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The Whisky Auras
Different approaches to the consumer experience
Several months ago I had the opportunity to travel to Scotland with my brothers and father. We did a lot of cool things, from hiking to trying out falconry, but the theme of the trip was whisky. Over the course of about a week, we traveled across the country, visiting various whisky bars and distilleries. As a tourist the trip was fantastic, but of course my economist brain never shuts off, so I couldn’t help but notice the different atmospheres and consumer approaches the various whisky distilleries used.
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First, the scale of the Scottish whisky industry is unequaled. This is a country that takes its love of the spirit to the next level. There are of course giant whisky bars in major cities (shout out to the world-class Pot Still in Glasgow), but even blink-and-you’ll-miss-it villages were also in on the game. A small hamlet might have only a small hotel and a few shops, but it will likely have a pub with hundreds of different whiskies. Take a look at the below photo, taken in Craigellachie, Scotland, population 500:
There were literally hundreds of whiskies available to try, including a Glenfarclas Pagoda whisky that cost £2,500 per dram (about one fluid once), and you had to buy a minimum of two drams! Another pub I went to on the island of Islay (pronounced EYE-luh) had over a thousand whiskies. Scotland takes their whisky seriously.
It’s also expensive. As I never tire of reminding people, the United Kingdom is not near as wealthy as the typical American thinks. Scotland has a similar GDP per capita, accounting for differences in cost of living, as West Virginia. Yet a typical dram, which again is only a fluid ounce, often costs $15 for a decent vintage at a pub. Unsurprisingly, it seemed to be mostly tourists that were drinking single malt whiskies.
What interested me most from an economics standpoint was the different approaches the distilleries took in presenting themselves to tourists. Broadly speaking, I would separate the auras into three different categories:
All of the distilleries I visited on the island of Islay were Rustic. The sheer scale of whisky on Islay is mind-bending. This is an island with only 3,500 residents, yet they have a total of nine distilleries. I visited Bruichladdich, Ardbeg, Lagavulin, and Laphroaig. I’d also put Oban, which is on the mainland but on the west coast, in the rustic category. These distilleries were all about the whisky. Many of them had beautiful properties and were right on the ocean, and they had a lot of comfortable outdoor seating given that it rains 146 days a year. But the tasting rooms were nothing fancy. There might be some displays on the wall and a few photographs, but on Islay the whisky was the star.
My personal favorite was Lagavulin, where we did a warehouse tasting. This was literally in the warehouse full of aging whisky casks. We sat under naked fluorescent lighting in rickety wooden chairs. The tasting was led by Iain McArthur, a whisky legend who has worked at Lagavulin for over 50 years. In order to get the whisky for the group, one lucky participant literally sucks it out of the cask into a metal tube:
In Speyside, the distilleries were Refined. Tasting rooms were usually purpose-built and had a lot of wood paneling. The lighting was soft, as were the chairs. At Glenlivet, which much like Ohio State insists on being called “The Glenlivet,” before the tasting began the guide passed around various essential oils to guests smell and guess the scent of. These distilleries wanted to exude Old World charm, and all were successful in doing so. One felt as if they were partaking in a refined aristocratic jaunt, even if it was actually just drinking whisky at 10AM:
Then there was one Speyside distillery that was in a class of its own. The Macallan class, which is held only by Macallan. The difference between touring Macallan and any other distillery is apparent before you even enter the property. Pulling up to the Macallan Estate, a young woman waits outside with a clipboard next to a Bentley to check you in. Then, instead of a lodge-like woodsy atmosphere, you enter a cavernous glass and steel structure:
The tasting is led by a young man with gelled hair wearing a tie and vest. Plenty of leather chairs to choose from. Macallan is definitely going for the shock-and-awe factor. They want a guest to feel like they are part of the upper crust just for being in the building. On the first floor there are numerous references to James Bond. I would love to know how much Macallan paid for this somewhat awkwardly timed product placement:
So why are the differences so stark between the distilleries of Islay and Macallan? The gap stands in sharp contrast to the uniformity of the Kentucky Bourbon Trail, which features distilleries that can all be put in the Refined category.
I think it comes down to the composition of the demand. Getting to Islay is difficult. No roads go to the island, so a visitor either has to take a puddle jumper from mainland Scotland or take a multi-hour drive followed by a multi-hour ferry. It is remote. The people that are going to Islay are going to drink whisky, and they are true whisky lovers. They aren’t going for fancy rooms or essential oils - they are going to visit an island that Ron Swanson famously described as a place “Where God’s chosen elixirs are distilled, barreled, and prepared for consumption.”
Speyside, on the other hand, is visited by more than just whisky lovers. Many generic Scottish tourists want to see all Scotland has to offer, and that includes a stop at a distillery or two. Here, the experience matters as much as the whisky. The distilleries need to compete on the atmosphere as well as the liquor. So they do. They build refined lodges and have Bentleys waiting at wrought iron gates. That could make the difference between having 5,000 or 10,000 guests visit a year. On Islay, nobody would care.
So whether they are Rustic, Refined, or Macallan, each distillery makes a decision on what ambiance it wants to embrace. And, most happily of all, all produce great whisky.
If you made it this far, please take my poll. What type of distillery would you most like to visit? All polls are anonymous, I can’t tell how anybody answered or even who voted. After a week I’ll provide an update on the final vote tally.
Update: after one week of voting, 2/3 of voters said they would prefer Rustic, 1/3 of voters chose Refined, and no voters chose Macallan.