Breaking New Ground

02 Jul 2014

I felt a real buzz when I arrived at our first New Distillers Forum event in Perth on Monday.  The Scotch Whisky industry is enjoying record expansion with great confidence in the future. This is good for the wider economy and is creating optimism across the supply chain. I thought that optimism was abundant at our event to help new entrants make sense of the commercial and regulatory landscape governing Scotch whisky production. The numbers say it all - more than 30 new ventures attended the fully-subscribed event.

After the rationalisation of the 1980s and early 1990s, Scotch producers of all sizes are now investing in expanding production capacity and infrastructure.  Some £2 billion of investment is committed over the next two years.  This kind of growth has not been seen since the early 1970s and it feels to me like a great time to be working in this industry.  As a result of the entrepreneurial spirit of those I met at our Forum, the number of distilleries licensed to operate in Scotland is set to grow from 109 to… well… who knows. These planned developments span the country from the Borders to the islands and range in size from micro distilleries to sites at a scale akin to mature distilleries in the sector.  They are poised to help create jobs and underpin communities around the country. This surge in investment reflects confidence in Scotch's strong export performance over the last ten years, with international prospects remaining bright.

New distillers will benefit from being able to walk in the footsteps of those who fashioned the age-old traditions that underpin the making of Scotch and, if successful, will build brands upon the best of what went before.  This advantage comes with a responsibility to safeguard the industry's reputation for consistency and quality while innovating and making a modern offer to an ever more educated market place.

But new distillers also face many barriers to entry.  Scotch Whisky is, by its very nature, a long-term investment, with limited returns over the first decade.  There is a complex array of licences, rules and regulations to navigate and cash flow to generate.   It is no doubt a daunting, as well as exciting, prospect.

Delegates at the event heard that starting a new distillery is not for the faint-hearted.  Those who have succeeded have faced ups and downs, delays and heartache.  It requires patience, passion, a long-term view, investors with foresight and access to the correct advice to 'get it right' first time. This is all while daring to be different in an industry where new developments have been the norm rather than the exception.

The SWA exists to help create the conditions for Scotch Whisky's long-term growth at home and abroad - from legal protection of Scotch Whisky from fakes to securing fair and equal access to export markets.

My own focus is to secure a competitive and sustainable business environment for all distillers, in areas as diverse as energy, taxation, product labelling and marketing.  As our industry evolves, we want to work with new distillers to steer them towards the best available advice and to learn more about their plans.  We were pleased to be joined in Perth by a number of high profile and expert speakers from Fergus Ewing MSP, Minister for Energy Enterprise and Tourism, HMRC, the Scottish Environment Protection Agency (SEPA), Scottish Enterprise and, importantly, from individuals such as Anthony Wills of Kilchoman Distillery who has already navigated the unclear path to create a durable site with an international brand.

I hope our event will help new distillers take their plans forward and I wish them every success in their exciting ventures.  Judging by the number of handshakes I saw at our New Distillers Forum, the business cards being exchanged and the real bustle over coffee and lunch around the exhibition, I feel encouraged that this new generation of distillers are on course to engage, collaborate and learn, as well as, perhaps question and challenge.  This is the stuff our great industry has been built on.

Julie Hesketh-Laird, Scotch Whisky Association director of operational and technical affairs