Islay distillers face peated malt shortages

There’s no need to panic buy… yet … but there are Islay peated malt shortages on the horizon for the Scotch whisky distillers with Port Ellen maltings especially facing unprecedented demand. Here’s the full story.

It started as a tip-off from an anonymous source on Islay: the supply from Port Ellen maltings to non-Diageo distilleries will be limited in 2023 and may be stopped entirely in 2024. So we did a bit of digging. Robbie Millar from Beam Suntory, owner of Bowmore and Laphroaig, had this to say when we asked him: “We are aware of the Port Ellen situation and have been working to address the consequences of Diageo’s decision to restrict supplies.”

Demand from Diageo distilleries like Port Ellen means there’s less peaty malt to go round

Peated malt shortages

Then another major distiller in Islay told us: “Diageo has substantially cut all of their external customers for 2023, and I have not yet had a chat with them about 2024, but it is a distinct possibility”. He didn’t want to go on the record but Anthony Wills from Kilchoman was happy to talk: “My understanding is they [Diageo’s customers] have been told from 2024, they will not be able to provide the level of malt they currently get.”

When we put this to Ian Smith, head of corporate relations at Diageo, he said he “would not contradict what you are saying.” He then released the following statement: “We can’t comment on the detail of commercial supply contracts, but it is the case that we have seen significant increased demand for malted barley from our Port Ellen maltings. As a result, the maltings are operating at full capacity and we are managing supply accordingly. We deeply value our relationship with our fellow distillers and customers and are doing everything we can to assist them within the supply constraints, alongside considering potential future solutions.” 

Georgie Crawford from Elixir distillers

Unprecedented demand

The problem is that demand for peated malt from Port Ellen maltings from Diageo’s Islay distilleries is at an unprecedented level. Caol Ila was shut for much of the pandemic – now it’s back to seven days a week. Combine that with the resumption of distilling at Port Ellen for the first time since 1983 and the continued demand for Lagavulin, and you have a problem. There was talk in the past of expanding capacity at Port Ellen maltings but for whatever reason it never happened. Georgie Crawford, formerly of Port Ellen and Lagavulin distilleries, and now at Elixir on Islay said: “It was foreseeable, everyone saw it coming yet Diageo took the option not to expand.” Another Islay distiller said, off the record, “they should expand. Why haven’t they?” 

He continued that it’s not just an Islay thing: “Overall malting capacity is an issue. It’s creaking at the seams.” Anthony Wills from Kilchoman said “Securing malt supply for malt next year is incredibly difficult. Across the industry, there’s a squeeze.” According to Wills, Bairds malters has just added 57 tonnes of capacity while Simpsons is seeking planning permission for new maltings at Speyside. “Everyone is at full capacity,” he added. Malt supply was further hampered by a fire in the peated kiln at Crisps in Portgordon.

Malt: there’s just not enough of it being made to meet demand

Logistical difficulties

One large Scottish maltster told us that it is not taking on any more customers: “the amount of enquiries we are having to walk away from, it’s more than I have seen in the last 30 years.” With all the expansion going on, he added, “the industry is in a tight spot.” He said that both Glenmorangie and Beam Suntory had come to him for malt. He hopes that the demand will encourage Diageo and other maltsters to expand. The Islay problem is particularly acute because even if distillers can secure supplies from the mainland, the island’s creaking transport infrastructure based around CalMac ferries make getting it there difficult. Currently, CalMac doesn’t have the capacity to accommodate the additional freight that would be required. Plus the fact that many distilleries depend on specifically Islay malt for their flavour profile, and their marketing. Not all peated malt is the same. According to Anthony Wills, Laphroaig alone needs five or six loads of malt per week, each one weighing in at around 28 tonnes. That’s a pretty hefty carbon footprint if it was all to come from the mainland.

It seems this malt shortage isn’t just a Scottish or even a British problem. Apparently, energy shortages in Germany have meant that some maltsters have had to shut down entirely. Never mind a whisky shortage, what happens if there’s a European beer shortage? And winter is coming. Maybe it is time to panic a little.