Can high whisky prices be justified?

20 August, 2018

Here we go again. when japanese specialist retailer dekanta released a special bottle of Japanese whisky to mark its third birthday in June, the twittersphere predictably rose up in anger and indignation.

There were three basic objections to the Eigashima finished in a Port Ellen cask: that the cask seems to be enjoying a higher status than the whisky; that nobody seemed to care what the whisky tasted like; and that the price tag of $650/£490 was too high.

The furore once more brought into sharp focus the growing rift between those who pay grossly inflated prices for trophy whiskies for collection and investment, and those frustrated whisky lovers who are being mugged off as their hobby is priced beyond their reach. For scotch whisky the ship sailed a long time ago, but it’s clear that Japanese whisky is following fast.

I think the criticism of the focus on the Port Ellen cask is unjustified. There is a mystique around the Islay distillery, and we should be celebrating the fact that someone has brought together a relatively unknown Japanese distillery with an iconic Scottish one. This is the sort of innovation we should be encouraging.

When it comes to taste, there are only two questions to answer: is it any good, and is it worth the money? The answer to the first is yes, it’s a nice whisky. Rough-and-ready dominant peat at first, but with water the peat softens out and some complex floral and spicy notes follow through.

Is it worth the money? Of course not. But that’s true of all expensive whiskies. To use the economics terminology, even if we could measure it, can anyone truthfully say that the incremental value of each sip of a £500 whisky is 10 times greater than that of a £50 bottle?

Does this mean it’s a rip off, though? And here’s the rub. I often get asked how I justify writing about whiskies costing hundreds of pounds and then claim to be a socialist. My answer to that is simple: if some fool spends £10,000 on a bottle of whisky and it keeps a few distillery workers in a job, then that’s redistribution of wealth downwards, so that works for me.

But if I put my economist’s hat on, the argument flips on its head. When a Bowmore finished in a mizunara cask was released for about £875, there was the same chorus of criticism. But it sold out without touching the shelves. And it’s basic economics to conclude that if demand outstrips supply like that, the price is actually too low. That’s why a secondary market has grown up, and why prices have reached ridiculous levels. It’s tough, but I can’t afford a Ferrari either.

This is the way it is. I have two bottles of single cask 12-year-old Australian whisky, distilled in 2000 and bottled in 2012. I have them because two other similar bottles were absolutely dreadful, and I don’t want to drink them, and wouldn’t impose them on others in a tasting. But because they are rare and the distillery is in demand, they are worth a considerable amount of money.

Truth is, moaning about this stuff is pointless. Much as we might hate it, this collecting business operates in another universe.

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