Some you win, some you lose

The United States’ great experiment with Prohibition caused shockwaves in the world of Scotch whisky – and while many distilleries suffered, others survived and prospered. Gavin D Smith explores the history and impact of the ‘dry years’

Given the USA’s status as the largest export market for Scotch whisky, the implementation of the National Prohibition Act of October 1919 had a profound effect on the industry in Scotland.

Prohibition began on January 17, 1920, and prior to that date, Scottish distillers shipped as much whisky as possible into the States, but this was always going to be a very short-term solution. There were serious concerns that as well as losing its premier overseas outlet for an as yet unknown period, by the time Prohibition ended – if it ever did – US drinkers would have forgotten the virtues of ‘real’ Scotch, having been subjected to all manner of illicit spirits, some masquerading as Scotch whisky.

In order to maintain a presence in the US, a number of reputable distillers entered into agreements with third-party traders – known as ‘bootleggers’ – in order to have their whiskies illegally imported into the States.

Many of these men were adventurers of dubious character, likely to ‘cut’ the Scotch with cheaper spirit to maximise their profits, which would only increase reputational damage to the product in the long term.

One bootlegger, however, earned the trust of distillers and a place in the English language. His name was Captain William ‘Bill’ McCoy, and apart from Chicago mobster Al Capone, who made millions of dollars trading in alcohol, McCoy is probably the best-known name associated with what President Herbert Hoover described as “a great social and economic experiment”.

McCoy was noted for the quality of the spirits he supplied, hence ‘the Real McCoy’ – though other origins of the term have also been suggested. He shipped a variety of spirits into the waters off New Jersey, where they were collected by small vessels and taken ashore.

One whisky brand in which he specialised was Cutty Sark, a blend light in colour and style and formulated by London wine and spirits merchants Berry Bros & Rudd especially for the US market, where it first appeared in 1923.

End of Prohibition, photo from New York Times

Pictured: William McCoy

Thanks in part to the efforts of Captain McCoy, Berry Bros & Rudd were one of the Scotch whisky ‘winners’ of Prohibition, as Cutty Sark became a firm favourite with illicit drinkers in the States, and once Prohibition was repealed in 1933 they kept on drinking it. Indeed, in excess of 7,000 cases had been sold by 1934, rising to a remarkable 80,872 cases per annum a mere two years later.

Another ‘winner’ was the Distillers Company Ltd, courtesy of its Haig blend, which – at the height of Prohibition in 1927 – exported the equivalent of almost 170,000 litres to the US, accounting for 17 per cent of its total annual overseas sales, and this in an ostensibly ‘closed’ market.

Meanwhile, Teacher’s shipped a grand total of 137,927 cases of its Highland Cream Scotch via Antwerp and the Panama Canal to San Francisco Bay on the <Lillehorn>, one of many vessels owned by the colourful Anglo-Canadian Joseph Hobbs through his Hobbs Brothers shipping line.

Hobbs made a great deal of money in the bootlegging trade, and once Prohibition was repealed, he participated in the legal shipment of large quantities of blended Scotch whisky into the US, being involved through his Associated Scottish Distillers in the operation of Glenury Royal, Benromach, Fettercairn and Bruichladdich distilleries, to name but a few.

Another Prohibition ‘winner’ was Laphroaig, which had been exported into the States prior to 1920 by distillery owner Ian Hunter with notable success. It has been suggested that Hunter was able to continue selling it during Prohibition as everyone considered the spirit could only be used ‘for medicinal purposes’ rather than for pleasure!

Whatever the truth, at a time when the Scotch whisky industry as a whole was in a poor state of health, Hunter was able to enlarge the Laphroaig maltings in 1923, and build new warehouses during the following year and again in 1928, going on to extend the mash house and stillhouse in 1929.

The industry’s poor state of health was partly due to the economically troubled inter-war years that affected most developed countries, though Prohibition served to weaken a number of already struggling Scottish distilleries, and these were the main ‘losers’ from the 13 ‘dry’ US years. In 1926, there were 113 licensed distilleries in Scotland, but the following year, that figure fell to 84. By then, no fewer than 50 distilleries had closed since 1921, most of them permanently.

This was party due to the actions of the Distillers Company Ltd, which set out to acquire struggling rivals and close down their distilleries, ostensibly to promote a healthier industry going forward.

ABOVE: Campbeltown pictured in the 1920s

One distilling region in particular lost out badly as a result of Prohibition, and that region was Campbeltown. The various reasons for its demise are explored in the May 2021 issue of Unfiltered, but the production of poor-quality spirit to satisfy ‘bootlegging’ demands in the US were certainly a significant factor. In 1920, 20 distilleries were active in the Argyllshire port, but only Riechlachan survived Prohibition, and that closed in 1934.

In the aftermath of Prohibition, Scotch whisky sales in the US did not immediately rise, partly due to the effects of the ‘Great Depression,’ which started in 1929, and partly because of a protectionist move by the US government that imposed a tariff of $5 per gallon on imported spirits. When this tariff was halved in 1935, Scotch whisky sales to the States began to climb once more, with production rising in tandem, due in part to an improving British economy.

Summing up, Ronald Weir writes in The History of the Distillers Company 1877-1939 that Scotch whisky “…maintained, even enhanced, its reputation for quality, creating a taste in the US market which was there when Prohibition ended”.