The Pandemic Depression Is Over. The Pandemic Recession Has Just Begun. Economics

PSA: Did you know that if you obtain a Bureau Member flair, you can create your own self posts on this sub? For more information, consult the sidebar!

Here's a list of all the whisky distilleries in Scotland. If you look at the malt whisky section and sort by region, you'd notice something very interesting - Only 15 of the distilleries (out of 128) are located in the lowlands. Yet the vast majority of Scottish people, around 80%, live in the lowlands. Look a bit closer at the 15, and you'll notice something. The vast majority of them were built and started production within the last 2 decades. Only Glenkinchie and Auchentoshan were founded before 2000 and have continuously produced malt whisky.

In comparison, Islay, a tiny island with a population of around ~3000 people is a Scotchmalt whisky powerhouse with 8 currently operating distilleries, a new distillery currently being built (Ardnahoe) and one currently in the process of reopening (Port Charlotte). The famous Speyside region has ~50 active distilleries and produces over 50% of the malt whisky produced in Scotland, yet the county of Moray (where most of the Speyside distilleries are located) has a population of only ~47 thousand people.

Yet if you look at the Scotch whisky industry, you will quickly realize that Scotch whisky production heavily depends on imported products. The majority of barley used in Scotch production is imported, and Scotch is aged in ex-Bourbon barrels imported from America or ex-Sherry barrels imported from Spain. Also, only a small percentage of total Scotch production is actually consumed in Scotland, the vast majority of it is exported.

The interesting question here is, why are all the Scotch distilleries located in such remote corners of Scotland? The vast majority of Scottish people and the vast majority of Scottish industry is located in the lowlands, yet there are only 2 continually operating Scotch malt distilleries located in the lowlands. How did this happen?

The history of Scottish whisky taxation

The first tax levied in Scotland on whisky production was introduced in 1644, at a rate of two shillings and eight pence per Scots pint (almost half a gallon). Only a small percentage of the total production of Scotch at the time was legal and taxed. Illegal production of Scotch significantly outpaced legal production, a remarkable 14,000 detections of illicit distillation were made during 1823 – clearly just a small proportion of the actual instances of illicit distillation being carried out

Whisky production in Scotland thus thrived in the far flung regions, where central government authority was weak and local officials routinely turned a blind eye. For instance, on the island of Islay, there wasn't a single Gauger (tax official) until 1797.

The issue lied in tax rates. At two shillings and 8 pence per Scots pint, the level of taxation was too high for most producers to be commercially viable. And thus it was difficult to operate a distillery in the lowlands, populous areas within reach of the tax authorities. Taxes were so high, that near the end of the 18th century, there was only 8 legal distilleries in Scotland actually paying tax.

This reality was not lost on the Duke of Gordon, who in the 1820s argued that tax levels were far too high for legal scotch production to be commercially viable and proposed to the house of lords that the taxation levels should be reduced to a level that would make legal production of Scotch commercially viable. Distillers were permitted to produce scotch legally by purchasing a £10 license, and taxes were lowered to two shillings and three pence per gallon of proof spirit in the Excise act of 1823.

Lower taxes effectively killed off illegal production of Scotch whisky, as former bootleggers who operated outside the effective reach of the tax authorities purchased licenses, paid taxes and became legitimate producers.

High taxes and effective tax enforcement severely curtailed whisky production in the lowlands before 1823, and thus when the taxes were reformed, most of the new producers were the bootleggers from the islands and highlands. The current situation in the scotch world, where most producers are concentrated in the highlands, speyside, and islands is therefore due to 18th and 19th century tax policy.

But what about Cameronbridge?

Scotland's largest distillery Cameronbridge is located in the lowlands. In fact, some of the world's biggest megadistilleries are located in the lowlands. These distilleries include North British in Edenborough, Girvan in South Ayrshire, and Strathclyde in Glasgow.

Obviously the distillation industry in the lowlands is not dead. But these distilleries don't really produce the same product as the malt distilleries in the highlands and islands. Lowland distilleries, outside of Auchentoshan and Glenkinchie are grain distilleries, not malt distilleries.

Sidebar: The difference between Scotch grain whisky and Scotch malt whisky:

Scotch malt whisky is whisky produced from fermented malted barley and is batch distilled in pot stills to a strength of 65 - 70%. Malt whisky is typically highly flavorful and could be either blended with grain whisky to produce blended scotch like Johnnie Walker or Dewars. Malt whisky is also commonly sold as a single malt (when the bottle only contains malt from one distillery) or blended malt (when the bottle contains a blend of malts from different distilleries).

Scotch grain whisky is distilled with a Coffey (also known as column) still. Grain whisky could be made from any grain, and is typically distilled to a much higher strength before aging. Grain whisky is typically lighter in flavor, and is not commonly sold alone. Instead, grain whisky is blended with malt to produce blended Scotch whisky.

The invention of the Coffey still in 1830 changed the distilling industry forever. Instead of batch distilling with traditional pot stills, Coffey stills allow for distillers to produce highly purified, lighter tasting spirits more effectively, unlike the pot stills traditional malt distillers use.

Scotch producers do not use Coffey stills to produce malt whisky, but they do use Coffey stills to produce grain whisky (for the difference, see sidebar above). Grain whisky is then blended with malt whisky to produce blended scotch. 90% of Scotch production is blended whisky, and thus it is likely that more Scotch grain whisky is produced than Scotch malt whisky.

Grain whisky production relies on the Coffey still, which was invented after the tax reforms of 1823. Malt whisky production thrived in the outlying regions because that's where the illegal distillers were. There were a number of illegal production facilities in the highlands and islands who were ready to pay £10 and become legitimate businesses. But those producers were pot still distilleries, with equipment and experience for producing malt whisky, not grain whisky. When Coffey still distilleries were established in the mid to late 19th century, they naturally chose the lowlands to leverage a larger workforce and easier transportation links.

Coffey stills are used to produce more than just whisky of course, and many of these lowland distillers are actually distillation powerhouses that produce far more products than just Scotch whisky. They typically also product gin, vodka, and other distilled products. However, because Scotch can only be legally produced in Scotland, the international conglomerates who own these large distilleries tend to invest in Scotland, contributing to the success of these large lowland distilleries.

The future of whisky production in the Scottish Lowlands

If you look at that list from Wikipedia of the whisky distilleries in Scotland, you would notice that in additional to Glenkinchie and Auchentoshan, who have always produced malt in the Scottish lowlands, there are 13 other malt distilleries who have either recently opened or are currently under construction.

Demand for whisky right now, is really, really high. And thus a large number of new distilleries are being built to accommodate this rapidly growing demand. Lowland malt whisky is therefore actually growing at a very rapid pace. After all, it makes sense to operate large scale industrial production closer to large population centers with accessible transportation links and large workforces.

For years, the lowlands were the most populous region of Scotland, but due to tax policy and historical reasons, had only two working malt distilleries. But I'm expecting that to change. The natural advantages that the lowlands have are encouraging investors to build lowland malt distilleries, and I hope maybe a few decades down the line, the lowlands would grow into a varied, diverse whisky region.

submitted by /u/Uptons_BJs
[link] [comments]

Most of Europe is a lot poorer than most of the United States

Posted: 04 Oct 2020 07:01 PM PDT

submitted by /u/foreigntrumpkin
[link] [comments]

ECB Takes Major Step Toward Introducing a Digital Euro

Posted: 04 Oct 2020 06:29 PM PDT

submitted by /u/FeistyTortoise
[link] [comments]

Using Satellite Imagery to Understand and Promote Sustainable Development -- by Marshall Burke, Anne Driscoll, David Lobell, Stefano Ermon (PDF)

Posted: 04 Oct 2020 09:23 PM PDT

submitted by /u/Central_Bank_Bot
[link] [comments]

When Information is Not Enough: Evidence from a Centralized School Choice System -- by Kehinde F. Ajayi, Willa H. Friedman, Adrienne M. Lucas (PDF)

Posted: 04 Oct 2020 09:23 PM PDT