Will Scotch Whisky Revive Britain's Tanked Economy?

Britain's economy is still struggling to pull out of the doldrums. There's on-going concern about inflation, and the new government is set to embark on the biggest round of spending cuts in a generation. But one area of the economy that remains resilient — and has throughout the recession — is Scotch whisky.

STEVE INSKEEP, host:

Here's one product that nearly always seems to sell well, no matter what the state of the economy: Scotch whisky. Even in these tough times, that business is strong in Britain. Whiskey accounts for about a quarter of the U.K.'s food and beverage exports. NPR's Eric Westervelt traveled to Scotland for a look at this can't-fail industry.

ERIC WESTERVELT: Hard times call for people to do without certain superfluous comfort items, but apparently for many, Scotch whisky is not on the list. Despite recession and gloom, 2009 was a record year for the industry: Exports to the U.S. - the most lucrative market - were up more than 13 percent. Robbie Hughes manages the distilleries at Glengoyne in the southern highlands north of Glasgow.�

Mr. ROBBIE HUGHES (Manager, Glengoyne Distillery): So we've managed to go through world wars and depressions and recessions, and we're always here at the end of it. People have maybe two or three luxuries that they consider to be luxuries in their life, and they're very reluctant to give up them. And drinking's one of them. And maybe women's another one, you know. It's these things which just keep going and keep going. Thank goodness.

WESTERVELT: What's your third?

Mr. HUGHES: I'm trying to think of a third, you know.

(Soundbite of laughter)

WESTERVELT: Glengoyne's profits were up 45 percent last year and are up 25 percent on that so far this year. Part of the industry's resilience as a whole might be that people want comfort or relief in unsettling times. But another key factor is the growth of the middle classes in China, India and emerging markets. Over the last decade, according to the Scotch whisky trade association, sales to Asia are up more than 26 percent.�

Mr. HUGHES: All these countries, you're talking about millions and millions of middle-class - I mean, dozens of millions, not just one or two millions. And now they've got the money, and it's a market that's really gone untapped. It's quite exciting.

WESTERVELT: Single malt has been distilled legally at Glengoyne since 1833, and two generations before that as illegal stills. But single malt - Scotch whisky distilled by a single distillery using malted barley and aged in oak - is not what sells in Asia or what brings in the money. For the industry as a whole, about 90 percent of all Scotch produced is used in blends.

Glengoyne's Robbie Hughes.

Mr. HUGHES: It's not the sexy, most-fun 90 percent. You know, but it's what pays the wages, pays the bills, is the blends themselves.

WESTERVELT: But the single malts are more fun to make, says Stuart Hendry, who wears the title Brand Heritage Manager at Glengoyne.

Mr. STUART HENDRY (Brand Heritage Manager, Glengoyne Distillery): What we're looking at here are three copper whiskey stills, traditional shape, like an onion ball at the bottom with a neck tapering up. They call it a swan neck.

WESTERVELT: Hendry tosses a long, metal cup into the frothy brew - called wash at this stage - gurgling inside one of distillery's massive barrels called a wash-back.

Mr. HENDRY: We'll just throw this in.

(Soundbite of thump and splash)

WESTERVELT: At this stage, the whiskey's really a kind of beer. This wash will then be distilled twice into a 72 percent raw spirit, akin to moonshine, before going into mainly Spanish sherry or American bourbon oak casks for the long maturation into single malt. Glengoyne's youngest is 10 years old.

Mr. HENDRY: Let's say nothing changed here for 150 years. It's all just passed down, the recipe. The same equipment's being used, and there's no computerization. There's nothing other than two guys at any one time making Glengoyne, just continuing to do the same thing hour after hour, day after day and decade after decade.

WESTERVELT: Today, Glengoyne is one of the just a handful of family-owned distilleries. But that commitment to hand-crafted distilling is still the standard across the Scottish whisky industry, even though the majority of the distilleries these days are owned by giant multinational beverage companies such as Diageo, Bacardi and Pernod Ricard.

During the recession, there's been pressure everywhere to expand and speed up production, but Glengoyne's Hendry argues that it's precisely that commitment to craft-distilling that keeps the bean counters and consultants from mucking it all up.

Mr. HENDRY: A fear of change is quite a healthy thing in distilling, and it's something that keeps accountants at bay, because everyone would like to cut costs and speed up processes and things like that. And it's just the sort of industry that that's too scary a thing to do.

WESTERVELT: There is a bit of fear that global sales could take a hit in coming quarters. Two of the top five biggest markets for Scotch, Greece and Spain, are the European countries in the worst financial shape. The industry is wondering whether Spanish and Greek drinkers will cut back on Scotch or continue to embrace it, as the U.S. has, through the hard times.

Eric Westervelt, NPR News, Dumgoyne, Scotland.

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