The year 2022 will forever be known as the year of the great booze shortage. Tequila,
Champagne, all the way up to the marquis producers of fine Scotch, like Macallan, left store shelves sparse. Even the most common of household names have become stringently
allocated. Why? That’s a great question!
Searching for Macallan 18 Sherry Oak, or even the Macallan 12 Year has become a real pain in
the neck, especially for those who love to sit with friends and enjoy an after-dinner aperitif. If
you haven’t noticed by now, huge retail stores are all sold out. Those who have it have
increased pricing by 50% simply due to scarcity and inflation. There is a reason why this
shortage exists, and we will get to it a bit later in this article. Before we do, it will help for you to
understand what Scotch is and how it is made, which will help you understand why distilleries
can’t just quickly make more.
Scotch is an interesting beverage. It isn’t for the faint of heart. Aged Scotch has a fruit
component to the taste profile, including tart cherry, dark berry, and citrus fruits. What makes
the liquor a bit more masculine in style is the smoky flavor which is created when it is produced
over a peat fire. Let’s step back for one more minute. The three main ingredients of scotch are
yeast, malted barley and water. In the early phase of scotch production, distillers use a kiln and
burn peat, to dry the wet barley. The barley absorbs the scent of burnt peat, which causes a
smoky taste.
What is the difference between a 12 Year and an 18 Year Scotch other than time? Generally,
the time in barrel and the barrels used will make the scotch creamier, richer, and more complex
in terms of fruit notes and aromatics. The price difference is simply due to the cost of managing
the process and storing barrels. A distillery doesn’t just make scotch and let it sit. A distillery
often takes a small sampling of each barrel every year to test chemistry and adjust.
Adjustments can mean taking scotch from another barrel and filling the other barrels when
there is a loss of alcohol due to evaporation (a phenomenon called angel’s share).
Now let’s talk about why you can’t find Macallan Sherry Cask Scotch or other fine and rare
scotch brands on the retail shelves.
First, you can’t take Scotch or rare Whiskey and just make more. The process of aging takes a lot
of time. The source materials used to make them cost a lot of money, and now they cost even
more. While supply and demand were usually tracked with relative accuracy, the pandemic
threw it all out of whack.
Secondly, the statistics show that people consumed more alcohol during the COVID 19
pandemic, then the previous 10 years COMBINED! That means that inventory depletions from
the source all the way to the store shelves were on steroids. People stayed home instead of
going to restaurants, not because they had to save money, but because they were told to stay
home by law. Consumers saved so much money by cutting down on fine restaurant dining and business dinners and avoiding travel that usually comes with treating oneself well… with staying
home and upping the caliber of booze they drink at home.
Thirdly, as if you haven’t noticed, there is a shortage of something every single day. Different
parts of the world were affected by the pandemic in different ways. The recent lockdowns in
China affected factory production of raw materials worldwide, including glass, aluminum cans,
labels, and even packaging boxes. In the past 20 to 30 years, producers of just about every good
on the planet have relied on cheap Chinese labor for source materials, especially glass bottles.
In 2019, a report released showed that China produced 51% of the world’s float glass. Only
6.8% of the world’s glass is produced in the United States. So, when China shuts down, the
whole world slows down from a glass bottle perspective.
The fourth reason why is shipping supply lines. During the pandemic the economy didn’t slow
down, it grew substantially. All sectors experienced high growth including housing, food
production, automobile, semi-conductor, literally almost everything went into high demand
overdrive. The phenomenon was unpredictable to the logistics companies who ran at a steady
pace for at least several decades. As supply lines shut down due to the lack of production, and
as demand increased for just about everything, glass especially, logistics companies didn’t have
enough bandwidth to account for the demand. Shipping isn’t a modernized industry and ports
are designed to take in and process new shipments based on history. For many months, ships
docked in port harbors waiting in a long line to process containers coming inbound from all
over the world. Liquor fell victim to this issue.
The fifth reason is the trucking issue, coupled with the high cost of gasoline/diesel. The major
reason for the disparity in price is the taxes levied on diesel, largely due to the carbon emissions
produced. The federal tax on diesel is currently 24.4 cents per gallon, as opposed to 18.4 cents
for a gallon of gasoline. Diesel one year ago cost $3.17 per gallon and today is $5.49 per gallon.
The ocean liners run on diesel and the trucks that take booze from the ports to the distributors
run on diesel, as does the delivery vehicles that take it from the distributor to the retailer.
The sixth reason is political. In 2019, President Donald Trump slapped a 25% tariff on single-
malt Scotch whisky as part of the trade dispute. While the U.K. no longer is an EU member, it
belonged to the EU when the tariffs were imposed. In June of 2021, the tariffs were lifted on a
variety of products including scotch, cheeses and olive oil. The Scotch Whisky Association
estimated the tariffs caused more than $850 million worth of lost exports to the U.S. In the
whole ordeal, did Scotland stop making and shipping scotch? No. They did what most smart
people would do, they shipped more product to the emerging Asian markets, which resulted in
displacing allocations to the United States.
As you can see from the explanation above, the pandemic created an anomaly which continues
to trickle down to retail shelves. Will the supply lines for scotch increase? Certainly so, however
as I pointed out above, vintage declared scotch can’t simply be increased overnight. It will take
at least a decade or more for the recovery to fully set in.