Despite my calling it a third type (see the quotes?), vatted malt is really a blended whiskey without the grain whiskey component.
Vatted malts, like blends, mix a variety of single malts together in an attempt to get a totally new flavor. With blends, grain whiskey can be used to thin out the flavors a little in order to achieve some balance, though many enthusiasts consider it to be cheapening the flavors.
Since no one publishes a list of what’s in a blend, it’s really tempting to put in cheap grain whiskey because… it’s cheap.
As for vatted malt, it’s somewhat confusing too.
Malt refers to the the mixture that will be fermented and vatted just means put into a big pot or container. Vatted malt would lead you to believe that malt from a variety of sources is put into a container and fermented together, but that’s not the case.
While much of the flavor is determined by the malt itself, there are flavors, mouthfeel, and other characteristics that develop in the cask while it matures in the warehouse. If you mix the malts and mature in the same warehouse, you lose a lot of that.
In reality, the vat refers to the blending process after the individual whiskeys have matured and would otherwise be consumed.
The Scotch Whisky Association recently renamed this category from vatted malts to “Blended Malt Scotch Whisky.”
Johnnie Walker Green Label, Eleuthera by Compass Box (vatted from Caol Ila and Clynelish), and Famous Grouse 10 yr. are among the few well-known vatted malts.