Monday, 23 July 2012

Been a while again

Just time to write a quick entry. Been a while since my last post. Getting HMRC approval for the warehouse was one thing - running it is something else. It has involved moving back to Scotland not just for me but for the Production Manager, meaning a new house, new schools, leaving friends behind etc etc. I'm not complaining as it was my decision and considering the stunning area I now live in, I have no reason to complain.

A lot has happened in the whisky trade since my last post but one occurrence in particular has caught my imagination. Bruichladdich was sold last week to Remy Cointreau (is that their actual company title?) for £58million. It is not the sale that I find remarkable, it was common knowledge that offers for Bruichladdich were quite frequent; no, it is the amount of money the brand and distillery has been sold for. Taking aside Bushmills which sold a few years ago to Diageo for about £250million, this is one of the largest single distillery purchases the world has ever seen.

Now, I neither have the desire nor the time to sit and work out Bruichladdich's profits, turnovers, Remy's potential return on investment etc etc, but I wonder how many years it would take at current profit levels for Remy to return their £58m, never mind turn a profit on the acquisition. And actually, that is not what concerns me - I hope that the £58m price tag is good value for Remy (as it must be for the ex-Shareholders of Bruichladdich). What I find amazing, and what has really been on my mind for the past 2-3 months is distilling. Being a distillery owner; a distiller. As a 19 year old entering into this fantastic industry I had no desire, plan or dream of owning my own distillery. That has changed though in the past couple of years.

There are a few reasons for this, but the likes of Arran, Kilchoman, Ardbeg, Bruichladdich and Glenglassaugh (and even the terribly named St George's Distillery) have all sparked my imagination, kicked off a desire and created a dream. It is the fact that with careful planning, methodical preparation and expertise on distilling, it is very possible to make a go of distilling - and sometimes more than a go - a large and profitable company. Scotland is not doing well at the moment, financially that is and who knows what independence may or may not bring, but one thing is certain, distilleries are doing well, and whisky is in demand. This demand for the niche, small, different and premium has been growing, no, exploding over the past 15 years. The idea that a micro distillery on Islay would make any money in the early 1990s - preposterous, but now totally reasonable.

Anyway, my imagination, desire and dream has to stay just that for now. I know I could make a success of a new distillery, but for some strange and inexplicable reason (!) the lenders that be just don't share my confidence. I think it boils down to the fact that really, you don't have anything to sell for at least 3 years (and more like 5) - investors are a usually looking for their return by this point.