Angel's Tax

Angel's Tax is a humorous term in the whiskey industry that describes evaporation loss during storage and maturation. The term refers to the portion of the inventory that evaporates through the wood of the barrels, and is informally referred to as the angels' tax.

Origin and meaning: The term builds on the more technical designation 'angel's share', which describes the portion of the spirit that evaporates from a barrel during maturation. In Danish conversations, Angel's Tax is used as a light and humorous way to refer to this loss and to the climate-related differences that can make the loss significant in warmer areas.

Factors affecting evaporation:

• Climate and temperature: Higher average temperatures increase evaporation and thus the size of the tax. In warm climates the loss can be considerably higher than under cool conditions.
• Humidity and ventilation: Airflow, vapor pressure, and the building's ventilation affect how quickly alcohol and water pass through the wood.
• Casks and wood types: New oak or ex-bourbon, ex-sherry woods give different interactions and permeability, which affects both the quantity and profile of evaporation.
• Fill level: The higher the fill level of the cask, the less contact with air and thus lower annual evaporation.
• Age and temperature fluctuations: Large temperature fluctuations and longer aging lead to greater cumulative evaporation.
• Storage section and placement: Upper parts of a building and areas with greater temperature variation can have higher losses than cool, more stable areas.

Consequences and applications:

• Economic and inventory management: Evaporation reduces the amount of spirit available for sale and affects stocks and pricing as well as estimates of finished goods equivalents.
• Alcohol strength and sensory: ABV changes over time, and the concentration of certain components develops, which affects the flavor profile.
• Accounting and practice: Evaporation is recorded primarily through volume- and ABV-loss and is often noted in internal memos and operational analyses rather than in external accounting.

Applications and culture:

• Usage in practice: The use of Angel's Tax at distilleries and among collectors often reflects experiences with the climate's role in aging, especially in warmer regions.
• Communication and humor: As a light and colorful metaphor, it makes it easier to discuss losses and aging challenges without going into technical details.