What’s Next for Springbank and Rising Commodities Prices?

When J & A Mitchell & Co. announced in June a production slowdown at its Springbank and Glengyle distilleries, some observers were quick to paint management at the privately-held Campeltown concern as out of touch and even a bit loony. Demand for Scotch whisky is soaring, why stop now?

In fact, this isn’t the first production rollback for Springbank, and even a complete shutdown wouldn’t necessarily affect the supply in the immediate future. The company has enough stock in hand to keep bottling as usual for two years without any new production, according to reports.

That said, discussion on the subject seems unconvincingly bland, and intentionally aimed at keeping a lid on fears of a general slowdown in demand for Scotch.

I know from experience that the Scotch whisky industry is run by some extremely aggressive marketers. It didn’t take the world by storm on taste alone, there is an enormous amount of BS propped up all around it.

I have absolutely no inside knowledge here but I wouldn’t be at all surprised if the muted response is at least in part a calculated effort to nip some uncomfortable truths in the bud — namely, that commodities prices are skyrocketing. That will almost certainly lead to whisky price increases over the long haul, hurting demand at a time of massive industry expansion.

Bottom line: The Scotch industry has seen boom and bust before, and it could well be headed for another round.

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~ by whisky1 on August 22, 2008.

2 Responses to “What’s Next for Springbank and Rising Commodities Prices?”

  1. […] The good news: Distillers generally purchase the earlier spring harvest for malting, while the winter harvest is sold primarily for feed. So this won’t likely add to the commodities pinch that’s driving a sharp increase in whisky production costs and led boutique distillers Springbank and Glengyle in June to reduce output and lay off some workers. […]

  2. […] percent growth to 7-9 percent growth. Finance Director Nick Rose cited weakening global economy and rising commodity prices, which keep creeping up. Diageo’s Rose said input costs such as grains and energy rose 90 […]

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