VCL Vintners

WHISKY JOURNAL

WHISKY JOURNAL

How has the closure of pubs and restaurants affected alcohol sales?

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How has the closure of pubs and restaurants affected alcohol sales?

We have all been spending more time than usual indoors this year. And whilst we haven’t been able to enjoy pubs and restaurants, many would agree that their weekly supermarket spend has increased largely down to a greater amount alcohol being consumed at home during the lockdowns.

Various health professionals and charities expressed their concerns, fearing a huge spike in alcohol consumption. The reality is that drinking levels have reduced compared to previous years. The Wine and Spirit Trade Association chief executive, Miles Beales, stated that “It’s a myth that people are drinking more during the lockdown”.

However, retailers have seen a rise in alcohol sales during the pandemic, of that we can be certain. And whilst the closure of bars and restaurants has resulted in slightly lower consumption levels, cask single malt whisky investors have still benefitted.

The Scotch whisky industry is a supply chain-based business- highly collaborative and manually driven. As a result, almost all distilleries have effectively ‘shut up shop’ and the scope of 2020 production has been a fraction of typical levels. This result has been that the perfectly inverse supply/demand imbalance that drives whisky prices higher and higher has been stressed further.

Yes, consumption levels have dropped but single malt Scotch whisky consumption is still prominent in over 200 different countries and micro-economies worldwide. And all the while that consumers globally continue to drink it and distilleries are unable to produce it, worldwide availability of single malt is decreasing, and prices look set to continue to rise.

As a final note, this supply/demand imbalance has been further accentuated- as investors migrate away from risky stock market investments and low interest rate savings accounts, they are increasingly identifying cask whisky as a safe haven for their money. With more investors buying in, and fewer barrels left available on the market, cask values look destined to increase.

My advice: sophisticated drinkers will always drink it, savvy investors will always invest into it, and whilst Scotland’s distilleries are unable to produce it, I think we could all benefit from it. Please contact our sales staff for further information.