This section is from the book "Beverages And Their Adulteration Origin, Composition, Manufacture, Natural, Artificial, Fermented, Distilled, Alkaloidal And Fruit Juices", by Harvey W. Wiley. Also available from Amazon: Beverages And Their Adulteration.
The whisky of Scotland is very famous, not only for excellence, but also for its peculiar flavor, which many people associate with creosote. The fact of the case is that the peculiar flavor of Scotch whisky is due to a remarkable character of the peat, which is produced in that country from aromatic heather. It may be a matter of some interest to know how the flavoring of peat gets into Scotch whisky, since peat is not a material which is used in the fermentation or in the mash in any way. The Scotch distiller makes his own malt, and in drying it after it has been sprouted he uses peat for a fuel. It is the burning of peat which gives rise to the aromatic substances, which are characteristic of Scotch whisky. These are absorbed by the moist malt during the process of drying, and thus pass into the mash, the fermenting tank and the still. After the fermentation, the flavor of the peat, being volatile, comes over with the whisky during the distillation.
 
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