Spirits. The price war is coming.
Scotch prices are up 70% in almost three years, but demand has dried up. The five biggest drinks makers are sitting on $22 billion of ageing spirits, and the price war has begun.
THE GIST ON BOOZE: "Last Orders"
Why did spirits get so expensive?
Scotch whisky prices have gone up 70% in almost three years, and it's not because we're drinking more. Whisky and cognac take decades to mature, so you can't just turn the taps off overnight. The result is the five biggest drinks manufacturers in the world sitting on $22 billion worth of ageing spirits in warehouses that nobody wants.
They passed the cost of that bet on to you.
What happens now?
Demand has dried up, the stock is still there, and they've got a great big hangover. The only way out is a good old-fashioned price war. They have to slash prices to shift stock, which sounds like a great deal for us, but it's very hard for a business to recover from discounting. Once you've seen a bottle on sale, it's hard to pay full price again.
Who suffers?
The big players will consolidate, cut ranges and focus on volume. The small craft makers who launched in the boom and make the interesting stuff are left holding the bag. The big boys can ride it out, but the offer will be homogenised.
What should you do?
The choice of booze we have today is the best it will be for the next 10 years. So you'd better get after it. What are you going to miss when it's gone?
Is a spirits price war good news for drinkers?
Your take. One tap, then see how everyone else voted.
Quick answers
How much have Scotch prices risen?
70% in almost three years, according to Huw.
How much ageing stock are the big drinks makers holding?
$22 billion worth, across the five biggest.
Who gets hurt by the price war?
Small craft makers who launched in the boom, while the big players cut ranges and focus on volume.
See you on the next one.
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