As a comparatively recent convert to Irish whiskey, one of the more confusing things to come to terms with has been the practice of distilleries sourcing their spirit. I initially scratched my head when trying an 18-year-old from a distillery that had only started production in 2013. So how is it that something like this can be released, and what does it mean for the consumer? Sourced whiskey seems to be a widely acknowledged but seldom discussed topic.
What is it?
Simply put, sourced whiskey is spirit bought (or acquired through some other arrangement) from a second party before being bottled and released. This can either be done by bonders or independent bottlers or by a distillery with insufficient aged spirit for expressions it wishes to release. In some cases, a distillery can acquire this second party spirit from another vendor entirely: Killowen’s latest release of Dalraida contains whiskey from a cask of Bushmills purchased from Echlinville!
For example, for Dunville’s to release a 12-year-old for Belfast Whiskey Week 2021, they had to purchase whiskey distilled in 2009, in this case, most likely from Cooley. The result is that the packaging of an Irish whiskey bears the name of the company that released it, but not necessarily the company that distilled it.
Although there are now over thirty distilleries operating on the island of Ireland, the vast majority of these are newly established: only three of these were operating in 2007 when the first of the new distilleries, Kilbeggan, was built. As such, the only sources for aged stock used as sourced whiskey are the Midleton, Bushmills or Cooley distilleries.
This is also a practice in the bourbon industry currently, with the revelation that some brands were marketing mass-produced spirit as their own small-batch bourbon, having caused quite some controversy a few years ago. The scandal caused is well-documented elsewhere; this article will focus instead on current practices in the Irish whiskey industry.
Is this an issue?
It depends. One of the key issues from the consumer’s point of view is openness and transparency. Dave recently blew the trumpet for transparency in the Irish whiskey and Scottish whisky industries. This is just another area to which his call for honesty and openness applies: information on the original source of a dram should not be too much to ask for. This becomes especially important when considering buying releases at higher price points; if I’m spending over £100 on a bottle, I want to know exactly what I’ll be getting. Without any legislation enforcing disclosure of origin, it’s down to each company to decide just how much to reveal, with differing levels of transparency as a result.
That said, the fact that a whiskey originated in a different distillery’s stills ultimately doesn’t change its quality. The current market is awash with great examples of sourced whiskey, some of extremely high quality. These serve as proof that the newer distilleries are already masters of warehouse management, knowing exactly when to bottle a cask for the best result, and in some cases providing proof that they can execute a finish flawlessly. That new distillers have been able to release premium age statement whiskies quickly has arguably contributed much to the massive growth in the industry, to the benefit of all brands. There is certainly no reason as a consumer to avoid the practice.
This does become an issue when a distillery’s own spirit comes of age. It doesn’t take an expert to know that even a small difference between stills can impact flavour if everything else remains constant. As such, some distilleries are currently building a brand with flavours and aromas that may be tricky for them to recreate when their own spirit has matured. Managing expectations while trying to release whiskies with their own particular style may become a complex problem to manage. Do they try to recreate these early sourced expressions with their own whiskey? Do they continue to purchase sourced spirit to ensure that the exact taste is maintained? Or do they discontinue the expressions that brought them early success?
Why is now the time to talk about this?
Those of you who read our interview with Brendan Carty of Killowen Distillery will be aware that there are worries in the industry about the availability of aged stock for sourcing: “Aged stock won’t be available anymore; even five-year-old will become much more highly-priced.” This is expected to impact the industry from as early as this year, with several factors responsible, from the increase in grain price to the reduction in stock on account of the rise in the popularity of whiskey. It remains to be seen if this shortage will represent a gap, correcting in a few years as newer distilleries’ stock comes of age, or if there will be a permanent impact on how the industry operates. One thing’s for certain: the price increase will have to be pushed to the consumer.
What does that mean for the industry?
Currently, sourcing allows a distillery to quickly release decent, age statement whiskies under its own name. In the Scottish malt whisky industry, where sourcing is forbidden, we have seen several distilleries release bottlings at the earliest legally allowed point, three years, so that they can begin to gain a return on investment at the earliest opportunity. While there’s not necessarily anything wrong with extremely young whiskies, some of these inaugural releases have received very mixed reviews. This can make it difficult for a new distillery to establish a reputation for high quality quickly. Instead, they are faced with a difficult choice: release early and run a reputational risk or wait until the spirit is ready and potentially run a financial risk.
The increasing price and decreasing availability of whiskey could soon become an issue for new or planned Irish distilleries as they will no longer be able to avoid this conundrum. This could present a particular barrier to anyone looking to set up a distillery, at least if they hope to do so in the current style or if they possess significant financial backing. Otherwise, sourced spirit is likely to become prohibitively expensive, where it can be found at all. It is extremely unlikely that any newly established distillery will be able to market a whiskey with an age statement even a few years more senior than the distillery itself in the near future.
However, this doesn’t mean that establishing a new distillery will become impossible by any means. Other products can be released to keep the lights on, and the stills operating until a suitably aged whiskey can be released. If we look at English whisky, the standard operating model seems to be a dual distillation of both whisky and gin, with the gin being released immediately, covering costs until the whisky is suitably mature. This has happened in the Irish whiskey industry as well; the most obvious example is The Shed Distillery’s success with its gin releases, which was joined by the Drumshanbo whiskey in 2019. The recent explosion of the rum industry presents a potential opportunity as well.
There is another option for those considering setting up a distillery on the island of Ireland: poitín. Legalised in 1997 and granted GI (Geographical Indicator) status in 2008, several brands have begun reinvigorating this age-old practice, not least Micil Distillery. Legally, this may be held in wooden casks for a period not exceeding ten weeks following production. With this maximum maturation of ten weeks, a distillery can bring its poitín to the market far, far quicker than the three years required for a whiskey. Does the increase in the cost of sourcing whiskey mean that we may be about to see an explosion in poitín production? There has already been an increase in the number of poitín brands available, which indicates that this may already be happening.
Of course, gin and poitín aren’t the only options. Irish distilleries have successfully released rum, vodka, coffee liqueur, and seltzers to remain profitable in their early years. The Boann distillery has opted to simply release its new make spirit. This seems to have been quite a successful move, with the Boann New Born winning “Best New Make and Young Spirit” at the World Whiskies Awards.
The lack of discussion around sourced whiskey in the Irish industry is slightly surprising in the context of the controversy caused by the same practice in America. While an increase in transparency of origin is something I would like to see in the industry, the quality of currently available sourced whiskies means that there is no reason for the consumer to avoid the practice. That said, with dwindling stocks available and rising prices, releases of sourced whiskey may become increasingly uncommon. That some of these problems are caused by whiskey’s increasing popularity should however be an encouraging sign to those wishing to enter the industry. Given the variety of other products distillers have successfully produced to stay solvent until their whiskey is sufficiently mature, a lack of sourced spirit isn’t necessarily an insurmountable barrier to new distilleries. Although we may soon see the end of the current spate of excellent sourced whiskies, the number of distilleries whose own spirit is soon to come of age is extremely promising. And with the practice of sourcing firmly established, the door is open for some exciting collaborations between these distilleries in the future.