The er...draft Scotch Whisky Regulations 2008 have been circulated to the whisky industry

The consultation process, duly promised by Department for the Environment Food and Rural Affairs (DEFRA), concerns proposals by the Scotch Whisky Association (SWA) ostensibly to ‘enhance the protection of Scotch Whisky and protect consumers’.

The consultation ends on 31st March -  yet I haven’t heard any discussion or debate about the implications.

DEFRA acknowledge that “The industry is highly concentrated with the top 6 companies accounting for 85% of the distilling capacity and case sales.” Nearly 60% is controlled by just two companies alone.

So whose interests do you think are at stake here? Yours? Mine? Or the industry’s?  The industry is entirely self-regulatory, the SWA being judge, jury and executioner. There are no checks or balances, no questioning of the executive’s authority. This consultation is merely going though the motions  - some of the regulations already being applied.

But then the SWA are not the innocuous, arms-length, independent  association that it  may appear. It’s members are whisky companies that pay a membership according to the amount of the industry that they control. The executive board is made up of the member companies’ MDs and CEOs. The current chairman is the CEO of Diageo.

Since the SWA claim to represent 95% of the industry, one assumes that 95% of the industry is content with the new proposals, many of which make sense - strengthening the existing laws, legally protecting the whisky regions, making it more difficult for counterfeiters, protecting the consumer.

But others actively enshrine confusion and will have a much more dramatic, long-term effect, changing the whisky sector forever:

Regulation 9(3) seeks to drive a wedge between cheap, blended whisky and expensive single malt, creating a new category of Blended Malt Scotch Whisky:

“the name of a distillery must not appear on any labelling or individual packaging of any blended malt…unless…a Scotch whisky that has been distilled at the named distillery  has been included in the blend making up the final whisky.”  In other words, as long as it said Blended Malt Scotch Whisky - instead of Single Malt Scotch Whisky – the title of the whisky could be “Bruichladdich” while only having a teaspoon of it in the ‘blend’.

Expect to see “Cardhu” single malt and “Cardhu” blended malt – where the latter may have barely an ounce of Cardhu in it. Or “Lagavulin” that is really Caol Ila with a dash of Lagavulin thrown in “as long as it is clear that not all the whisky was distilled at that distillery.” A suitably ambiguous caveat in the hands of a seasoned marketing department.

Here are two whiskies. One is a distinctive scotch whisky made from malted barley at a single distillery, the other is scotch whisky made from malted barley from several single malt distilleries.

The consumer, particularly Johnnie Foreigner (90% is exported)  will be deliberately or may be unwittingly deceived and the hard won single malt whisky category undermined. The SWA’s members want this freedom of manoeuvre for it means  a successful brand’s currently capped growth, limited by stocks laid down two decades before, can now look forward to unlimited growth.

In addition, the ‘blend’ can be diluted down with inferior quality and  cheaper single malts changing the very style associated with the established brand - and the price structure. No wonder the Big Boys are gearing up to whack out huge volumes of single malt from mega distilleries…

The industry/SWA on the one hand want to put the single malt category on a pedestal by tightening the category rules, while simultaneously muddying the water to stimulate a mass market category, unfettered by supply restrictions.

It is clear that if the SWA really had the consumers’ interests at heart – rather than the industry’s - Regulation 10,  sections 2 & 3 would be removed. So where are those inquisitive journalists, hungry for a story, those newshounds that live and breathe whisky, holding the SWA to answer, posing awkward questions, rocking the cosy industry boat, questioning their actions? Um…ah…

Now you know why there is a distilling boom forecast. These regulations I fear are a fait accompli; large drinks companies are just about to get even larger.

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