In 2009 there were two gin distilleries in London. One was Beefeater, and the second was newly founded Sipsmith, who had fought tooth and nail to open a small batch distillery in the heart of the capital.
By 2018 there were 24 working distilleries in London.
When Sipsmith fired up its stills, gin was a dated, old persons’ drink, mostly reserved for the odd cocktail. Less than ten years later, in 2016, Sipsmith was purchased by Erdington Beam Suntory (and if you are wondering what the big deal is about that, between them this super group own Macallan, Highland Park, Laphroaig and Bowmore, amongst others).
So, what changed in the gin market, and what does it have to do with single grain whisky?
The market for gin
According to the U.K. Wine and Spirit Trade Association there are more than 100 British gin brands available. That is more than double what was available 2011. Interestingly the WSTA only started collecting data on the subject in 2010.
In 2018 more than 6million nine-litre cases of gin were consumed in the UK. Up 32.5% on the year before. Just like whisky, gin is not just limited to the UK market; globally in 2018 69million cases of gin were consumed.
Crucially, it was the entry level San Miguel gin that was actually the world’s bestselling gin in 2018; selling 12million cases. Importantly San Miguel gin also saw a 6.1% rise between 2017 and 2018 (source).
Translating that into single grain whisky
In their 2019 Whisky Yearbook, Erdington Beam Suntory forecast a 95.9% increase in sales of single grain whisky from 2018 to 2022. Which is a faster rate of growth than the gin category, albeit from a smaller base.
The key points of comparison between gin and single grain whisky are:
- Branding
- A range of price points
The first wave of gin and arguably the one that has received the most hype was craft gin; small-batch, high-end gins. These appealed to young drinkers previously excluded from the gin market, drinkers who were open to something different, looking for local interesting drinks with provenance.
Crucially, it was the craft gin distilleries that re-established the gin brand and the demand, but it was not just these craft distilleries who benefited:
“Sales of Gordon’s gin increased by 27.8% between 2017 and 2018, while Tanqueray increased by 19.1% in the same period. The idea that craft gin will ever dominate global market share is a complete fallacy.” (source)
Part of the appeal of gin is that you get the status of the drink while it is also available at a range of price points; something that single grain can help with in the whisky market.
Reporting on the whisky market is dominated by the astronomical performance of single malt whisky; just like gin is dominated by reporting on small-batch high-end craft gin distilleries. Whereas single grain whisky is more like Tanqueray; a mid-priced drink that appeals to aspirational drinkers and still has the brand appeal of its more popular cousin.
Just as importantly, single grain is performing well not just thanks to cross-marketing but also because of focused efforts of branding within the single grain subcategory, such as by single grain market leaders Haig Club.
We can already see the results in the performance of single grain: over the last five years the value of single grain has increased more than 900% (RW101 Full Year Review 2019, pg 30).
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Using gin as a performance blueprint for single malt
What we can learn from gin is that consumers are willing to accept rebranding.
They also like small batch products with a mid-level price point and local provenance.
All these things translate directly into single grain whisky and we are already seeing the results in the market. In 2019 the single grain investment index outperformed the single malt investment index: single grain increased 8.29% compared to 5% in single malt.
Before you rush out of your seat to sell your single malt in exchange for single grain, it is important to note that the single grain market is just 1% of the value of the single malt market. However, it is the potential indicated by these strong performances that is important.
Translated into global appeal
Just as importantly, gin is being introduced successfully into emerging markets where long drinks are preferred:
“IWSR insight shows that gin has already experienced explosive growth in Brazil, with volumes increasing by 122.3% in 2018; in South Africa the increase in 2018 was 53.6%.”
This is ideal for single grain whisky; mid to entry level brand leaders Haig Club have successfully marketed their single grain whisky as an interchangeable short or long drink.
This ensures single grain whisky is appealing in emerging markets giving vast future potential, but also ensures the high-end, high-age statement single grain whiskies still have the appeal for the high-value market.
The difference with single grain
The biggest difference between gin and single grain whisky is that the value of single grain whisky increases with age, which provides the potential for a long-term investment.
Within the whisky market single grain whisky provides a cheaper alternative to single malt, be it as an investment or a drink. As such single grain provides an interesting alternative investment whether that is as an entry level investment or as a complimentary investment alongside a single malt cask.
Interestingly, the biggest step in value for single grain whisky is between 30 and 40 years old, when the value of single grain jumps 112% on average. Importantly this shows there is demand for high age-statement single grain whiskies in the market, and the data discussed above suggests that this is something that will only increase.
Want to know more?
If you are interested in investing in single grain whisky then please get in touch. You can send us an email or give the office a call on 01260 218 718.
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