Whiskey Bonders

[GlennHalpin]

Hi everyone,

I am in the early stages of planning for my research paper for a Marketing MSc in the University of Limerick and as a result of a deep interest in the Irish whiskey business, I would like to look at the area of whiskey bonders. I have a number of questions at this early stage to help me get my head around where to start with this.

The proverbial tap was turned off so they say to the bonders around 1968 by industrial producers, is this true? For what reason specifically? I know that Mitchels and Sons bond Greenspot and Yellowspot and that there is a new bonder in Co. Clare called Chapel Gate but how many more are out there and who supplies them with the whiskey before it is put into the casks?

What are the main benefits of doing this? I would imaging that the savings that can be made from the expense of opening a distillery would be the big benefit. In this era of booming Irish whiskey demand, why arent more whiskey marketers going down this route?

There isn't a whole lot of information surprisingly online about this topic.. If anyone has any useful links that might help, I would be enormously grateful.

Also I am looking to carry out interviews with anyone that believes they can help me with this from their professional capacity. My email is glennhalpin.gh@gmail.com .

Thanks

[IrishWhiskeyChaser]

There is plenty of Bonded whiskey in Ireland but possibly in 2 different formats.

Firstly the main reason for placing spirits in bond is because of the high cost of duty on such spirits. However placing your spirits in bond means you don't have to pay this up front and can pay as you go so to speak. So you only pay the duty when the spirit is released from bond.

The reason this is mostly associated with whiskey is because of the time it takes to mature whiskey, minimum 3 years but probably averaging 5-7 years and a lot still 12 years and over. However if you look at clear spirits like Vodka and Gin and even non aged rum these are basically produced for direct route to market so not so much an issue for bonding but I presume they do it also even if it is for short periods as large Corporations these days look for the smallest gains they can get anywhere.

Whiskey Distilleries all avail of practice of placing their whiskey in bond.

However they all would have applied to have bonded warehouses on site. Therefore they can mature their whiskey in bond with out paying the duty up front.

The benefit is they don't have to pay the duty until the whiskey is ready for release. They also pay less per cask doing it this way because as a cask of whiskey matures it loses some of it's abv and some of it's metric volume. Therefore instead of paying for a full cask of regular whiskey at point of distillation itis far cheaper at point of release for say a 12yo whiskey.

Basically a 225L cask filled at the industry average of 62.5% abv would cost circa 225x.625x42.57(Irish Duty Per Litre of alcohol)= €5986.40

However a 12 year old whiskey could lose as much as 40 liters through evaporation in that time giving yield of 185L and have a reduced ABV of anything from 55-60%. So taking worst case scenario of a 55% abe you duty costs are 185x.55x42.57 = circa €4331.49

That is a difference of over €1600. That in itself is a huge saving per cask but the big benefit is not having tio pay massive sums up front but waiting till you have the window to send it to market and being fairly sure you'll get it back fairly quickly.

The Whiskey Bonder of old is but a memory though ... these businesses rose from the practice that Distilleries very rarely bottled their own whiskey pre 20 centuary and sold their whiskey by the cask. Most bonder's were also public houses and used the same premise of buying in bulk and placing in storage and aging their in bond for the same reasons as specified above. However once the Irish whiskey Industry became a monopoly in the 60's under IDG (Now IDL) a decision was made not to sell their whiskey into independent bond any longer.

I'm not 100% sure but I am guessing this decision was take as mainly a marketing one, although also a quality assurance one too. Basically they wanted to have total control over their product and have a standard product coming to market rather than the multitude of whiskey coming out of the whiskey bonders at a local level.

To this day Irish Distilleries don't sell much casked whiskey to independent bonders and the practice has fallen out of favour.

However with the re-emergence of new Distilleries there is no reason why this may not happen again.

However you still have Whiskey Bonders, these however are mainly wholesale importers that will import spirit for distribution and resale around Ireland. How you find out about these I've no idea but I'm sure their is a register somewhere just may take a bit of digging.

Not sure how accurate all this is but that is how I understand it so think it's close enough, hopefully you'll get a few more to jump in on this and give you more input or clarify anything.