Scotch Has Lost Its Way. Can It Come Back?

"The Covid-driven boom came at the end of a decade of steady growth and amplified already unrealistic expectations. Whisky is notoriously difficult to forecast, and many producers were caught out by the sudden spike in demand. Secondary market prices subsequently soared, and several major brands tried to capitalize by ramping up production and raising prices to match auction values. Both moves have proved costly."

"Spirit must mature in oak for at least three years before it can legally be called Scotch, meaning the liquid laid down in good times is now flooding into a saturated market. As auction prices regress to the mean - down 48 percent year-over-year - some bottles are stuck at price points that no longer make sense. Yet reluctance to discount runs deep."

"There are too many high-value releases coming out. That includes both frequency and number of units. There are numerous occasions where pricing has outstretched its realistic capabilities. If you're selling something for over $50,000, more than 100 bottles is a lot for the market to absorb. Auctions have shown how few people operate at the high end of this industry."

Single malt sales have fallen 40 percent from the 2022 peak after a post-pandemic surge. The Covid-driven boom followed a decade of steady growth and amplified unrealistic expectations. Whisky forecasting is difficult, and many producers were caught out by a sudden spike in demand. Secondary market prices rose sharply, prompting several major brands to increase production and raise prices to match auction values. Scotch requires at least three years' maturation in oak, so stock built in boom years is now entering a saturated market. Auction prices are down 48 percent year-over-year, leaving some bottles priced above market realities and resisting discounts. Top-end releases have traded tens of thousands of dollars below release price, reflecting stretched volumes and pricing beyond demand.

Read at Elite Traveler