Your SlideShare is downloading. ×
0
20130908 BH Report: Scotch Whisky
20130908 BH Report: Scotch Whisky
20130908 BH Report: Scotch Whisky
20130908 BH Report: Scotch Whisky
20130908 BH Report: Scotch Whisky
20130908 BH Report: Scotch Whisky
20130908 BH Report: Scotch Whisky
20130908 BH Report: Scotch Whisky
20130908 BH Report: Scotch Whisky
20130908 BH Report: Scotch Whisky
20130908 BH Report: Scotch Whisky
20130908 BH Report: Scotch Whisky
20130908 BH Report: Scotch Whisky
20130908 BH Report: Scotch Whisky
20130908 BH Report: Scotch Whisky
20130908 BH Report: Scotch Whisky
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

20130908 BH Report: Scotch Whisky

427

Published on

20130908 BH Report: Scotch Whisky

20130908 BH Report: Scotch Whisky

0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
427
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
36
Comments
0
Likes
1
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. BH Report: Scotch Whisky 2013/9/8
  • 2. Context •I think I was about 12 when I had my first sip of Scotch - I saw a tiny 50ml bottle of Macallan 12 years old in a random discount store. Despite having absolutely no prior knowledge about it, I bought it for ¥500 and tried it secretly at home (maybe because it has such a beautiful color). Ever since, I have been a fan •Scotch is by no means an "everyday drink", but it is something I see everywhere, and I feel like I am seeing more and more of it lately. This is especially true for lesser known single malt whisky This was particularly confusing to me because on one hand, I see media coverage stating that people are deserting hard liquors (including Scotch) and moving more toward lighter drinks, or even non- alcoholic beverages •In this report, I intend to answer following key questions: –Is Scotch Whisky production/stock getting bigger, or is it shrinking –Who is consuming Scotch ? –What's the major 'trend' [in particular, in the US] ?
  • 3. Summary of findings •Each year, roughly 1.8 billion bottles worth of Scotch is produced – this is equivalent of ~350 bottles per Scottish population –This represents roughly 1/6th of the stock •Cyclicality exists, but both stock and production have been on upward trajectory for the past 20-30 years •Only ~30% of the 'consumption' comes from whisky older than 10 years; roughly half of the consumption is from 3-4 years old whisky, which are mostly sold as lower priced blended whisky •Past decline in UK consumption (-2.2% CAGR in '80-'11) has been offset by growing export (1.1% CAGR) resulting in net growth (0.8% CAGR) –Export represents ~93% of consumption today •Scotch is exported to large number of countries and top export countries span Americas, Europe and Asia- top 20 countries account for ~77% •Even among the top 20 countries, there is large variance in terms of the level of penetration and the average quality/price of each bottle E.g., –France (largest importer) consumes more per population than US (2nd largest), but consumes lower priced bottles •Scotch Whisky overall sales volume in US has been flat, but price increase has driven market growth in the last 10 years •Price increase driven by the combination of shift toward more premium/single malt whisky (driving ~57% of price increase) and inflation (~43%) Scotch Whisky production/stock Trends in the US Consumption/ Export
  • 4. Agenda •Whisky production and stock •Consumption/ Export •Trends in the US
  • 5. Whisky production has been on the rise in long term, though cyclical... 0.0 0.5 1.0 1.5 2.5 2.0 2006 2005 2004 2003 2002 2001 1999 1998 1997 1996 2000 1994 1993 2011 2010 1995 2009 2008 1992 1991 1990 1989 2007 1987 1986 1985 1984 1988 1982 1981 1980 Annual production of Scotch whisky1 (billion 70cl bottles2) 1983 This is equivalent of ~350 bottles per Scottish population 1. Includes both malt & grain whisky 2. Estimate conversion from LPA (Litres of Pure Alcohol) assuming average 40% strength Source: Scotch Whisky Association
  • 6. ... and stock has been increasing for the past 25 years 12 10 8 6 4 2 0 1988 1987 1986 1985 1984 1983 1982 1981 1980 Year end stock of Scotch whisky1 (billion 70cl bottles2) 1992 1998 1997 1996 1995 1994 1993 +1.2% -3.3% 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1991 1990 1989 This is equivalent of ~2,200 bottles per Scottish population 1. Includes both malt & grain whisky 2. Estimate conversion from LPA (Litres of Pure Alcohol) assuming average 40% strength Source: Scotch Whisky Association
  • 7. Back-up: Breakdown of stock/consumption by vintage 8% 12% 14% 13% 16% 11+ 6-10 5 4 3 2 1 16% 2011 year end stock <1 15% 6% Breakdown of stock by vintage (2011 year end) Breakdown of consumption by vintage (2011) 11+ 6-10 5 4 3 2 1 2011 consumption 29% 7% 13% 20% 28% 2% 1% • Roughly ~16% (1/6th) gets added to stock each year • Only ~15% of the stock is above the age of 10 • Hardly no consumption for age 1-2 (consistent with the law requiring Scotch to be at least 3 years old) • Roughly half of consumption from age 3-4 => Mostly lower-priced blended whisky • ~30% from age 11+ => Premium blended + single malt Source: Scotch Whisky Association
  • 8. Agenda •Whisky production and stock •Consumption/ Export •Trends in the US
  • 9. Declining UK consumption is offset by growing export; resulting in net consumption growth 0.25 1.25 0.75 0.00 1.50 0.50 1.00 1987 +0.8% 1986 1985 1984 1983 1982 1981 1980 Consumption of Scotch whisky1 (billion 70cl bottles2) Export UK consumption 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 1988 2003 2004 2005 2006 2007 2002 2009 2010 2011 1990 1989 2008 '80-'11 CAGR +1.1% -2.2% 1. Includes both malt & grain whisky 2. Estimate conversion from LPA (Litres of Pure Alcohol) assuming average 40% strength Source: Scotch Whisky Association ~83% export ~93% export
  • 10. Scotch exported to large number of countries; top export countries spread across Americas/Europe/Asia 80 20 100 60 0 40 2011 Export (bottles) 1.3 billion % Top 20 countries ~77% of exported bottles Wide distribution of bottles per population & price per bottle Country # of bottles imported (million) # of bottles imported per population Value of import ($ million1) Import price per bottle ($) France 205 3.1 857 4.2 USA 130 0.4 1,048 8.1 Spain 75 1.6 415 5.5 Singapore 63 12.2 509 8.1 India 56 0.0 84 1.5 Germany 50 0.6 239 4.8 South Africa 49 1.0 265 5.4 Brazil 47 0.2 159 3.4 Thailand 36 0.5 80 2.2 Mexico 32 0.3 129 4.0 South Korea 31 0.6 228 7.3 Venezuela 28 1.0 133 4.7 Australia 27 1.2 111 4.2 Japan 25 0.2 119 4.8 Taiwan 23 1.0 248 10.9 China 22 0.0 106 4.8 UAE 21 2.4 131 6.2 Greece 17 1.5 113 6.8 Poland 16 0.4 67 4.1 Italy 16 0.3 74 4.7 Top 20 969 5,116 5.3 World 1,264 6,756 5.3 % top 20 77% 76% 1. Assumed 1 GBP = 1.6 USD Source: Scotch Whisky Association
  • 11. Even within top 20 countries, the level of penetration and the average quality/price level vary Import # of bottles per population <0.4 bottle 0.4-1.0 bottle >1.0 bottle Uncommon Common USA South Korea Spain Singapore Taiwan UAE Greece Japan China Italy Germany South Africa Venezuela India Brazil Mexico Thailand Poland France Australia Import price per bottle ($) >$5.5 $4.3- 5.5 <$4.3 Pricey (more premium?) Inexpensive (less premium?) Distribution of top 20 Scotch export countries by # of bottles per population and price per bottle Source: Scotch Whisky Association US, for example, tends toward more premium Scotch, but the penetration is not as high (room for further growth?)
  • 12. Agenda •Whisky production and stock •Consumption/ Export •Trends in the US
  • 13. Within US, Scotch sales volume has been flat, but price increase has driven market growth in the past 10 years... 0.5 1.5 1.0 2.0 0.0 1.7 1.5 1.5 1.5 1.8 1.6 1.5 1.4 1.4 1.3 US Scotch Supplier revenue ($B) +3.6% 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 120 124 122 122 123 121 116 116 117 119 50 100 150 0 2004 2003 2002 # bottles sold in US (million 70cl bottles) -0.1% 2011 2010 2009 2008 2007 2006 2005 14 15 13 13 14 11 12 12 13 11 0 5 10 15 20 Supplier price per bottle in US ($) +3.8% 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 x Source: Distilled Spirits Council of the United States
  • 14. ... caused by the combination of the volume shift toward more premium whisky & inflation 5 6 7 0 100 80 60 40 20 % of bottles sold in US 2012 25 33 35 2011 28 34 32 2010 30 35 31 2009 31 37 28 4 2008 31 36 29 4 2007 31 37 29 4 2006 31 37 28 3 2005 33 38 26 3 2004 34 38 25 3 2003 35 38 24 3 Value Premium High End Premium Super Premium Factor 1: Shift toward more premium whisky Factor 2: General inflation 40 30 20 10 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Supplier price per bottle in US ($) 1.7% 1.6% 1.1% 1.9% Value Premium High End Premium Super Premium Source: Distilled Spirits Council of the United States 57% 43% (see next page for examples)
  • 15. Back-up: Examples of brands and single malt vs. blended Examples of brands • VAT 69 • Passport • Dewars White Label • Johnnie Walker Red • Johnnie Walker Black • Chivas Regal • Dewars 12 • Glenlivet 12 • Macallan 10 • Chivas 18 • Johnnie Walker Blue Breakdown of single malt vs. blended whisky 0 40 20 60 80 100 2006 Blended Single Malt 88 87 12 14 89 2007 2008 2009 2010 2011 2012 83 15 17 88 86 85 91 90 91 9 10 9 11 12 13 % of bottles sold in US 2004 2005 2003 Value Premium High End Premium Super Premium Source: Distilled Spirits Council of the United States
  • 16. Disclaimer This document is provided for general information only and nothing contained in the material constitutes a recommendation for the purchase or sale of any security. Although the statements of fact in this report are obtained from sources that I consider reliable, I do not guarantee their accuracy and any such information may be incomplete or condensed. Views are subject to change on the basis of additional or new research, new facts or developments.

×