Future Scenario Planning – Production v Consumption in Scotch whisky?
Commercial Spirits Intelligence No. 151
In this article we build on previous analysis that covers both maturing inventory and new make spirit production estimates. If we link these historic values through to consumption levels, we can see how inventory may evolve going forwards in various scenarios. Production today leads to maturation, with some loss, to the angels and then naturally into consumption in the future. The role of all whisky casks is to eventually end up in bottles. If we make too much today, then we get stock build in the future and need more warehouses to accommodate the maturing liquid. If we do not make enough then we deplete the stock and then need to allocate stock to the markets which naturally brings price rises for finished product. The current dynamic has seen a stock build versus future growth that has so far failed to materialise. The trade has two levers to pull to deal with this situation. We can make less spirit, or drink more and one is easier than the other. Ideally achieving both is the aim. In this article we have used the last decades worth of data to understand what has happened recently and model a few scenarios for the next 7 years to see how things could unfold.
