Going Once…Sold!

A man walks into a bar and orders a whisky, not unusual you may say, but this bar was Pennyhill Park and the whisky a very rare Dalmore 62yo sold for £32,000. This happened back in 2005, and was such a big deal at the time it made the BBC news. The whisky was sold by Speciality Drinks, and was the beginning of the company’s love affair with connecting old, rare and exclusive products with the on-trade.

Speciality Drinks has, since its inception, worked closely with key brand partners to facilitate the sales of rare and exclusive products to UK on-trade venues. Luxury brands like Macallan, Dalmore and Rémy Martin led the way and wanted the best venues in the UK as their shop windows, in a bid to showcase their most prestigious releases and, in turn, build brand value. Now that job has arguably been done and brands are becoming increasingly focused on private clients and direct-to-consumer, where does this leave the on-trade?

The answer is quite simply, in a difficult spot!

It is becoming increasingly difficult for venues to gain access to the most prestigious expressions and if they do there are huge costs attached. The price of these most exclusive bottles has increased dramatically: for example, in 2011, a bottle of Macallan Lalique 55yo was sold for £10,000 ex-VAT when first released and by 2012 the same product was selling for £42,000 ex-VAT. This same bottle is now listed on Wine-searcher.com for £143,000. This is largely driven by the opening of new global markets and, consequently, a scarcity of aged spirits, coupled with the fact that collectors are willing to pay more than venues, either direct from brands or via the secondary market.

The secondary market is also contributing to the increase in market value, especially for old and rare spirits. While this undisputedly increases the cost to obtain these products, the effect on brand value is not clear-cut. While the launch of spirit-focused auctions has increased the opportunity for the on-trade to acquire old and rare bottles for more reasonable prices, it also pits bars against consumers for the same products. Have auctions democratised the opportunity to access interesting, old and rare spirits or disrupted the market for brands?

Historically brands are built in the on-trade. With new brands launching every five minutes, can the established brands really afford to stop making their most exclusive products available in the most exclusive venues? And if so, how will the industry evolve to meet the unquenchable thirst for the old, rare and exclusive spirits?

Jen Baernreuther, Commercial Director for Speciality Drinks will be discussing these questions and more, with guest speakers Isabel Graham-Yooll (director, Whisky.Auction) and Scott Green (spirits buyer, 5 Hertford Street & Oswald's) at Speciality Drinks’s Raising the Back Bar event on 9 May 2022 – register now.