A Golden Age For Private Labels
In the early 2000s, the single barrel business began to boom for independent Scotch whisky bottlers. Sitting on a glut of old casks due to decreased demand for their blended labels, many companies tapped into the burgeoning collector market and began selling off their blending components as individual single barrel whiskies. Instead of dumping their casks of single malt into a larger blend, each barrel was bottled as a unique whisky and sold to various markets around the globe.
For small retailers with a finger on the pulse, it was a good time to be in the business. Consumer awareness was growing, tastes were expanding, and demand for unique products was rising. Single barrel Scotch whiskies were a great way to differentiate one’s selection and introduce consumers to an entirely new experience. However, as with any trend, the good times don’t last forever and the pendulum eventually swings back the other way.
In 2023, single barrel Scotch prices are at an all-time premium and the available inventory is less than exciting. Independent retailers looking for deals are finding few options, while consumers have been priced out by the growing competition. One might posit that the increase in demand for single barrels ultimately led to the decrease in supply, but I’ll tell you what’s really happening: the market has shifted once again back to blends, in the form of private labels for large chain retailers. We’re entering a new era of Scotch whisky, one that rewards the casual drinker over the sophisticated one.
Releasing a single barrel of whisky isn’t advantageous for independent bottlers. Think about it: as a business owner, would you rather create paperwork, labels, certification, and bottling instructions for fifty individual barrels of whisky, resulting in fifty different invoices that need to be collected, or would you rather dump all fifty of those barrels into a giant vat, create one label and one invoice, and collect one big check? The answer is pretty clear, in my book. The transition to single barrel sales was always a necessity rather than a stylistic choice. Given the option, few bottlers would ever have signed up for the headache.
But if Scotland’s best single barrels of whisky are no longer hitting the boutique retail market, where are they going instead? I’ll tell you: Costco, Trader Joe’s, Total Wine, and other large retailers that are creating high-quality private labels for a bargain price. The days of generic white labels labeled as “Beer” or “Whisky” are long gone, replaced instead by savvy chain buyers who know exactly what their customers want. As the Wall Street Journal reported over a year ago: “Store brands are no longer the cheap knockoffs you keep hidden in the back of the cupboard, but quite possibly the tastiest deals on the shelf.”
I’ll be happy to share a few examples with you.
Alexander Murray, one of the most successful bottlers of single barrel whisky in Scotland, provides a number of private labels to both Costco and Total Wine—many of which utilize top quality single malts from undisclosed distilleries. The company supplies the whisky for Kirkland’s 18 year old Sherry Cask single malt, a very tasty release that sells for less than $70, as well as the ridiculously-priced Kirkland blended Scotch whisky—a 1.75L bottle that goes for $19.99 at my local Costco.
Hunter Laing, a Glasgow based bottler, offers its Scarabus Islay single malt whisky exclusively to Total Wine in the states, where it sells for well under $40 at most locations as part of the Spirits Direct program. A Lowland single malt called Bothan’s, also bottled by Alexander Murray, sells at Total Wine for as low as $30.99. I have both of these whiskies at home and I marvel at their value with every glass poured. Both are classic specimen of their respective regions, sourced from top-notch distilleries that demand far higher prices from their official labels.
The private label phenomenon isn’t just limited to Scotch whisky. While many independent retailers experienced a dip in sales last year after the pandemic spike in 2020 and 2021, the private label business soared for large retailers in 2022, jumping 11% to $229 billion dollars. “Last year’s record sales and double-digit growth reflect the strong consumer demand for store brands,” said Peggy Davies, president of the PLMA, in an article for Food Business News; “Shoppers are filling their baskets with great-tasting, innovative and high-quality store brand foods, beverages, nonfoods, household goods and many other categories.”
Forbes reported the same phenomenon this past September, writing: “Grocery stores have long been a place where brands battle, but lately, private label has been winning. Retailers from Walmart to Trader Joe’s are pumping it up, and given the post-pandemic economy, inflation, and retailers’ interest in building their own brands, we may be seeing a perfect storm for private label.”
If you’re a Scotch whisky drinker searching for a hot deal, the value proposition was sucked out of the single barrel business years ago. Today, all the momentum is in the private label game because that’s where large retailers can flex their muscle. By making deals for dozens of barrels, equating to thousands of cases per purchase, stores like Costco and Trader Joe’s can extract pricing that smaller competitors cannot. With the rising costs of both inflation and the premium Scotch market, the value proposition of a high-quality private label has never been more clearly defined.
For whisky aficionados and collectors who appreciate transparency on the label, cask strength proof, and the other informational accoutrements that often come with single barrel whiskies, finding bottles that scratch that itch is only getting harder and more expensive. Yet, for drinkers who appreciate a bargain, as well as the treasure hunt that the retailer private label game offers, it’s a golden era for practicality. Many private label Scotch releases have become so popular they sell out in days. Kirkland’s Islay single malt whisky, for example, is released just a few times a year (when supply allows) and is generally sold out in less than a week.
For independent bottlers, the math behind private labels makes far more sense. For customers who value drinkability above all else, the value is downright unbeatable. I have to admit: I spent several hours yesterday blending my bottle of Kirkland blended Scotch whisky with other private label single malts I acquired from Total Wine this week. Once I settled on a formula, the finished product was laid to rest inside a beautiful crystal decanter, ready to be served to future guests. Not one of them will ever suspect they’re drinking Costco Scotch.
-David Driscoll