the IWA. This is inevitable, there are a lot of us small players now who tangentially benefit from the work the IWA do on category protection and the new tourism push. However the IWA cannot address the internal wholesale market and are not currently focused on addressing the reduction of tax and excise for small producers. We need a body like the craft beer guys have to do this kind of thing. The IWA is focused on other things, they have some good initiatives. But  the smaller guys are  going to need to band together to flight for what we need to grow and survive. Note how I said COMPLEMENT not compete. The IWA does good big picture work, but when you make less, WAAAY less in many cases,  than 10,000 cases a year you need to focus on the small stuff too. Also the IWA is kind of dominated by the BIG players with BIG budgets, our agendas are totally different…

Less Dots Next Year?

Prediction 3: 2017 will be the year we see the famous Irish Whiskey Planned and Under Construction Distilleries Map shrink rather than grow. The realities of setting up a whiskey company for all of us are well and truly roosting now. The lack of Mature Whiskey on the open market and its pricing is crippling and hampers scalability. The  planning and licensing issues are stuck in 1840. As there is a perceived ‘Glut’ of whiskey companies raising finance has become a little more difficult at least on these shores. There were 8 Whiskey Companies raising EIIS funding in the Business Post in October.  I think a few projects may be Mothballed this year.

Let me just clarify however, that I don’t feel there are a glut of companies. It just seems that way as we are in resurgence phase.  I think its a misconception but a shake out is inevitable I don’t think he shakeout will happen in 2017, but we’ll see a project or two abandoned.

Prediction 4: I will through sheer force of will and hard work begin exporting to the U.S.

That last prediction is kind of for my own benefit. I’m writing it down to hold myself accountable. I may not make it to Turkey this year but I will sure as hell apply the same force of will to making this happen as I would to going a week without food in the pursuit of personal renewal.

Here’s to a great year for Irish Whiskey!

 

 

 

A Gathering And A Gossip

Us in Limerick Just Before Christmas

A bunch of us Independent Whiskey producers from beyond the Pale (like not Dublin)  got together in Limerick before Christmas to talk shop, share news, tips and have a good old moan about various  industry things. You would imagine that a bunch of Irish Whiskey makers getting together would be a boozy affair right? Wrong, not a drop was consumed as we’d all driven in from various angles, Galway, Cork, Clare etc. We convened in Limerick as it was fairly central for many of us. It was the first time such a gathering had occurred and we had lots to talk about.  We met at 1PM and we got booted out of the restaurant at 4PM when the dinner service was turning over.

All of us are at varying stages of development, some are already exporting, others are in the post planning stage, there were differing business models Grain to Glass and 3rd party Wholesale. The industry is at such an interesting phase right now and its super exciting. We are all making and learning from our mistakes, all trying new things and ruffling various feathers and all having a really good time.

All of us have core commonalities that we share, namely

• The need for the Internal Wholesale Irish Whiskey Market to Open up and become more competitive
• The need for the reduction in Excise and Duty for Small producers similar to that created for Craft beer producers
• The need for the Craft Drinks Bill to be Passed

Who will help us with this? No-one but ourselves I fear as these are issues which affect only us new guys and small producers for now, so there is not much share of voice for this kind of thing other than amongst ourselves.

I have high hopes though, our little get together was really cathartic there was a lot of laughing and a lot of advice being thrown around freely. We need that. We are all after the same piece of pie for sure but we’ll be stronger in these early days of the resurgence to band together to go and get it. I’ve no doubt we’ll be convening again.

Happy New Year to Everyone.