MIDLETON — With the end of EU-imposed dairy quotas next year, Ireland will soon open wide its milk tap. Farmers will be ready to lead larger herds back in the island’s meadows, and dairy output will grow expontially. But another source of income is on the rise in Ireland these days: Irish whiskey. Over the past 30 years, Ireland has had only three whiskey distilleries, but by next year there are expected to be a dozen.
Nearly 60 years to the day after it first shut down, powerful stills are steaming again at the Tullamore Dew distillery, located halfway between Dublin and Galway.
This reopening is an ambitious project by none other than the Scottish company William Grant & Sons. Having invested 35 million euros, this family business known for its Scottish whiskies (Glenfiddich) wanted to expand its range of products and benefit from the growing success of its Irish counterpart. In 2010, it acquired Tullamore Dew, the second-largest local whiskey brand.
And this isn’t an isolated example. A Teeling Whiskey Company distillery is expected to open in Dublin by the end of the year. It was named after a businessman who became rich thanks to mining in Africa. In 1987, Teeling created a distillery in Cooley and sold it in 2011 to the American company, Beam, which specializes in Bourbon. Both are now the property of the Japanese group Suntory. But the Teeling family is still very much in the game. In 2012, Jack and Stephen, John Teeling’s sons, decided to live up to their family name and opened their own factory in Dublin.
New players in town
Just like Jack and Stephen Teeling, a whole new generation of players now wants to get in on the Irish whiskey market. The Walsh Whiskey Distillery, due to open in 2016 in Carlow, is another example. The project has been launched jointly by Ireland-born Bernard Walsh, who first started in the business 15 years ago with the brand The Irishman, and by Italian company Illva Saronno, known for its liqueur Disaronno.
American group Alltech, which specializes in animal food, also set up offices in Carlow in 2012. The company wants to enter into the bourbon and whiskey industry. Among the new players, Dingle Distillery in County Kerry, has been open since 2012 and is the property of the Irish Porterhouse pub chain.
These new distilleries are aimed at growing demand. To seduce differentiate themselves from Scottish and American whiskies, Irish whiskey producers praises its triple distillation, its sweet and fruity taste, and its “easy to drink” quality. But these new projects aren’t likely to topple the undisputed leader in the business. The most important Irish distillery remains to this day, unequivocally, Irish Distillers, a company affiliated with Pernod Ricard, the world’s second biggest player in the spirits market.
Located Midleton, near Cork city, Irish Distillers’ most successful and renown product is the iconic Jameson whiskey. The factory was last extended and modernized in 2013, with 100 million euros invested. In a new designer building, three gigantic copper-toned stills sit behind a glass front. In a huge working room, an advanced industrial process has been devised to constantly distill a mix of malted barley, corn and other cereals under low temperature, so as to save energy.
The aim is to double production, up to 64 million liters of pure alcohol. It has produced alcohol for all Irish brands that have recently appeared on the market and that have no proper production apparatus. As such, until now, Tullamore Dew was made by Irish Distillers. And because whiskey has to age, it will probably still be produced by Irish Distillers until 2021.
An industry in the (re)making
Alexandre Ricard, Pernod Ricard’s managing director says the Irish whiskey revival is just beginning. And, notes Anna Malmhake, CEO of Irish Distillers, “In the 19th century, it was the most consumed beverage in the world.” This privileged position was nearly reduced to nothing when the Irish War of Independence started in 1919. It was hit even harder during U.S. prohibition between 1920 and 1933, making it difficult for Irish whiskey to stay strong in its biggest markets: the UK colonies and the United States. World War II was the last straw and brought the industry to its knees, leaving the door wide open for Scotch and American bourbon to rush in, which they did.
In the aftermath of the war, only seven of the 160 distilleries that were registered in Ireland by 1880 remained. In 1966, those survivors decided to come together and founded Irish Distillers. Then, in 1975, they built a new factory, in Midleton, next to the historic site of the city opened in 1825. All of this was bought by Pernod Ricard in 1988. The French company went on to play the hero, helping the Irish whiskey industry stay out of Britain’s reach.
Indeed, the English conglomerate, Grand Metropolitan, suggested at the time a tender offer to buy out Irish Distillers. But Pernod Ricard won the bid set at 442 million pounds (over $725 million), a highly reasonable price for the company, which had just then sold BWG and Bushmills companies for $282 million and $378 million, respectively.
Indeed, for a while, Bushmills, another historic (nothern) Irish whiskey brand, was the property of the French firm. It was also part of Irish Distillers when Pernod Ricard first bought the whole business. In 2005, Bushmills was sold to Britain’s Diageo, the world leader in spirits.
The rise of Pernod Ricard in the whiskey business
Buying Irish Distillers turned out to be a formidable coup for Pernod Ricard, given that it symbolized the beginning of a more active acquisition policy, which led it to become No. 2 in the global spirits industry.
By taking hold of the Irish company, Pernod Ricard acquired various brands of whiskey, from the cheap Paddy to the more refined Redbreast and Midleton. Then there was Jameson, which has shown nothing but constant growth in sales since the buyout. “We used to sell 500,000 cases of Jameson in 1988, and we should be closer to 5 million this year,” says Malmhake. The brand alone stands for 68% in market shares.” Jameson embodies the rebirth of the whiskey industry, even if it only accounts for 4% of total global whiskey sales.
The trend is evolving so fast that former distilleries, once left completely abandoned, are now taken up as key local sites for tourists. People staying in Dublin often visit the old Jameson factory, now a museum. The same goes for Midleton and Tullamore. Hundreds of thousands of visitors come from all around the world to visit rehabilitated buildings and sign up for special tastings. Those sites generate good profit for the companies.
According to Alexandre Ricard, the company owes its success to the smooth taste of Jameson, its history and its inherent Irish spirit. He also acknowledges its marketing campaigns meant to seduce young urban customers in the United States, South Africa, Russia and more recently Japan, Brazil or Kenya. This has allowed the company to regularly raise the price of the Jameson. Today, it’s the fourth most profitable of all of Pernod Ricard products.
From 2008 to 2011, Alexandre Ricard was CEO of Irish Distillers, a key position in his career. He is expected to become head of Pernod Ricard in early 2015, after a transition period he likes to qualify as “smooth.” And he wants to push things further. “By 2020, we want to double the revenue generated by Jameson and make it reach one billion euros.”
