A Monopoly Ended
Irish Distillers enjoyed this monopoly for nearly 30 years until John Teeling created the Cooley Distillery in Dundalk. This was the first independent distillery to open in Ireland and take on the Irish Distillers monopoly in nearly 70 years!
By the 1980’s Ireland produced only 2 million cases per year of which 50% were sold domestically in Ireland. The remaining 50% sold in Irish pubs around the world. Conversely during the same era Scottish whisky sold over 100 million cases per annum around the world. Making the Irish Whiskey market only 2% of the Scotch market. But with conglomerates such as Pernod Ricard heavily invested into Irish whiskey, Along with stiff competition from John Teeling, a huge resurgence was underway to bring Irish Whiskey back to its former glory as the main player in the whiskey market.
In 2012 Jim Beam Suntory Bought Cooley Distillery from John Teeling for a reported €73million. Then, his two sons (Jack and Stephen) created Teeling Distillery. It’s reported that within 3 years of opening Teeling Distillery, Bacardi has taken a stake in the company. Jack Daniels owners Brown-Forman created Slane Distillery in 2015 for their stake in the Irish Whiskey boom set to take place. Bushmills was sold to Diageo for €200 Million in 2005, then Tequila giant Jose Cuervo bought Bushmills from Diageo in 2014. As quickly as brands become popular or available for sale, the big boys are gobbling them up as Irish Whiskey emerges once again as a global player.
Fast forward to 2018 and over 10 million cases of Irish Whiskey are sold per year. A growth of 500% since the 1980s! Showing an average growth rate of over 13% p/a. With distribution now in 140 countries, Irish whiskey is firmly coming back in a big way. Countries such as Russia and Asia are beginning to show their heads as huge markets for the future, but are virtually untapped at present.
Four market forces driving this growth are…
1. Young drinkers since the early 2000s have turned to brown spirits. Whiskey is once again cool.
2.Emerging middle classes around the world.
3.The opening of Eastern Europe and Russia.
4.Heavy investment of €2.4Billion from Pernod Ricard into production and global advertising of Irish Whiskey along with over €1 Billion committed from the Irish Whiskey Association to double the market once more by 2030.
With how long it takes to make a great Irish Whiskey (minimum legal age is 3 years, but most opt for 5-8 years in age before bottling), the demand is outstripping the supply.
Very recently, UFC fighter Conor McGregor released his own brand of Irish Whiskey. With the success of his brand Proper 12, the Bushmills distillery who make his whiskey have aggressively bought up the vast majority of mature stocks all across Irish bonded warehouses to meet his huge demand. Having 26 million followers on Instagram creates a buying frenzy.
This will further hurt the supply issue for other brands as demand increases globally for Irish Whiskey, yet without the supply to back it up.
This however, Is a great problem for investors who are sitting on whiskey as it matures, knowing their will be a market willing to pay top dollar for it in the future.