CNN Starts New Scotch Scare

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The Cable News Giant Started A New Whisky Shortage Scare With Just One Story, But How Accurate Was It?

By Richard Thomas

Images CNN Public Domain + Richard Thomas

CNN wants you think single malt whisky is about to be swept away

On Wednesday I was catching up with my whiskey news feed, whereupon I discovered a torrent of articles about a new Scotch shortage. As I sifted through the pile, I found that the overwhelming majority of the articles (like this one, this one, and this one) referred back to last Friday’s report from CNNMoney’s Sophia Yan, which stated “whisky lovers are draining the world’s supply of old single malt Scotch.”

Stories like this are old hat to observers of the world whiskey scene, so much so that The Whiskey Reviewer has been testing the veracity of these tales for four years now, harking back to our early blogging days. The problem with so many of these shortage stories is that they use a very narrow base of sources, and often amount to little more than yellow journalist clickbait. Sadly, Yan’s story was no exception.

Is There A Shortage?
The textbook definition of a shortage is an imbalance created when demand exceeds supply. That word imbalance is important, and often forgotten by plenty of people who ought to know better, because it comes into play when the mechanisms for coping with a shortage, such as price increases, fail. Minor shortages happen all the time in all manner of goods and services, but often go unremarked upon because moderate adjustments cope and restore equilibrium.

A shortage becomes a crisis, and a crisis is exactly what these scare stories strongly imply, when you can’t get what you want except at extreme prices, assuming you can get it at all. The 1970s energy crisis with its ubiquitous gas lines was a shortage crisis. Look around at a premium liquor store and ask yourself if you think the same thing is happening to whiskey.

Shortage shelves

Does your liquor store look like this? No?
Then there isn’t a shortage.
(Credit: Wikimedia Commons)

The question then becomes not whether demand for Scotch whisky has exceeded supply, although it certainly has to a degree. Instead, it becomes whether normal market mechanisms are adjusting and coping, which they most certainly are. Over the last decade, I’ve seen the prices on my favorite, regularly purchased single malts rise only slightly higher than the rate of inflation, and I can always buy these whiskies on demand. That is the market coping, and a sign that it is coping well.

The only Scotch whiskies that are routinely hard to get are hot limited releases or rare, discontinued or old expressions, and this is so precisely because both are only available in very finite numbers. The truth is that unless your idea of a go-to single malt is James Bond’s 50 year old Macallan, you’ve got nothing to worry about.

This Is What Happens When You Consult A Speculator
A common flaw with whiskey shortage articles is their reliance on a narrow base of sources, sometimes just one source. Many scaremongering bourbon shortage stories, for example, rely solely on Buffalo Trace’s annual press release on their continuing supply difficulties for particular brands as a source, and then tack on a headline implying there isn’t a drop of bourbon available anywhere in America.

NYSE Floor

This is what you get when you talk to speculators…
(Credit: Public Domain)

Where Sophia Yan went wrong is in relying on whisky speculators as sources, thereby producing a necessarily and severely slanted article. If you ask to Rickesh Kishani and Stephen Nothman, both CEOs of Hong Kong-based whisky investment firms, and David Wainwright, who advises on investing in wine and spirits, if there is a severe whisky shortage, as Yan did, of course they will say yes. These people make their profits in speculation on pricey bottles of Scotch and other whiskeys, and talk of a shortage helps drive prices up.

If she had consulted more widely, Yan might instead have learned one or more of the following:

While reading Yan’s CNNMoney article, I couldn’t help but reflect on what many business reporters like her were doing in the years before the housing bubble burst, causing the global financial crisis. Remember those stories circa 2006 about how the sky was the limit on housing prices, and we were in a “new economy” of endless growth? Those were fluff pieces penned by business reporters, credulously repeating what interested parties in the real estate and finance sectors told them.

It’s an all-too-familiar scenario, as is scaring the bejesus out of people to sell newspapers. That is why, in all likelihood, you’ll never see the headline “Whiskey Shortage Overblown” on CNN, and if you did, you absolutely wouldn’t see it repeated ad nauseam all over the mainstream media.

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6 comments

  1. Charlie Whitfield

    Hi Richard,

    Hope this finds you well. Please just ask me in advance in future (or look at my LinkedIn), as I could have told you I am back working on The Macallan, managing brand education and our fine and rare whiskies.

    Many thanks,

    Charlie

    • Charlie — Good to hear from you! Obviously I didn’t anticipate you switching back so soon after we were last in touch. My mistake.

  2. What’s your beef with business reporters cozying up to their sources and subjects? They don’t eat otherwise.

  3. Good to see reasoned perspective correcting hype. Sad that we must look to the blogosphere instead of “professional” journalists to find that.

    One stylistic point. “Yellow journalism” of course has a well-established meaning. The subtly different “yellow journalist” is probably best avoided. Particularly in this context.

    • I see what you are getting at. I never thought of it that way before, but merely in the context of “yellow journalism.” However, best not to give people an opening, even a phony one like that, so I won’t use that phrasing again.

  4. Just to be clear: I don’t mean to even suggest anything but a somewhat poor choice of wording. But given contemporary sensitivities, those can easily be a distraction.

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