Peat is found all over the British Isles and it is the use of peat in the Scottish whisky industry that helps to produce a drink that has a unique flavour within the world of spirits. Peat is earth that consists of grasses, moss, tree roots and soil that has become tightly compacted over thousands of years. For use in the whisky industry, the peat is cut (normally by hand) and then left to dry in the open air for approximately two weeks. After this time, the peat is collected and then taken to the distillery. Here the peat is burnt underneath the malted barley to stop it's germination. Because peat is so tightly compacted and dense, it burns for a long time and with consistent heat and smoke. This is also why it is still widely used as a domestic fuel in some areas of Scotland.
The peat smoke produced contains chemicals called phenols and it is these phenols that the malted barley absorbs during this process. The level of phenols are controlled by the amount of smoke produced, the type of peat used (most of the time it is local to the distillery or cut on their own property) and the length of time that the barley is exposed to the smoke. This is one reason why different distilleries have different characteristics in their whisky. Once finished, the malt is taken away for mashing and the phenol level is measured (this level is known as the ppm - parts per million). A distillery will always have the same ppm for their malt and this value is also measured in the final spirit, although some is lost during distillation so the ppm is always lower at the end.
The ppm figure most commonly used is that of the malt. All whisky has some smokiness but in most the ppm value is so low (eg. 1-5 ppm) that it is virtually undetectable. In smokier whiskies, it is easier to detect these levels as the ppm increases. Here are some examples of ppm values of some distilleries (the approximate ppm of the malt is in brackets in increasing value),
Bunnahabhain (1-2), Bruichladdich (3-4), Springbank (7-8), Benromach (8), Ardmore (10-15), Highland Park (20), Bowmore (20-25), Talisker (25-30), Caol Ila (30-35), Ledaig (35), Lagavulin (35-40), Port Charlotte (40), Laphroaig (40-43), Ardbeg (55), Longrow (55).