Thursday, December 7, 2023
BusinessLifting spirits: Scots whisky distillery secures £22.5m investment to boost expansion

Lifting spirits: Scots whisky distillery secures £22.5m investment to boost expansion

A SCOTS whisky distillery has secured a mammoth £22.5m investment from a major UK bank to boost expansion plans.

Kilchoman Distillery, based on the island of Islay, Inner Hebrides, has secured the £22.5m funding package with Barclays.

The new funding allows the distillery to invest in new production facilities and further grow the brand globally.

The independent distillery aims to substantially increase production of its famous Single Malt.

Kilchoman Distillery Building set in farmlands.
Kilchoman Distillery is Islay’s only farm distillery.                                                                                        (C) 3×1 Group

Barclays bank already has experience in the whisky industry in Scotland, having previously invested £5.5m in The Glasgow Distillery Company in 2020.

This followed an investment of £25m in Isle of Arran Distillers in 2019 to aid the development of their Lagg Distillery.

The bank says the new deal with Kilchoman Distillery is their latest example of “providing financial support to one of the country’s most valuable industries”.

Kilchoman aims to produce 40% more whisky over the next 12 months and the owners have now started work on a new warehouse.

Extra staff have also been hired to cope with demand.

The distillery is a major employer on the island of approximately 3,200 residents, with 40 people now working for the company.

Set in 2,000 acres of farmland, Kilchoman is Islay’s only farm distillery, producing Islay’s only Single Farm Single Malt.

Kilchoman is one of nine distilleries on the island of Islay and is a family business established by Anthony and Kathy Wills in 2005 when the first cask was laid down.

Now supported by their three sons, George, James and Peter, Managing Director Anthony remains hands-on as Master Distiller whilst Kathy is head of the visitor centre.

Their three sons manage the distillery’s sales and marketing activities.

Kilchoman Distillery reported turnover of approximately £7m at its last audited accounts to December 2020.

This new investment will allow Kilchoman to store thousands more casks of whisky which they can release to the market in several years’ time.

The brand is already established as a premium spirit in 50 countries, with the biggest markets being in France, Germany, the US and China.

The process of ‘laying down’ and storing whisky, normally for a minimum of three years, is an expensive one as substantial working capital is needed while the spirt matures.

Kilchoman Distillery General Manager Islay Heads standing in front of numerous whisky casks.
Islay Heads is looking forward to “exciting opportunities” developing as a result of the investment.                  (C) 3×1 Group

Islay Heads, General Manager at Kilchoman Distillery, said: “Filling thousands of barrels of whisky and waiting several years for the spirit to mature is an expensive business.

“This substantial investment will allow us to invest back in the business, with construction of a new warehouse already underway and plans in the pipeline that should bring efficiencies and further expansion

“There are exciting opportunities to grow our brand in countries like France and the US and despite the unsettling economic conditions there remains a growing market for premium whisky brands.

“For us it was all about getting the right package in place and developing a long-term relationship.

Andy Hall, Head of Barclays Corporate Banking, Central Scotland, said: “Despite the challenging economic conditions, the production of our national drink remains an expanding industry.

“We are pleased that Kilchoman is now one of several independent distilleries in Scotland, where we are supporting their ambitions for growth in Scotland and beyond.

“Whisky remains a growing market and there is still a huge appetite for single malts, with many people still prepared to pay premium prices.

“We have a breadth of knowledge and understanding of how varying levels of investment is key to supporting distilleries, where in most cases the whisky produced today will not be available for market for several years.”

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