Is Irish whiskey on the rocks?
The boom appeared to be very much back for the Irish whiskey business. In the aftermath of the pandemic, consumer demand went through the roof, prompting an explosion in new distilleries – suddenly supply chased demand.
'We were guilty of – hubris is a great word – but of getting caught up in the euphoria that took place in '23,' the founder of Great Northern Distillery John Teeling said recently.
'We expanded our production up to 20 million litres a year – that was about 1.25 million to 1.5 million bottles a week. That's a lot of whiskey . . . and we made plans to double it. We did all kinds of crazy things.'
They certainly weren't the only ones in the Irish whiskey industry to get caught up in the euphoria of booming post-Covid demand. The surge in the number of distillers is impressive, from just four in 2010 to somewhere north of 50 today – even Ibec's Irish Whiskey Association couldn't give an exact number when asked this week.
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The big problem for the small-scale producers who flooded into the market during the pandemic is timing.
Whiskey isn't gin. You can't found a brand and start selling a month later. Those that came into existence during the pandemic would be reaching the end of the three-year period in which their product is mandated to sit in wooden barrels, often expensively imported oak, to qualify as Irish whiskey.
This lead time, with rising electricity prices and interest rates, is expensive.
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Irish whiskey is undergoing a market correction, a temporary blip, a 'little pause'
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In theory, that previously-clear distilled alcohol has now become liquid gold, perfect to erase the debt required to fund its production.
In reality it is now hard to shift and expensive to store – leaving debts mounting. The result is small distilleries that will be forced to take a hit on already-thin profit margins, hundreds of staff unsure of their future and a long-awaited pay-off, when it comes, that will struggle to refill the coffers.
Ireland's whiskey industry is in trouble, it might not be on the rocks just yet, but it is veering dangerously close. While nobody could doubt the spirit of producers, the viability of more than 50 distilleries is less certain.
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