How Global Climate Change Will Affect the Quality and Price of Whisky.

In Japan, where the four seasons are distinct, it is common to consider the blistering heat of midsummer and the freezing cold of midwinter as natural occurrences. While there are occasional cool summer days or warm winter days, most people—excluding perhaps farmers—likely view them as nothing more than lucky weather for an outing.

However, in recent years, global climate change and extreme weather events have intensified, and even the Japanese, who are traditionally insensitive to climate shifts due to the presence of four seasons, are increasingly startled by sudden and violent weather changes. Summers, in particular, are marked by climate shifts so severe they cannot be described as merely "capricious"; with "guerrilla" rainstorms, hail, violent thunderstorms, and tornadoes, I feel that something is fundamentally different about the Japanese weather I once knew.

 

Meanwhile, the extreme heat in Europe is affecting not only crop growth and changes in precipitation but also the quality of the land itself. I recall news reports of Europe falling into chaos due to extreme heat exceeding 40°C—reaching a record high of 46°C—alongside simultaneous droughts and floods. Each time I see this, I find myself thinking, "Oh, the production of local barley is going to plummet". Indeed, I have been able to confirm samples from a certain region in Europe where annual barley production has decreased by about 40% due to factors like climate change.

In this way, global climate change, which is progressing faster than humanity anticipated, is already having a devastating impact on industries and livelihoods. I believe the global whisky industry will face a considerable crisis in the near future. Whisky will be treated as an even greater luxury than it is now, and it will require far more cost to produce and consume. I suspect the following events will likely occur. While I am just a whisky enthusiast and not an expert, I believe the general direction of these thoughts is not wrong.

1) Significant Decline in Barley Production and Quality Due to Climate Change.

The most direct and destructive factor is the decline in the production and quality of the barley used in whisky making. As mentioned above, due to rapid climate change in recent years, many barley farms have seen yields drop by more than 40%, and this trend is expected to continue.

Atsushi Katsuki, Chairman of Asahi Group (famous for Asahi Beer), stated in a 2023 interview that in the UN's worst-case scenario where global temperatures rise by 4°C by 2050, France's barley supply would decrease by 18%. If the 2°C warming target specified in the Paris Agreement is met, supply would decrease by 10%. For major beer-producing countries like Poland and the Czech Republic, a 4°C rise alone could reduce barley supplies by 15% and 25%, respectively.

As the costs of cultivating barley increase, the quality of the barley itself declines, and the cost of making whisky is expected to rise sharply. Even if whisky bottled ten years from now is made from barley harvested around 2020 or earlier, the high production costs of that future time will be reflected directly in the price of whisky ten years hence.

2) Potential for Criticism of Grain-Based Alcohol Production and Increased Social Costs Amidst Global Food Shortages.

You might think such a thing is impossible, but social demands and pressure for a sustainable economic environment are growing stronger every day, regardless of the business field. Due to the continuous increase in the world population, wars, military conflicts, and factors like climate-driven declines in food production and capacity, it is said there is a medium-to-long-term possibility of global famine. In this context, even raising livestock on grain is beginning to be socially criticized; eventually, there may be growing criticism of processing grains like barley and corn into alcohol instead of food.

Currently, many Scotch whisky distilleries are increasing new investments in sustainable operations. Glengoyne Distillery has introduced a wetland facility that captures carbon dioxide, purifies distillery wastewater with wetland plants, and creates a circulation system to manage and reuse the purified water. By creating this wetland, it has also become a refuge for local wildlife, including 14,500 plants of 20 different varieties and 80,000 bees, thereby improving biodiversity.

Tomatin Distillery was also selected as the Sustainable Distillery of the Year at the 2023 Icons of Whisky awards. It is switching from traditional fuels to biomass energy and liquefied natural gas (LNG) for whisky production, creating wetlands to contribute to biodiversity while introducing a system to purify plant wastewater, and even utilizing solar power to reduce carbon dioxide emissions.

In the future, other distilleries will also be forced to invest in equipment for developing sustainable mechanisms, but where will those enormous costs come from? Naturally, they will be added to the price of the whisky sold. Consequently, the price of whisky will continue to rise, and in the case of long-aged whiskies, it may reach a price point where they can only be enjoyed with the eyes.

3) Depletion of High-Quality Natural Resources Used for Whisky Aging Casks.

Currently, the Scotch whisky industry generally utilizes casks made from European oak. While wood consumption can give an impression of environmental destruction, it is said that they actually contribute to global environmental issues by conducting forest resource development and logging in parallel. However, the problem is not the environment, but the decline in the production and quality of the wood resources used for oak casks to age whisky.

• Exhalation of oak casks: The action of expelling volatile aromatic substances (aldehydes), lipids, tannins, lactones, etc. from the oak cask.

• Absorption of oak casks: The action where the charred interior of the cask acts as a carbon filter, absorbing whisky components.

• Interaction between oak casks and whisky: The action where the cask and whisky interact, exchanging constituent substances to create new substances.

• Oxidation of whisky: The evaporation and oxidation that occur because oak casks are not hermetically sealed.

During maturation, as noted above, the components of the cask undergo chemical reactions with the whisky to develop flavor. However, due to changes in wood components caused by climate change and the longer growth periods required for timber, it has become difficult to secure high-quality oak casks for making delicious whisky. Furthermore, the circulation of distinctive casks used for aging, such as wine and cognac casks, has plummeted. Due to the decline of the European wine industry, the availability of high-quality oak casks that once held premium wines has decreased, significantly reducing the options for whisky aging casks. For these reasons, the production costs for high-quality, long-aged whisky will double and continue to rise, and it is possible that even basic age-statement whiskies, let alone 18-year-old expressions, will become unattainable luxury items.

4) Increase in Levies on Greenhouse Gases Generated During Whisky Distillation

The image of whisky making is widely recognized by distillation equipment, represented by steam rising from massive stills. While there are various distillation methods, traditional methods reportedly emit more heat and carbon dioxide than the latest gas stills. This is being criticized as an "act of destroying the environment for a wealthy person's hobby". Consequently, modern distilleries are being forced to install the latest management equipment, introduce systems to measure and manage CO2 emissions, build new facilities to absorb CO2, and pay large levies on greenhouse gas emissions. All such costs will be reflected in the price of whisky.

5) Increased Costs for Securing Peat

Of the total peat harvested by the UK industry, most is used as general fuel, with only 1% utilized for whisky production. Because of the large amount used for general fuel, peat reserves are visibly decreasing, and the Scottish government has announced an investment of £250 million by 2030 to restore 250,000 hectares of peatland. While this massive investment is a government expenditure, I believe the burden will ultimately have to be shifted to the whisky industry.

For the reasons stated above, it is likely that the future whisky market will further bifurcate into low-priced and high-priced whiskies, and high-quality whisky that can be savored over time will become a luxury item that is difficult to obtain. For this reason, it might be wise to acquire the whiskies you love as early as possible.