The Basics of Whisky

Like all investment assets, the more you know about Scotch whisky, the more successful you will be as an investor. This primer on the world of Scotch whisky will help you navigate your way through this lucrative-but-complex investment class. We’ve distilled the basics of Scotch whisky investing into 10 categories ranging from the legal definitions of how it’s made to how it is best enjoyed. And don’t forget that Scotch whisky is always spelled without an “e”.

1. Types of Whisky

The two basic types of Scotch are “malt whisky” from 100% malted barley and “grain whisky,” which can be made from any grain (usually maize or wheat), but must also include a fraction of malted barley, as well. Malt whisky must be distilled in pot stills, whereas grain whisky is usually made in column stills. There are numerous categories which must be declared on the label:
  • Single malt whisky – malt whisky from a single distillery
  • Single grain whisky – grain whisky from a single distillery (unusual)
  • Blended malt whisky – a mixture of malt whiskies from different distilleries
  • Blended grain whisky – a mixture of grain whiskies from different distilleries (unusual)
  • Blended whisky – a mixture of malt and grain whisky, usually from different distilleries

2. Whisky Age

By law, the term “Scotch Whisky” refers strictly to whisky that is matured in Scotland in oak casks for at least three years. Certain brands of very cheap whisky are just three years old, but most Scotch is five years old or older. Bottled whisky may be a mixture of casks of any age over three years. Producers are not required to include an age statement, but if there is one, the age on the label must be the age of the youngest whisky in the mix in completed years. A whisky aged three years and 364 days is legally still three years old. Some distilleries sell products younger than three years old. These must be referred to as “spirit.” Single malt whisky is commonly bottled at ages ranging from 10 to 21 years, but there are also both younger and much older ages. The current record holders are bottled at an age of 70 years (from Mortlach and Glenlivet distilleries).

3. Whisky Regions

Traditionally, Scottish distilleries have been grouped into regions. The official whisky regions are
  • Lowlands
  • Highlands
  • Speyside
  • Campbeltown
  • Islay
Some prefer to regard Campbeltown as part of the Highlands region but treat the Scottish islands apart from Islay as its own distinct region. The different whisky regions are reputed to produce their own distinctive styles of whisky. But even though there can be certain similarities – like an emphasis on peaty whisky on Islay—it is impossible to find a common denominator for each region. The region should be regarded only as a geographical hint about the location of a distillery, although the reality is that it can safely be ignored.

4. Production of Malt Whisky

Barley is malted by soaking it in water until it begins to sprout. The germination is then stopped by hot air to which peat smoke may be added. Malting was traditionally done in the distilleries, but the vast majority of distilleries now use malt from big industrial malting companies. The traditional kiln pagodas still remain as the visual trademark of Scottish distilleries. The malt is then coarsely ground and mashed with hot water in order to extract the sugars from the malt. This wort is drained and fermented with yeast for at least two days, accompanied by heavy bubble action and the production of carbon dioxide. The result is the “wash,” which has an alcohol content of about 7%. Distillation is done in copper pot stills. Because this ancient method is not very efficient, distillation must be done at least twice. Most distilleries use double distillation, but some distill three times. The final spirit usually has a strength of about 70%.

5. Whisky Maturation

Scotch whisky must be matured in oak casks. Most casks are recycled, typically with casks that previously held American bourbon, although sherry casks from Spain are common. Sherry casks typically lead to a slightly sweeter Scotch, which helps explain the rising popularity of Macallan whisky. Only a very small fraction of Scotch is matured in new casks. To a lesser extent other cask types like port, Madeira, rum or wine are used, as well.  The process of re-filling whisky into a fresh cask for the final months of the maturation is called finishing. Most whisky casks are re-used several times by distilleries. Maturation takes place in warehouses. The traditional dunnage warehouses have stone walls and an earth floor which is believed to create perfect conditions for maturation. But there are also modern racked warehouses with concrete floors and steel walls where casks can be handled by forklifts. During maturation, the clear new spirit extracts flavouring and colouring substances from the cask that emanate from both the wood and the remains of the previous cask contents. The longer it stays in the cask the darker the whisky gets. But every cask is different. There are five-year-old old whiskies that are dark brown, and there are 30-year-old whiskies that are only slightly yellow.  Because the casks are not totally airtight some of the spirit evaporates during maturation. This is called the “angels’ share.” Depending on the climate and the location of the cask in the warehouse, this loss typically ranges between 1% and 2% per year.

6. Blending and Vatting

Most whisky you find in shops is a mixture of several casks. This is obvious for blends, but even bottles of single malt whisky typically come from more than one cask (in the same warehouse). The process of mixing a batch of casks selected for bottling is called “vatting” because prior to bottling, the casks are filled into huge vats where they are “married” for a while. All blended whisky brands like Johnnie Walker or Chivas Regal have their own recipes. It is the job of the master blender to select the right casks in order to assure that each vatting tastes the same. Single malt bottling follows essentially the same process, with the primary difference being that only casks from a single distillery are used in the vatting stage.

7. Bottling

For bottling, most whisky is diluted with water to lower the alcoholic strength. The legal minimum is 40%, and many brands adhere to this standard, but there are also bottlings at 43%, 46%, 48% or even 50%. Whisky contains fatty components that are dissolved at casks’ strength, but when diluted below 46% they can turn the batch cloudy. To avoid this issue, many whisky producers apply chill-filtration to remove the fatty components. The whisky is cooled down to just above freezing and then run through a fine filter that holds back the fatty substances. The major whisky brands often add caramel colouring (E150a) to the whisky to ensure that each bottled batch has the same colour. The possible impact of caramel colouring and chill-filtration is sometimes the subject of heated debate among whisky lovers.Some whisky is bottled undiluted at natural cask strength. There are also single malt bottlings from a single cask.

8. Business

Even though single malt is usually regarded as the most sophisticated type of Scotch whisky, about 90% of Scotch is sold as blended whisky. The Scotch whisky business is dominated by big conglomerates like Diageo (Johnnie Walker, Bell’s) or Pernod Ricard (Chivas Regal, Ballantine’s). These producers not only mix their blends, they also own the distilleries that produce the raw whiskies. Only a fraction of the distilleries are independent companies. Currently there are about 100 malt distilleries in Scotland and a handful of industrial scale grain whisky distilleries. There is also a market for full whisky casks which allows independent bottlers to sell whisky of various distilleries under their own label. Some distilleries have disallowed independent bottlers to use their name for their bottlings, so you will also find whiskies with fantasy names on the shelves whose provenance can only be guessed. Other distilleries have no orignial bottlings of their own because they produce whisky almost exclusively for blends, so you have to rely on independent bottlers to enjoy them as single malts.

9. Flavours

Scotch single malt whisky comes in a seemingly infinite variation of flavours. You will find heavily peated and smoky single malts like Laphroaig that may even shock you if you haven’t tasted them before. You may also find creamy and fruity whiskies like Glenlivet, as well as the heavy sherry cask matured Macallan or Glenfarclas malts. Sometimes two whiskies from a single distillery can be totally different. The scope of flavours in blended whisky is more limited because blenders try to create a flavour profile that will appeal to as many people as possible. In younger blends the grain whisky creates a certain roughness which will mellow as the whisky ages. As mentioned above, producers often try to group Scotch whisky flavours by regions, but there is no general trend. You just have to try as many different whiskies as possible to decide on your own favorite blends.

10. Enjoying your Scotch

How to enjoy Scotch whisky in the best possible manner has always been a matter of controversy. Some drink it neat, some add water, some add ice, and others use it with mixers.If you’re just in it for the refreshment, any of those approaches will work just fine. It’s just a matter of personal preference. But if you want to fully explore the nuances of flavor, the consensus is that a tulip shaped nosing glass and whisky at room temperature work best. Fill the glass with 20 to 30 ml (or about an ounce), swirl it around a little and enjoy the smell. Then take a sip and hold it in your mouth for a few seconds before swallowing, so the flavours can reach every part of your palate. Adding a few drops of still spring water helps to “open up” a whisky because the water breaks up the connection between the alcohol and the flavour molecules. You may notice that the smell and taste of your dram changes a little after a few minutes. This is perfectly normal and does not mean that your senses are playing tricks on you.But whichever way you prefer your dram, Scotch whisky is best enjoyed in the company of good friends and acquaintances.

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