Interview: K&L’s Spirits Buyer David Driscoll Talks Scotch Whisky Trends

California retailer K&L Wine Merchants operates three stores in the Golden State, located in Redwood City, San Francisco and Hollywood. Traditionally known as a wine powerhouse, over the past decade K&L has seen its spirits sales grow from 3% of its revenue to the current 12% share. For the nine years, head spirits buyer David Driscoll has developed direct relationships with Scotch whisky distillers, bringing products from small-lot players into K&L’s stores and cultivating a loyal customer base. SND recently spoke with Driscoll about current Scotch whisky trends.

SND: How does Scotch stack up in terms of spirits sales at K&L?

Driscoll: Scotch is roughly 50% of our spirits sales, with a strong focus on single malt.

SND: K&L focuses on small casks. How are you choosing producers?

Driscoll: Since each distillery is now making five or six whiskies, shelf-space is overcrowded. We have to balance the need to have new Scotch whiskies with building traction for existing products.

SND: What are the hottest sellers?

Driscoll: Single barrels from lesser-known distilleries are flying off the shelf, when priced right. A private K&L barrel of Royal Brackla 17-year-old single cask ($59.99), owned by Dewar’s, sold out in 10 days. People will sacrifice brand recognition and luxury if it means getting a good deal. Our sweet spot is $60 to $100 for a 750-ml. that’s bottle-aged 15 to 20 years.

SND: What about the old and rare market?

Driscoll: It’s treacherous. The whiskies have become so expensive that I can’t sell them, so I’m not buying them. They went from $500 to $1,000 retail to $5,000 to $10,000 for the higher-end 25- to 40- year-old single malts. A 50-year-old name brand sells for $25,000, but I can sell a 50-year-aged Scotch from a less high-profile distillery for $250. Keep in mind that the single barrel whiskies I’m buying were originally intended for blending.

SND: What’s the selling approach?

Driscoll: Online sales now comprise 50% of our spirits business. We have a whiskey club, and I have a blog with tens of thousands of followers. We also have 12,000 followers on our Twitter feed, which is heavy on spirits, and we do email and newsletters. Our younger demographic is fun. Social media is creating momentum for us.

SND: What other trends are you seeing specifically in single malt?

Driscoll: The market has changed quite dramatically. Regions have become irrelevant. With blended Scotch declining, distilleries who traditionally created whiskies for blending are now marketing the product as single malts.

SND: Are customers overwhelmed by the array of choices?

Driscoll: Actually, customers love it. The trend is toward collecting dozens of Scotch bottles with different flavor expressions. People will buy a new bottle without any pressure to finish the old one.

News Briefs:

•Pure Liquid, a new boutique wine and spirits shop, has opened in the World Trade Center’s Oculus transportation hub in New York. Pure Liquid is a new venture by chef Henry Meer and business partner Richard Hanano (Meer was chef and owner of the former City Hall restaurant in TriBeCa, which closed nearly a year ago). Hanano tells SND that Pure Liquid’s 1,220-square-foot space houses about 500 wine SKUs and 200 spirits SKUs, including a wide selection of artisanal Bourbons, Cognacs and single malt Scotch whiskies. It also stocks more than 50 wines under $20 a bottle, with an even split between domestics and imports. Market Watch has the full story.

•Washington is poised to have its largest-ever harvest in 2016, and the same is true for the state’s biggest wine producer—Ste. Michelle Wine Estates. Amid an early bud break and moderate temperatures that extended the harvest period to a full three months (August 13 to November 13), Ste. Michelle’s total Washington crop is expected to come in somewhere between 275,000 and 280,000 tons—a record-high for the Woodinville-based company. The 2016 harvest represents an increase of more than 20% over the previous record: 227,000 tons in 2014. Ste. Michelle’s bountiful harvests have come as the wine company has enjoyed impressive volume growth. Last year, Ste. Michelle’s depletions grew by 6% to 8.2 million cases, according to Impact Databank, and the company recently reported similar growth for the first nine months of 2016.

•Jose Cuervo Tequila has unveiled the latest iteration of its limited edition Reserva de la Familia label. Released annually, Reserva de la Familia ($150 a 750-ml.) is an extra añejo Tequila sourced from the Cuervo estate’s private reserves, with 2016’s expression packaged in a box designed by Mexican artist Jorge Méndez Blake. Jose Cuervo, which is marketed in the U.S. by Proximo, was up 3% to 3.45 million cases in the U.S. last year, according to Impact Databank.

•Heaven Hill Brands has promoted Jacob Sabel to the role of Southeast region manager, granting him oversight of wholesaler and broker relations across Georgia, South Carolina, Alabama and Mississippi. He will report directly to select division manager Jim Cotter. Sabel joined Heaven Hill in 2012 as Georgia area manager, and has also previously held roles with Sovereign Brands and Atlanta Beverage Company/Anheuser-Busch.

Craft Brewing And Distilling News:

•Sierra Nevada Brewing Co. has promoted 10-year company veteran Joe Whitney to the newly-created position of chief commercial officer. Whitney, who was previously vice president of sales, joined Sierra Nevada after serving in senior sales and marketing roles for Boston Beer Co. and New Belgium Brewing Co. Sierra Nevada is the country’s third-largest craft brewer, according to the Brewers Association.

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